Taiwan fears impact of US chip restrictions

On the lookout: The founder of TSMC Morris Chang speaking at a news conference in Bangkok. The company is at the centre of Taiwan’s chip supply chain and is in the process of setting up a chip fabrication facility in the US. — Reuters

TAIPEI: Taiwan’s semiconductor industry may be impacted by recent United States moves to reduce reliance on the island’s leading-edge technology, a Taiwanese economic official says.

A recently passed US semiconductor law, along with a similar proposal in Europe, “could directly and indirectly affect exports of crucial industries in Taiwan,” said Tsai Yu-tai, head of statistics for the directorate-general of Budget, Accounting and Statistics.

“The uncertainty from these acts will affect Taiwan’s production and exports, although the scale of impact is still unclear,” Tsai said at a briefing yesterday about Taiwan’s economic outlook.

Tsai was referring to the roughly US$50bil (RM225bil) Chips and Science Act passed by the US government in August to boost domestic semiconductor research and development.

The legislation is part of the Biden administration’s attempt to reduce dependence on Asian suppliers, including Taiwan.

Taiwan’s government on Tuesday lowered its forecasts for gross domestic product growth for 2022 and 2023 to 3.06% and 2.75%, respectively, citing a slowdown in global demand fuelled in part by inflation and China’s Covid policies.

Taiwan’s chip supply chain, centred around Taiwan Semiconductor Manufacturing Co (TSMC), is leading the market, and TSMC is building a chip fabrication facility in the US.

But Taiwan’s chipmaking prowess has also long contributed to tensions between the US and China, hastening Washington’s desire to make itself the foremost chipmaking power to counter Beijing.

While Taiwan is preparing its own tax incentives, those plans have not yet been finalised, Tsai said. Earlier this month, the island proposed expanding some tax breaks for companies that invest in technology research and production, an attempt to strengthen its semiconductor industry.

The Chips Act’s signing has already spurred US chip companies, such as Micron Technology Inc, to plan billions of dollars in new investments.

US Secretary of Commerce Gina Raimondo also pointed to the need to shift cutting-edge chip production from Taiwan to the US.

The US has also taken more aggressive action to combat China on technology, including the unveiling last month of sweeping curbs on the sale of semiconductors and chipmaking equipment to the world’s No. 2 economy.

Tsai on Tuesday did not specifically mention sanctions, though she said that a prohibition on production in China might create a “large impact on order placement,” impacting the supply chain there.

The European Union, meanwhile, agreed this month to pursue a €43bil (RM200.5bil) to jump-start its semiconductor production, though the plan won’t be finalised until next year. — Bloomberg

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Taiwan , US , chips , ChipsAct , TSMC


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