“There’s growing global recognition that these are the technologies that will determine who ‘wins’ in the future global economy,” Kenton Thibaut, Resident China Fellow at the Atlantic Council’s Digital Forensic Research Lab in Washington DC, told CNN Business. However, she added, being completely self sufficient in chipmaking is easier said than done because of the layers of technology and specialized expertise involved. “It’s not really possible to gain a top spot in the semiconductor supply chain as a whole.”
A push to bolster US production
TSMC’s investment predates the CHIPS and Science Act, but the legislation is likely to spur more companies to bring factories to the United States, according to Zachary Collier, an assistant professor of management at Virginia’s Radford University who specializes in risk analysis.
Even beyond the short-term incentives, companies may be keen to establish a US manufacturing presence because of the country’s relative stability, security, highly educated working class and, perhaps most importantly, sheer demand. Collier estimates that the United States accounts for a quarter of global semiconductor demand but only 12% of manufacturing. And TSMC says North America, broadly, accounts for 65% of its revenue, with China and Japan accounting for 10% and 5%, respectively.
Companies “would try to rush in and satisfy that demand,” Collier said. But replacing China overnight — or perhaps at all — will not be easy.
“Right now China has an advantage in that it has a concerted strategy around pitching its technologies and supplying critical infrastructure to countries that need them,” said Thibaut. “The US and other democracies need to also develop a strategy around tech that does not just focus on competing with China, but is also proactive in providing real solutions to real needs.”
No matter how much countries try to shore up their local manufacturing bases, it will likely be virtually impossible to decouple from the global supply chain, particularly for products as integral and intricate as semiconductors. The design, fabrication, manufacturing and even raw materials for chips are distributed across several different countries and regions.
“It’s really a huge web,” said Collier, adding that no matter how much countries try to localize production, a degree of interdependence is inevitable. “It’s global, one way or the other.”