At the recent APEC Summit, Morris Chang, the founder of Taiwan Semiconductor Manufacturing Company (TSMC), stood out as a central figure. Representing Taiwan, Mr. Chang engaged with over half of the summit’s attending national leaders, underscoring TSMC’s preeminence in the global semiconductor landscape.
During a press conference on Nov. 17 in San Francisco, Mr. Chang reflected on his interactions at the summit. While he didn’t engage in formal bilateral talks with U.S. President Joe Biden, Mr. Chang noted a significant amount of interaction with U.S. leaders, including Secretary of State Antony Blinken, Vice President Kamala Harris, and senior White House advisor Lael Brainard.
The summit provided Mr. Chang with numerous opportunities for informal dialogues, including a working lunch for APEC dignitaries and a dinner hosted by President Biden and the First Lady. At these gatherings, Mr. Chang conversed with leaders like Thai Prime Minister Srettha Thavisin and Singaporean Prime Minister Lee Hsien Loong, sharing insights on the semiconductor industry.
Mr. Chang’s expertise in semiconductors was a magnet for curiosity and respect. Leaders inquired about Taiwan’s success in the field and sought explanations about the fundamentals of chip technology. His humorous recounting of these interactions highlighted the genuine interest in TSMC’s domain.
A Taiwanese foreign affairs official noted Mr. Chang’s significant impact at the summit, with many leaders seeking his company, boosting Taiwan’s global stature and fostering international friendships. Mr. Chang, however, reported no interactions with Chinese leader Xi Jinping during the event.
On the subject of U.S. restrictions on high-tech exports to China, Mr. Chang expressed support for the measures, aligning TSMC with U.S. policies on chip export bans.
This year marks Mr. Chang’s seventh representation of Taiwan at the APEC Summit, having previously represented Taiwanese Presidents Tsai Ing-wen and Chen Shui-bian. His experience in the United States, spanning nearly three decades, laid the foundation for founding TSMC in 1987.
Under his leadership, TSMC evolved into the world’s leading chip enterprise, boasting a market value of about $470 billion. The company’s chips constitute about 50 percent of global production, with its advanced chips dominating 90 percent of the market.
These chips are integral to billions of electronic devices worldwide, including mobile phones, computers, and cars. With the advent of artificial intelligence, particularly generative AI, the demand for advanced chips has skyrocketed. As the 21st century is being shaped by artificial intelligence, the role of advanced chips as the core of AI technology underscores TSMC’s pivotal position in the global arena.
China’s Inability to Reduce Dependence on Imported Chips
The semiconductor industry is deeply entrenched in global interdependence. Chiu Chun-Jung, a professor in the Department of Economics at Taiwan Central University, outlined a global landscape where foundational patents reside in the United States, key compounds are in Japan, and crucial photolithography equipment is in the Netherlands. Taiwan, with its pool of excellent and highly dedicated engineers, has been instrumental in TSMC’s success, a triumph of location, conditions, and human talent.Mr. Chiu emphasized the unique nature of the semiconductor industry, underscoring that it’s not merely a matter of investment. “Even with the know-how, the United States cannot replicate the latest chip production capabilities without relocating TSMC to its shores,” he told The Epoch Times.
The Chinese Communist Party’s (CCP) ambition to independently produce advanced chips under the “Made in China 2025” policy aimed to slash China’s chip import ratio from 85 percent to 30 percent by 2025. However, this goal faces substantial challenges.
In September, it was reported by Reuters that the CCP’s new investment fund, also known as the Big Fund Phase III, received approval. This fund, with a target of 300 billion yuan (about $41 billion), aims to bolster China’s semiconductor industry and narrow the gap with global competitors, particularly the United States. This third phase exceeds the combined investments of the first two phases, which raised 138.7 billion yuan (about $19.5 billion) and 200 billion yuan (about $28.2 billion) in 2014 and 2019, respectively.
Despite these investments, the CCP’s approach has been marred by inefficiencies and corruption, leading to bankruptcies, defaults, and unfinished projects. Since 2021, several high-ranking officials have been implicated in related corruption scandals.
The semiconductor industry is a focal point in the United States–China rivalry. The U.S. government’s upgraded chip ban on China in October further exacerbates the challenges for China. The order prohibits the sale of specialized chips, like Nvidia’s A800 and H800, to China, addressing previous loopholes. Moreover, it stipulates that chips produced using U.S. technology, software, and equipment globally require U.S. authorization for sale to China.
Additionally, the order places constraints on U.S. skilled workers, prohibiting Americans from assisting China in developing or producing integrated circuits without authorization.
As of the end of 2022, China’s self-sufficiency in integrated circuits lingered below 30 percent, indicating an over 70 percent dependence on imports. This situation highlights the complexity and challenges China faces in reducing its reliance on foreign chips, underscoring the strategic importance and competitive nature of the global semiconductor industry.
