TSMC's $165 Billion Bet On US Chip Manufacturing Raises Alarms In Taiwan Amid China Threat — Experts Warn Taipei Must Plan Beyond Its 'Silicon Shield'

Taiwan Semiconductor Manufacturing Co.'s TSM $165 billion U.S. expansion is reportedly driven by geopolitical pressure, supply chain security, and customer demands, but it comes with major risks for Taiwan. 

What Happened: TSMC’s accelerated U.S. expansion aims to meet the demands of American clients like Apple Inc. AAPL and Nvidia Corp.NVDA.

However, experts warn that Taiwan’s strategic importance could diminish as the U.S. increases its share in global chip production, reported Nikkei Asia.

Earlier this month, TSMC announced an additional $100 billion investment to build five new chip facilities and an R&D center in the U.S.

The self-governed island has relied on its “Silicon shield” for protection, but the U.S. is now home to TSMC’s first overseas cutting-edge plant in Arizona.

See Also: Intel ‘Will Be Fighting For Every Socket' In The Data Center Business, Says Co-CEO Michelle Holthaus As Competition From AMD, Nvidia Heats Up

Konrad Young, a former R&D director at TSMC and former senior advisor at Intel, said that Taiwan should move beyond the “silicon shield” concept and avoid linking its strategic significance solely to a single company or industry.

He stressed the need for Taiwan to establish “multiple shields” to showcase its broader value to governments worldwide.

Why It's Important: The expansion of TSMC in the U.S. has sparked a series of geopolitical and economic concerns.

Last month, China accused Taiwan of potentially surrendering its semiconductor industry to the U.S. for political support. This accusation comes amid rumors of TSMC’s potential stake in Intel Corp. INTC.

Moreover, Taiwan’s government has also scrutinized TSMC’s overseas ventures, saying that they require permission for joint ventures abroad.

Previously, the U.S. has also expressed concerns over Chinese tech giant Huawei Technologies’ access to TSMC chips.

Despite these challenges, TSMC’s Chairman CC Wei earlier this month said that the U.S. expansion is driven by the booming demand for AI and smartphone technologies, not political pressure.

Price Action: TSMC’s stock inched up 0.32% in after-hours trading, reaching $181.48. Earlier on Tuesday, it closed at $180.90, slipping 0.14% during regular trading. So far this year, the company’s shares have declined 10.26%, according to data from Benzinga Pro.

Photo by Andy.LIU Shutterstock

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.