• China accuses Taiwan of attempting to "sell out" its semiconductor industry to the US for political support.
• Taiwan Semiconductor Manufacturing Co. (TSMC) is reportedly considering expanding its footprint in the US amid tariff threats.
• The US relies heavily on Taiwan's chip production, raising concerns over national security and strategic dependencies.

BEIJING: Tensions are rising as China has accused Taiwan of attempting to give away its semiconductor industry to the United States, referring to Taiwan Semiconductor Manufacturing Co. (TSMC) as a potential pawn in political maneuvers. According to a statement by Zhu Fenglian, spokesperson for China's Taiwan Affairs Office, Taiwan's current leadership is "using Taiwan's semiconductor industry and powerful companies" to gain leverage for independence, calling this an act of attempting to "sell out" Taiwanese interests. This allegation comes amid discussions about potential investments by TSMC in US firms like Intel, which has not been confirmed.

US media have reported that Taiwan's government is also navigating the increasing pressure from the Biden administration, which has aimed to repatriate chip manufacturing to the US. Former President Donald Trump had previously stated that Taiwan's dominance in the chip sector risks American jobs, threatening up to a 25% tariff on foreign-made semiconductors to encourage local manufacturing. The significance of TSMC cannot be overstated; the company accounts for approximately 76.8% of the world’s wafer production, making its decisions pivotal for both US and global markets.

Amid these geopolitical developments, TSMC is making strategic moves; reports indicate they recently held their first board meeting on US soil, which symbolizes a commitment to the US market. The state-run South China Morning Post mentioned that TSMC has invested significantly in a new facility in Arizona that has started production of advanced chips and is expected to ramp up operations further in the coming years.

Nonetheless, the prospect of imposing steep tariffs and increasing costs prompts a careful consideration among Taiwanese chipmakers about whether to establish new factories in the US or devise alternative strategies for managing potential import duties. Analysts have indicated that while TSMC and others may have the capability, smaller foundries may face significant financial hurdles in setting up operations stateside.

As the US looks to reduce its dependency on Taiwanese chips, the island remains a crucial player due to its technology and talent pool. However, Taiwan's government has also been working to encourage local companies to increase their investments in the US, enhancing collaboration with Washington to fortify the semiconductor supply chain.

In light of this complex landscape, many Taiwanese manufacturers are opting to maintain substantial operations on the island. With ongoing investment from major companies like AMD and ASML into new facilities for AI projects in Taiwan, the island’s sector continues to thrive despite the geopolitical pressures.

For further details, refer to the original coverage by Reuters and SCMP.