Taiwanese Semiconductor Giant Delays Arizona Plant Production Amid US-China Chip Race

Washington has repeatedly tried to outpace Beijing in the ongoing global chip race, seeking to economically collaborate with Taiwan, which is seen by China as an essential part of the People's Republic.

Taiwan Semiconductor Manufacturing Co. (TSMC) has announced that it will postpone production at its new chip plant in the US state of Arizona to 2025 due to a shortage of skilled labor, in an apparent blow to President Joe Biden’s push for bringing more chip production to the US amid a Washington-Beijing trade row.

During an earnings presentation, TSMC chairman Mark Liu said that the plant faced a shortage of workers with the "specialized expertise required for equipment installation in a semiconductor-grade facility."

He added that TSMC was "working to improve the situation, including sending experienced technicians from Taiwan to train the local skilled workers [in the US] for a short period of time."

The company, which makes chips for Apple Inc. and Nvidia Corp., earlier said that as compared to last year, TSMC’s profits fell by around 23% to $5.8 billion in the past three months to the end of June, because of slower demand for semiconductors.

Liu’s remarks came against the background of US Treasury Secretary Janet Yellen’s latest statement on semiconductors pertaining to hefty investments made by US chip-making companies in Vietnam, including Arizona-based Amkor and Intel, which has the largest assembly and testing facility in the Vietnamese city of Saigon.

Yellen is currently on a visit to Hanoi, Vietnam to discuss the strengthening of bilateral economic collaboration, among other issues.

US-China Chip Competition

The past several years have seen growing competition between the US and China to prevail in the prospering global chip industry, which may grow to $1.4 trillion in revenue by 2030, a race that is expected to continue in the immediate future.

According to the White House, the US currently produces roughly 10%, while China accounts for at least 15% of semiconductor-related global production.

Washington is striving to win the race by imposing further restrictions and expanding investments in the domestic chip industry. In October 2022, the Biden administration rolled out the most extensive restrictions to date on Beijing's chip manufacturing industry, requiring licenses for those companies that export chips to China using US tools or software, no matter where they're made in the world.

The restrictions were preceded by President Joe Biden signing into law the bipartisan CHIPS and Science Act, which includes more than $52 billion for US companies producing semiconductors, as well as billions more in tax credits to encourage investment in the industry. The goal is to prevent American investors from directly or indirectly contributing to the development of semiconductor production in China.

China, meanwhile, announced in a retaliatory move earlier this month that it would restrict exports to the US of rare metals, such as gallium and germanium, which are used to manufacture semiconductors.