President Lai, TSMC Is in the Process of Becoming ASMC; the Government Must Not Be Careless

Scholar Zheng-liang Guo recently remarked on a political commentary show that, “If Trump is elected, he may require Taiwan Semiconductor Manufacturing Company [now TSMC] to register in America and become an American semiconductor company (ASMC)!” Executive Yuan spokesman Chen Shih-kai rebutted Zheng-liang’s thoughts as having no basis. I contend that Chen’s response proves the government does not actually understand the operations of multinational enterprises, and this is the true crisis for Taiwan. If TSMC does register in the United States and become an ASMC, “America First” would be the U.S. government’s only option, and Taiwan’s fab [microchip fabrication plant] could only be at its mercy, with even fab relocation or closure becoming a possibility. C.C. Wei’s future as chairman would be called into question, and his guarantee of TSMC’s home base remaining in Taiwan would be of no use!

The Taiwanese public certainly wants to know if it possible for TSMC to become ASMC. I contend that it is completely possible. There are two key reasons why, which I will elaborate on below: First, does America have schemes to overtake TSMC? The answer is absolutely.

Donald Trump is arrogant and does not mince words when asking for money. He demands that Taiwan, Japan, South Korea and the EU pay protection money, complaining that Taiwan has “stolen” America’s chip industry. In America’s present financial difficulties, he will think of all possible means to raise funds. TSMC is a choice piece among the pickings — as long as the opportunity presents itself, Trump will certainly not hesitate to grasp it.

Joe Biden has not said as much, but his actions have not been few either. In July 2023, he already made Volodymyr Zelenskyy bundle all of Ukraine’s valuable state-owned industries, including power grids, mining, infrastructure, energy and technology companies, such as jet engine manufacturer Motor Sich, in a transfer to the American Jewish consortium BlackRock*. At the same time, he also had Ukraine transfer over 60% of the fertile black land in its western granaries to three American companies, Monsanto, DuPont and Cargill, all the while claiming that this is payment for America’s assistance with the war.

It turns out there is no such thing as a free lunch, and American aid comes at a price. After the war, the majority of Ukrainians can only work or farm on behalf of American consortiums. Biden or Kamala Harris will similarly aim to control TSMC, and the story of Ukraine very well may repeat itself in Taiwan. The Taiwanese people should not be complacent because the U.S. Congress has passed the Taiwan Aid Bill; this would be mistakenly swallowing America’s morphine pill.

Second, do objective facts point to the possibility of American takeover? The answer is still a definite yes. The U.S. Trojan horse before us has already entered TSMC’s board of directors meetings and is preparing to put the city under siege. TSMC is at great risk! Matters have become this way because former President Tsai Ing-wen’s administration was subject to American pressure and its vain obsession with diplomacy, allowing the U.S. to seize this opportunity. I have never doubted that Tsai loves Taiwan, but her chip policies have two major oversights, as described below.

Intoxicated by Chip Diplomacy, Tsai Ing-wen Is Selling Taiwan without Realizing It

The first oversight of the Tsai administration is its intoxication with “chip diplomacy.” Zhang Zhongmou once said the cost of producing semiconductors in America rather than Taiwan is more than 1.5 times higher, so the returns do not justify the investment. Yet, as an enterprise, TSMC is forced to bear the pressure of the U.S. government’s required investments. The Taiwan government should have shouldered its responsibilities and helped TSMC block investment requirements that were not in line with the company’s interests. But who would have thought that our government would go along with it and encourage TSMC to successively build three fabs in Arizona, where even the most advanced 2-nanometer process is not regulated. As TSMC makes investments in Japan and Germany, where production costs are similarly more expensive than in Taiwan, the government has no public review process, nor has it convinced the Taiwanese people of why international relocation is necessary for the chip industry.

Japan has always locked out Taiwan’s technology, yet the Taiwanese government is bent on helping Japan rebuild its chip industry. Is its motive not puzzling?

Japanese brand Panasonic is called Panasonic around the world, but when TSMC expanded to Kumamoto, its globally recognized name was changed to Japan Advanced Semiconductor Manufacturing. Now, whose idea was this? The government ought to explain clearly to the Taiwanese people.

What’s worse, the government has even encouraged chipmakers to help India’s Tata Group construct its own chip fabs, endowing the country with its mature chip technology, and this is a recipe for disaster. Everyone around the world knows that India is a graveyard of foreign investment and traps foreign capital without so much as the blink of an eye. Tata Group has publicly declared it will poach high-paying technology positions from Taiwan, but the government is quite enamored with Indo-Pacific strategy, believing that India can fend off China; therefore, it not only helps India build its own chip fabs, but also ignorantly open its doors to Indian migrant workers, allowing Indian engineers to capture Taiwanese technology under the premise of work immigration. There will come a day when Taiwan’s chipmaking and chip technology companies are inevitably challenged by India. Rather than hedging against China, the government ought to hedge against India!

Incredulously, for the vain pursuit of diplomacy, the government has treated the precious jade that is our world-renowned chip technology as if it were cabbage, distributing it to everyone. Even National Taiwan University’s Semiconductor College plans to nurture chip talents for Germany. Is this not a result of the ignorance of the government, or the naivety of the college?

On May 2, Tsai attended the opening ceremony of Power Semiconductor Manufacturing Company’s Miaoli fab. Representatives from America, Japan, France, Germany, India and other countries were in attendance. The media lauded this event as the fruits of “chip diplomacy.”

On the contrary, I think this is Taiwan’s tragedy! Chip diplomacy is selling Taiwan! It peddles away the long-term interests that the Taiwan people depend on for survival and development!

In the 1980s, our generation of entrepreneurs once depended on and created the Taiwan economic miracle that led the nation to become one of the four dragons of Asia. But unfortunately, in the 1990s, we also personally faced the first comprehensive relocation of industries in Taiwan during the Lee Teng-hui era. We all know well the bleak state of Taiwan’s economy after this hollowing out of industries, which led to a murky future for youth, lack of suitable space for development and salaries struggling at around 24,000 new Taiwan dollars for many years.

Luckily, fate has been on Taiwan’s side, and the chip industry was left by Chiang Ching-kuo as a blessing to the Taiwanese people. In the 1980s, Chiang appointed talented people such as Sun Yun-suan and Guo-ding Li to establish the roots of Taiwan’s semiconductor industry, sent others such as Tsing-cheng Tsao and Qin-tai Shi to study in the United States, and invited Zhang back. In 1987, when the government’s finances were not abundant, he traversed the difficult path to establishing TSMC. Over the past 40 years, there have been countless efforts by technological elites, until finally, amid the COVID epidemic, a TSMC-led chip industry rose up to save Taiwan’s economy from crisis.

Today Taiwan’s economy depends on the chip sector for support, and the nation’s hope for the future lies in chip technology. Relocation of the chip industry is exceptionally damaging to Taiwan. After the de-Taiwanization of chips, what will Taiwan do? This is a topic that intellectuals must seriously face.

Submitting to America, TSMC Has Been Bullied while the Government Sits by Idly

The second oversight of the Tsai administration was its excessive submission to America, which has created an impression for the U.S. that Taiwan can be pushed around, resulting in it making great demands.

The U.S. Department of Commerce Secretary Gina Raimondo has bullied TSMC, requiring the provision of its proprietary information, yet the Taiwan government did not come forward to seek justice on TSMC’s behalf. American think tanks have advocated that, “if Taiwan falls, America must first destroy TSMC, then use the last flight to evacuate chip engineers, leaving behind only a group of refugees for China!” The government again did not strongly protest these remarks nor demand clarification. TSMC belongs to the Republic of China; what right does America have to destroy it?

The excessive lenience and inability to cherish chip technology exhibited by Tsai’s government is a disguised form of encouragement for America to continue its gradual push forward, such that now TSMC becoming ASMC is not only a possibility, but in reality, an already ongoing preparation by the U.S.

During the TSMC board of directors' reelection in June, 10 board members were appointed, with the number of Taiwanese directors decreasing to four and the number of foreign directors increasing to six (five Americans and one British). Only one Taiwanese director holds dual citizenship, and it is rumored that the U.S. Department of Commerce, which has long been eyeing TSMC, already has representation on the board of directors. I believe Raimondo is currently calculating when the Trojan horse will besiege the city. The strait has not yet opened fire, but TSMC’s board of directors has already lost domestic control — how will our great semiconductor stronghold protect its own nation now? The government must not be careless and disgrace the Taiwan people!

According to publicly available data online, Taiwanese comprise approximately 28% of TSMC’s shareholders, while the National Development Fund holds 6.38%, making it the largest Taiwan shareholder. The remaining shares are mainly dispersed among over 1,000 international legal persons. The Taiwanese people are the ones who actually control the core technology and operations of TSMC, so, as long as the government is willing, taking control of the board of directors is certainly not an issue. I do not understand what the underlying reasoning is for the government allowing American and British gentlemen to take control of TSMC’s board of directors.

Zhang once said, “TSMC is a necessary battleground for geopolitical strategists,” so who will the American and British directors take orders from at the critical moment? In fact, Zheng-liang’s concerns could be realized at any moment, and the government can no longer cover its ears to willfully deceive itself and others. If today TSMC’s board of directors meeting makes a passing vote for TSMC to transfer its registration to the United States, the U.S. will force Taiwan to act in accordance with its laws, and Taiwan would certainly fall into chaos. How would President Lai Ti-che handle this? The very thought distresses intellectuals! The only immediate solution to the danger at hand is governmental intervention, for which I provide my introduction below.

Geopolitical Strategists Must Fight for TSMC: Four Suggestions To Protect Taiwan’s Lifeblood

Famous voices have commented on political commentary channels that TSMC and other semiconductor strongholds have many foreign shareholders, so the government has no power to object when they register or invest in those places. But I think that this shows the ignorance of those voices.

Semiconductors have impacted the strategic capital of geopolitics, and countries across the world are all intervening. The German government has restricted Chinese enterprises from acquiring German chip factories ELMOS and ERS. The British government has required a Chinese company to sell its 86% stake in the British NEWPORT chip fab, forcing it to reduce its shareholding; in April 2021, the British government also blocked Jensen Huang’s NVIDA from acquiring ARM on the grounds of national security. Even though the United Kingdom and America are allies, they regulate against each other in the same way.

America’s chip policies restrict green-card holders from working at Chinese-owned chip enterprises; they regulate their own companies from investing in China; forbid the sale of advanced AI chips, such as Huida and AMD, to China; and have exercised long-arm jurisdiction to restrict Taiwanese, Japanese, South Korean and Dutch semiconductor manufacturing, materials and equipment from entering the Chinese market.

Given that the whole world is regulating around it, TSMC is a company of the Republic of China, and while the government should not interfere with its operations, it should naturally take regulatory action regarding its ownership rights and foreign investment. I have four recommendations for the Lai administration that I also hope the ruling and opposing parties can achieve consensus on.

1. The government should immediately establish a strategic materials review mechanism that can legislate when necessary. This mechanism should prudently regulate the overseas relocation of TSMC and other chip manufacturers, and should also accept public supervision.

2. As Zheng-liang has said, TSMC may register in America, so the government should establish a crisis management task force that can intervene administratively when needed to prevent TSMC from becoming ASMC.

3. In regard to TSMC changing its name to JASM in Japan, the government should require a correction. This poor example should not be permitted in order to prevent the TSMC brand from fragmenting across the world in the future.

4. The government’s erroneous policies for assisting India in building chip factories and drawing in Indian migrant workers should be stopped immediately, and adjustments for damage control should be made.

As I close my remarks, I also would like to remind President Lai that cross-strait peace is key to the survival and development of Taiwan. Until the 23 million people of Taiwan reach a consensus on cross-strait matters, Lai should avoid bringing up his personal notions about Taiwan’s future. If war breaks out in the Taiwan Sea, I am afraid that TSMC will face numerous threats. If China does not destroy TSMC, America will, and this will be the misfortune of the Taiwanese people.

We greatly depend on President Lai to care for Taiwan’s safety and protect TSMC and the nation’s chip industry, in order to give Taiwan’s youth an economic environment with prospects for development. To achieve this would be the great fortune of the Taiwanese!

*The author is founder of Xilinx Electronics and has formerly served as chairman of the Electrical and Electronics Association, the Industrial and Commercial Construction Research Association, and the Youth Entrepreneurship Association.


*Editor's Note: Though BlackRock's founder is Jewish, the company is a nonsectarian, publicly traded company.