Taiwan’s chip monopoly puts US security and economy at risk



America has a Big Tech problem. An oligarchy of powerful, trillion-dollar companies wields tremendous control over the digital ecosystem, affecting the information we see, the products we buy, the candidates we vote for, and how we live our daily lives. Behind closed doors, these brand-name entities use their market dominance and deep pockets to protect their interests, not consumers.

Today, the U.S. faces another monopoly threat that involves the hardware that’s in virtually all modern electronics: semiconductors. Policy meant to generate domestic production of these vital components —that is, the CHIPS Act — inadvertently profited foreign suppliers and further entrenched the world’s largest chipmaker, Taiwan Semiconductor Manufacturing Company, which received more than $6 billion in U.S. taxpayer subsidies.

TSMC’s global dominance is so massive — and its US presence is growing — that the only way to check its global monopoly is to level the scales for domestic chipmakers.

President Trump called out the flawed logic of giving taxpayer money intended to promote U.S. production to our biggest foreign competitor. “We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here,” he told Joe Rogan last fall. “These chip companies, they stole. They stole 95% of our business. ... [And now] they want protection.”

TSMC dominates the global semiconductor market, and, to borrow a Trumpism, it is eating America’s lunch. TSMC commands over 60% of the total global semiconductor market and makes more than 90% of the world’s most advanced chips. Meanwhile, Intel — once a national icon and our closest answer to TSMC — has fallen sorrowfully behind and is a “shell of its former self,” despite receiving the largest chunk of CHIPS funding.

The lack of a domestic alternative — or any friendly alternative outside of Taiwan — is a huge risk for the world as China ramps up its rhetoric.

Semiconductors power the devices we use, from smartphones to washing machines, as well as major networks, like banking. More than one trillion semiconductors were shipped worldwide in 2021, and that number has likely grown since. TSMC’s choke hold on this vital industry has earned it the moniker, “The most important company in the world.” It would be more fitting to call it the most dominant monopoly in the world.

TSMC’s playbook is obvious: Secure major deals with America’s largest companies, dominate the market with its chips, and push out U.S. competitors that lack the same scale and resources. Just look at its contracts. Apple inked a deal with TSMC in 2023 to buy all of its three nanometer chips. Amazon’s AWS and AI chips are made exclusively by TSMC. And Nvidia is in talks with TSMC to develop its advanced chips.

We can’t build our own semiconductor industry from ground zero, our workers need the experience to do it. However, policymakers should be wary of any company that exerts such unilateral control over a commodity that touches every aspect of daily life. TSMC’s geography and geopolitics make it especially troublesome.

TSMC is headquartered in Taiwan, where as much as 90% of its production capabilities are located. China has long laid claim to Taiwan and refuses to acknowledge the country’s sovereignty. The Chinese government has conducted military exercises to test its “seizure power.” Just this month, a Chinese vessel cut an undersea fiber optic cable in an apparent act of sabotage, and in a New Year’s Eve speech, Chinese leader Xi Jinping said no one can stop China’s “reunification” with Taiwan.

It’s not a matter of if China acts but when. Whether military action, technological warfare and sabotage, or a combination of both, such aggression would inevitably disrupt, if not sever, the U.S. semiconductor supply chain. As two researchers opined in the New York Times recently, the result could be “a global economic crisis far worse than the shock caused by the COVID-19 pandemic.”

It’s time policymakers get tough and hold TSMC accountable to the geopolitical situation. Fortunately, President Trump has the chops to do it. He has been vocal about using tariffs to stop the flood of foreign-made chips and support U.S.-based manufactures. “You didn’t have to put up 10 cents,” he said on Joe Rogan's podcast. “You tariff [foreign chips] so high that they will come and build their chip companies for nothing.”

President Trump is right. He should encourage antitrust regulators to keep an eye on TSMC’s practices. TSMC’s global dominance is so massive — and its U.S. presence is growing thanks to the CHIPS Act — that the only way to check its global monopoly is to level the scales for domestic chipmakers. President Trump should ensure that TSMC’s practices in Arizona are in good faith. The company should make commitments to train American workers, honor collective bargaining agreements, and commit long-term to investing in facilities and advanced chip development in the United States — not just in Taiwan.

The federal government must also make a concerted effort over the next decade to ensure American companies are up to the challenge. We must invest in an educated engineering workforce and streamlined facilities and encourage capital investment in domestic manufacturing.

TSMC has steadily tightened its grip on the U.S. semiconductor market for decades. It’s time policymakers get serious and hold TSMC to higher standards and work to support our own struggling industries. Otherwise, America could face a supply-chain crisis and economic recession of China’s (or Taiwan’s) doing — which is hardly the time to be asking how to rebuild our domestic semiconductor industry.

Semiconductor panic at North Carolina quartz mine highlights America's fragile supply chain



The ramifications of the federal government's failures in disaster relief showcase a much larger issue than it appears on the surface. A natural disaster could wipe out key resources or, at best, reroute supply lines to sources that could significantly inflate prices for Americans.

Spruce Pine, North Carolina, has been the source of economic panic since it was revealed that a Sibelco North America Inc. facility where ultra-high-purity quartz is mined is in the flood zone of Hurricane Helene.

Quartz is used in semiconductors and to refine wafers, which are used in microchips. Semiconductors themselves are used in nearly all consumer electronics, such as computers, phones, and appliances.

Reports and X threads have popped up sounding the alarm that entire industries could grind to a halt as a result of closures at the North Carolina plant.

An alleged geologist wrote that he is "concerned about the potential future global economic disaster because Spruce Pine is the sole producer of ultra pure Quartz for crucibles that all global semiconductor production relies on."

"All semiconductor production may grind to a halt in six months. The entire world's economy depends on Spruce Pine," he added.

This scare was the driving narrative until contradicting threads were written, revealing that there are other sources of purification as well as other mines and stockpiles. In fact, there is reportedly another mine in South Carolina.

A high-purity quartz mine was acquired by Ferroglobe in 2023.

As X account SemiAnalysis pointed out, the existing inventories and alternative methods can provide a "buffer" if the industry takes a hit due to the recent hurricane.

In conclusion – existing wafer inventory provides a buffer as mining operations restart, major companies are already using synthetic methods to produce semiconductor-grade quartz crucibles, and there are other sources of HPQ. Spruce Pine FUD is exaggerated.
8/8
— SemiAnalysis (@SemiAnalysis_) September 30, 2024

This does not mean the industry is in tip-top shape should a disaster like this happen. What it does reveal, however, is that if U.S. strategic infrastructure is not shored up, the consumer will take the hit in the marketplace.

This was glaringly obvious during COVID, when it became apparent that the U.S. was overly reliant on drug manufacturing from China. In fact, this was also an issue during the Trump administration in 2019.

Trump's chief economic adviser, Gary Cohn, wrote at the time that 97% of all antibiotics in the United States came from China.

"If you're the Chinese and you want to really just destroy us, just stop sending us antibiotics," he said, per the Council on Foreign Relations.

For semiconductors, China has the second-highest share of sales in the world. When supply chains in the United States are disrupted, at best, the market turns to the Chinese. If that option is not available, competitors in Europe may be able to pick up the slack, but at nowhere near as low a price.

Nothing is scarier than the situation surrounding microchips from Taiwan; the smaller the chip, the more likely it came from the region. According to Forbes, Taiwan is responsible for 92% of the production of logic semiconductors when components are smaller than 10 nanometers.

As production has shifted overseas since the 1980s — when semiconductor power was within the U.S. and Europe — weak and overly-reliant supply chains could be one disaster or political move from collapse or, at best, an unaffordable state.

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