On Friday, the Trump administration banned any chipmaker using American equipment from supplying China’s Huawei Technologies Co. without U.S. government approval. That means the world’s preeminent chipmaker TSMC and rivals must cut off Huawei unless they get waivers from the U.S. Commerce Dept. TSMC has already stopped accepting new orders from Huawei, Nikkei Asian Review reported Monday.
Debby Wu and Ian King for Bloomberg:
The U.S. already blacklisted Huawei last year, preventing American companies from supplying the Chinese company unless they got a license. The latest move tightens those restrictions to prevent chipmakers — American or foreign — from working with Huawei and its secretive chip-design unit HiSilicon on the cutting-edge semiconductors they need to make smartphones and communications equipment. The Trump administration sees Huawei as a dire security threat… “We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests,” Commerce Secretary Wilbur Ross said in a tweet.
Huawei’s products meanwhile are likely to suffer, putting them at risk of falling behind those of rivals like Apple… For TSMC, it’s growing ever more difficult to remain neutral amid the growing tensions between the U.S. and China. The company brands itself “everybody’s foundry,” effectively the Switzerland of the tech industry. It supplies Chinese customers like Huawei and the American military, while relying on U.S. producers of semiconductor-making equipment like Applied Materials and Lam Research.
TSMC did take one step closer to the U.S. last week, saying it would build a $12 billion chip plant in Arizona.
Meanwhile, China appears to be preparing to retaliate for the new restrictions on Huawei. On Friday, the Global Times — a Chinese tabloid run by the flagship newspaper of the Communist Party — reported Beijing was ready to initiate countermeasures, including imposing restrictions on Apple, suspending the purchase of Boeing airplanes and putting U.S. companies on an ‘unreliable entity list.’
MacDailyNews Take: This balancing act has lots of parts in motion currently!
As for TSMC chip fabrication plant bound for Arizona, it will use TSMC’s 5-nanometer process technology and be capable of producing 20,000 semiconductor wafers per month. Over 1,600 jobs are expected to be created directly by the construction project. The company plans to commence construction next year, with production starting in 2024. The total cost including capital expenditures is estimated to be approximately $12 billion, spread out between 2021 and 2029.
This is not going to have a pretty endgame I fear, the longer game China will play could get very dirty indeed I fear. They certainly won’t lie down longer term that’s certain, rightly or wrongly they will see this as an attack on any successful Chinese company on the World stage and as comercial Imperialism. No doubt there will be a new economic plan to bring everything Inhouse as far as possible or attained through external acolytes they can put pressure on so as to fundamentally reduce reliance on US tech and eventually make it a thing of the past. Meanwhile they will further expand external reliance on their technology and exert political and economic pressure of their own which is already bringing many parts or the world into their sphere of influence as they slip away from the West. Expect more acts like banning Australian goods which I reckon will put many countries into a space between a rock and a hard place. Shorter term they may try to ride this out like a boxer ducking punches until a new President takes over but I’m sure those long term policies won’t change now. What the picture will look like in 25 years time is anyone’s guess.
Ahhh the beauty of your free markets… let the invisible hand make your moral and ethical choices for you. Wear your little red hats and bow to the god of your making.