Economist says China must seize TSMC if the US tightens sanctions

The importance of the Taiwan Semiconductor Manufacturing Company, better known as TSMC, to the global economy cannot be understated. The world’s largest chip manufacturer has a 54% share of the global chip market, which makes an economist’s call for China to seize TSMC if the US imposes harsh sanctions on the country all the more concerning.

Bloomberg reports that Chen Wenling, chief economist at the government-run China Center for International Economic Exchanges, said, “If the US and the West impose destructive sanctions on China like sanctions against Russia, we must recover Taiwan.”

Chen singled out TSMC in the speech at the Chongyang Institute for Financial Studies at Renmin University last month. “Especially in the reconstruction of the industrial chain and supply chain, we must seize TSMC,” she added.

TSMC is reportedly set to build six chip fabs in the US, though it has announced just one so far. “They [TSMC] are speeding up the transfer to the US to build six factories there,” Chen said. “We must not let all the goals of the transfer be achieved.”

Chen does talk about the scenario only taking place if the US hit China with Russia-like sanctions, which were put in place after it invaded Ukraine. Taiwan has long said it is an independent nation, while China insists it is part of its territory and has no qualms about using force to bring it under control.

Many in the industry are aware of the threat to TSMC should China ever invade Taiwan. Intel CEO Pat Gelsinger last year said, “Taiwan is not a stable place.”

“Beijing sent 27 warplanes to Taiwan’s air defense identification zone this week. Does that make you feel more comfortable or less?” Chipzilla’s chief warned.

Intel is currently building more fabs in the US and worldwide as part of its IDM 2.0 strategy that involves its newly formed Intel Foundry Services (IFS) division manufacturing chips for others, thereby lessening reliance on Taiwanese chipmakers. Elsewhere, President Biden has announced plans to put $52 billion into domestic semiconductor research.

Last week brought news that Taiwan was restricting the chips it exports to Russia to those with frequencies under 25 MHz and with performance under 5 GFLOPS.