TSMC Founder Morris Chang Supports China’s Chip Sanctions, But Raises Doubts About Chip Law
Perspective: This week, the founder of the world’s leading chipmaker commented on geopolitical factors driving change in the semiconductor industry. While he expressed support for the recent US sanctions on chip imports from China, his comments mostly focused on issues based on whether they benefited TSMC.
At the CommonWealth Semiconductor forum, TSMC founder Morris Chang joined discussion about segmentation and specialization in the chip industry this week. He supports recent US sanctions on China, but expressed doubts about the country’s efforts to encourage domestic semiconductor production.
Chang estimates Chip production in mainland China is about five to six years behind Taiwan, and we welcome US sanctions because they will continue to do so. The sanctions, imposed last year, are designed to limit China’s development of supercomputers and other equipment for military purposes.
Last year, the US imposed import restrictions on various Chinese companies and other organizations associated with the country’s military. The goal is to limit Chinese logic chips to a 14nm node, DRAM to 18nm, and 3D NAND flash to 128 layers. The most recent Chinese companies banned from dealing directly with US sellers are Loongson and Inspur. The Netherlands also recently agreed to limit the export of its vital lithographic equipment to China.
So far, the sanctions have caused China’s chip imports to fall by 27 percent in the first two months of 2023, more than in all of 2022. Meanwhile, Taiwan’s exports are up 18 percent in 2022.
What’s more, the Chip Act, which the US signed into law last year, is intended to make it easier for the US to set up semiconductor manufacturing plants to reduce the country’s dependence on foreign computer equipment. However, Chang doubts the benefits of this move and the speed with which the desired effects could appear.
Chip Wars writer Chris Miller spoke to the 91-year-old founder and observed that the semiconductor industry is diversifying across more countries to reduce interdependence. He believes the process will be slow, which Chang attributes to certain deep-seated qualities of a handful of nations.
Chang believes that countries such as Taiwan, South Korea, and Japan lead the way in manufacturing because of their work culture. Conversely, he acknowledges that there are great designers in the US (perhaps referring to those who work at Apple) because of their proximity to market needs.
In addition, Chang warns that segmentation could increase costs and slow down overall chip development. The TSMC founder attributes the sharp drop in semiconductor prices over the past few decades to their current ubiquity, stressing that U.S. manufacturing costs could double prices compared to Taiwan. Chang also doesn’t like Taiwan’s lack of “friendshoring,” a practice in which countries orient their supply chains along with political and economic allies.