The construction of a $12bn semiconductor factory in Arizona owned and operated by TSMC has prompted a group of Democrat senators to probe whether the Taiwanese giant was lured with the promise of financial incentives.
In a letter [PDF] issued to US commerce secretary Wilbur Ross and defense secretary Mark Esper, senators Jack Reed, Patrick Leahy and Chuck Schumer acknowledged the importance of returning semiconductor manufacturing to the US, but urged President Donald Trump's administration to cease negotiations until it can disclose what subsidies or tax breaks it's prepared to offer.
"We have serious questions as to how this project takes into consideration national security requirements and how it aligns with a broader strategy for building a diverse U.S. semiconductor manufacturing supply chain," the letter explained.
The senators also raised concerns that this investment from TSMC – which produces chips for the likes of Qualcomm, AMD, and Nvidia, as well as current Trump administration bête noire Huawei – represents a mere drop in the bucket, and doesn't constitute a coherent plan to address America's economic and national security needs.
The Huawei and TSMC trading relationship might not be an factor for the US administration for much longer, however, if reports in the Nikkei Asia Review are to be believed. A source told the paper days ago that TSMC has halted new Huawei orders to "fully comply with the latest export control regulation".
The senators acknowledge in the letter the overtures made by Intel with respect to the development of new US-based fabs, but argue that a comprehensive approach would involve the support of smaller but equally important firms like Micron, GlobalFoundries, and Cree.
In addition to its lighting products, American chip designer Cree also develops components used in radio transmitters. Meanwhile, Micron is heavily present in the flash storage space. The Abu Dhabi-owned GlobalFoundries acts as a manufacturer for other fabless semiconductor firms, with facilities in Singapore, Germany, and the US.
In their letter, the senators question the "Jobs First" strategy of the Trump administration as it pertains to the semiconductor industry, which emphasises new facilities over more long-term investments.
The recent supply chain disruption caused by the COVID-19 pandemic has pressured governments – not just in the US – to repatriate and rebuild their manufacturing sectors. Over the past two decades, China has established itself as the "World's Factory" after becoming a formal member of the World Trade Organization in 2001.
While much of the focus has centred around medical devices and equipment, it has also encompassed the semiconductor industry to a significant extent, which has both civilian and military applications.
Semiconductor makers are facing turmoil too: A recent revenue forecast from analyst house Gartner makes for grim reading, highlighting slumping demand from the smartphone sector (with shipments expected to decline 14 per cent this year) and car manufacturers, which are predicted to sell 72 million fewer motors in 2020.
Even the increased demand from medical devices like ventilators, pulse oximeters, and digital thermometers can't compensate for that. ®