Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, cautioned for the first time that trade tensions could jeopardize its access to critical manufacturing equipment and negatively impact its operations, amid growing tensions between the United States and China.
The company, which manufactures semiconductors for Apple Inc. and other major global technology companies, stated in its annual report released on Friday that “continued trade tensions or protectionist measures may result in increased prices for, or even the inability to obtain, critical equipment.” It cited factors such as export license delays or denials, increased export control controls, and other tariff or non-tariff barriers.
TSMC manufactures using equipment from US suppliers such as Applied Materials Inc. and Lam Research Corp. The company said that trade tensions could also make it more difficult to secure raw materials for production, a point it made in its previous annual report.
Semiconductors have emerged as a focal point of growing US-China rivalry, with chips used in a wide variety of items ranging from missiles and automobiles to smartphones. China is eager to develop a domestic semiconductor industry in order to reduce its dependence on foreign technology as the US tightens controls on chip-related exports to the Asian region, including sales of critical equipment to Chinese chipmaker Semiconductor Manufacturing International Corp.
Earlier this week, two Republican lawmakers in the United States – Texas Congressman Michael McCaul and Arkansas Senator Tom Cotton – advised the State and Commerce departments to devise a better strategy for “mitigating the danger of Taiwanese companies selling services and technology to entities of concern,” adding that TSMC should refrain from manufacturing advanced chips for China’s military.
According to the South China Morning Post, TSMC has suspended new orders from Tianjin Phytium Information Technology Co., one of the companies blacklisted by the US, over allegations it is involved in the development of supercomputers used by China’s military actors, military modernization efforts, or the development of weapons of mass destruction.
Taiwan’s chipmaker cautioned that new steps taken by China in response to US sanctions may have an impact on its operations. China introduced a blocking legislation in January that “entitles Chinese entities harmed by a multinational’s compliance with international laws to pursue civil remedies,” according to the statement.
“Measures taken by an affected country to mitigate the effects of another country’s actions or regulations could expose multinational companies, including our own, to substantial legal liability,” TSMC stated in the study.