TSMC considered relocating its chip fabs away from Taiwan because of the threat from China, and even discussed the matter with customers, but decided against the move because of the difficulties it posed.

The world's largest chip contract manufacturer revealed at its Annual Shareholder Meeting in Hsinchu, a city in northern Taiwan, that this idea was floated because of rising tensions with Beijing, which regards Taiwan as a rogue province and has threatened the use of military force to reunite the island with mainland China.

C C Wei, who has now been promoted to the dual roles of chairman and chief executive officer, disclosed the hypothetical exodus of TSMC's manufacturing facilities from its home nation.

"Instability across the Taiwan Strait is indeed a consideration for supply chain, but I want to say that we certainly do not want wars to happen," Wei reportedly said, adding that TSMC decided it would be impossible to move its chip factories off the island as 80-90 percent of its production capacity is hosted in Taiwan.

TSMC operates four 12in (300 mm) wafer GIGAFAB facilities in Taiwan, along with four 8in and one 6in wafer sites, together giving the company a 61 percent share of the entire global semiconductor market, according to Counterpoint Research.

This potentially perilous state of affairs is not lost on the US, where Secretary of Commerce Gina Raimondo last month said it would be "absolutely devastating" if China were to seize control of Taiwan.

"I'm not commenting on whether that's going to happen, how it's going to happen, or if it's going to happen, but what I can tell you is right now the United States buys 92 percent of its leading edge chips from TSMC in Taiwan," she told the House Appropriations Committee.

It also emerged in May that chip lithography supplier ASML has the ability to remotely disable the advanced machinery it sold to TSMC to prevent this hardware being used by China in the aftermath of an invasion.

However, in addition to the human impact of any conflict, war would almost certainly mean a cut-off in the supply of most of the chips that companies rely on to make everything from computers to TVs and even automobiles.

Also at the Annual Shareholder Meeting, Wei made public his expectations that AI development will drive a recovery of the semiconductor industry this year, with projections for growth of around 10 percent, excluding the large and volatile memory chip sector.

According to Nikkei Asia, Wei said he is considering raising the prices his company charges to GPU giant Nvidia for manufacturing its highly sought-after AI accelerator chips.

"I did complain to Nvidia's CEO Jensen Huang - the 'three trillion guy' - that his products are so expensive," Wei reportedly said, adding that given the price of Nvidia's chips and TSMC's vital role in their production, "it would not take a genius" to consider asking for a higher production fee. Nvidia's latest Blackwell GPUs are understood to cost between $30,000 and $40,000 each.

TSMC is building fabrication plants in other countries such as the US and Japan, but Wei said Taiwan will remain the chipmaker's top priority in terms of both production and technology.

"The first priority is Taiwan, the second priority is Taiwan, and the third priority is Taiwan," he said, adding: "We will definitely keep all the most advanced chip production in Taiwan and run that production smoothly first here, and then consider production using those technologies overseas." ®

https://www.theregister.com//2024/06/04/tsmc_discussed_moving_chip_fabs/