Taiwan-U.S. semiconductor cooperation unlikely to change after election: TSIA

Taipei, Nov. 8 (CNA) Cooperation between Taiwan and the United States in the semiconductor industry will not change even though Donald Trump, who recently appeared unfriendly to Taiwan's chip industry, won the U.S. presidential vote and will take office in January 2025, according to the Taiwan Semiconductor Industry Association (TSIA).

Speaking on the sidelines of the TSIA's annual general meeting held on Thursday, Cliff Hou (侯永清), chair of the association, said Taiwan and the U.S. had built a close partnership during the past decades.

While several presidential elections were held in America that resulted in changes in the ruling party during the period, the close ties have never changed, Hou added.

Hou, who also serves as senior vice president and deputy co-COO of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), said that when Trump takes the helm, cooperation on both sides is unlikely to change. He said details of bilateral cooperation could be adjusted and finalized as the U.S. has a new Republican administration.

Trump said in an interview in June that "Taiwan took our chip business," and as Taiwan is "immensely wealthy" the U.S. should not be giving it "billions of dollars to build chips." Trump has repeatedly contended that foreign companies would foot the bill.

In April, the U.S. Department of Commerce announced it had signed a nonbinding preliminary memorandum of terms (PMT) with TSMC for up to US$6.6 billion in direct funding under the CHIPS and Science Act for its US$65 billion investments in Arizona, where the chipmaker is building two advanced fabs and plans a third.

In addition to the proposed US$6.6 billion in direct funding, the PMT also proposes to provide TSMC with up to US$5 billion in loans.

Many investors fear that Trump will scrap the US$6.6 billion subsidy deal signed by the Biden administration and TSMC.

However, a Bloomberg report said earlier this week that TSMC and GlobalFoundries have finished negotiations with the Biden administration on binding agreements for massive grants and loans.

In addition, Trump threatened during his campaign trail if he wins the election, he will raise tariffs to protect U.S. industries. Hou emphasized Taiwan's semiconductor industry needs to make itself stronger and more competitive in the market and cement its relationship with the global supply chain.

He added that his association has not been informed of any possible tariff hikes.

He said Taiwan largely imports foreign-made equipment to roll out chips and provide IC packaging and testing services, which has paved the path to high operating costs. If the country provides tax incentives to encourage foreign semiconductor companies to set up maintenance centers, raw material logistics hubs, or research and development centers in Taiwan, the local semiconductor industry is expected to improve its efficiency, Hou said.

Addressing the TSIA members, Hou forecast the production value of Taiwan's semiconductor industry is expected to climb out of the weakness of last year by rising 22 percent from a year earlier to NT$5.3 trillion (US$165 billion) this year in the wake of a boom of artificial intelligence development and a global economic recovery.

In 2023, the output of the local semiconductor industry fell 10.2 percent from a year earlier to NT$4.3 trillion at a time of a weaker global economy amid escalating geopolitical unease, according to Hou.

The anticipated 22 percent growth in 2024 will be impressive, Hou said, forecasting Taiwan will maintain its No. 1 role in IC manufacturing as well as IC packaging and testing, and No. 2 status in IC design this year.

Hou said that as Taiwan is expected to play a bigger role in the global semiconductor ecosystem, Taiwanese chip companies have to speed up their pace in growth to shoulder such a responsibility.

He said Taiwan's semiconductor industry should keep moving ahead in R&D to ensure it will continue to become an indispensable part of the global market.

The TSIA, Hou said, has set up a special task force to expand the association's coverage to chip equipment and raw materials from the current manufacturing, assembly and testing, and design, a way to build a more comprehensive supply chain.