Less than 15% of TSMC advanced processes in U.S. by 2029: Expert

Taipei, Jan. 21 (CNA) Less than 15 percent of Taiwan Semiconductor Manufacturing Company's (TSMC) advanced manufacturing processes are expected to be relocated to the United States by the end of U.S. President Donald Trump's second term in office, Lien Hsien-ming (連賢明), president of the Chung-Hua Institution for Economic Research said Wednesday.

Lien made the remarks in a Facebook post commenting on recent statements by U.S. Commerce Secretary Howard Lutnick, who told CNBC that Washington aims to bring 40 percent of Taiwan's supply chain to the United States before Trump's term ends in 2029.

TSMC is currently investing US$65 billion to build three fabs in Arizona, with the first starting commercial production in the fourth quarter of 2024. The chipmaker has also pledged an additional US$100 billion to construct three more fabs, two IC assembly plants and a research and development center in the U.S.

Citing TSMC, Lien said equipment installation has begun at the second Arizona fab, which is scheduled to start mass production in 2027, while construction of the third fab started earlier this year. TSMC is also applying for a permit to build a fourth fab.

Given the construction timeline, Lien said it is unlikely TSMC will be able to achieve mass production at its third Arizona fab by the end of Trump's term, let alone at a fourth facility.

After factoring in TSMC's Arizona schedule and its overall output of advanced chips, Lien estimated that less than 15 percent of the company's high-end processes would be located in the U.S. by the end of Trump's presidency.

The economist added that TSMC is not the only semiconductor company expanding advanced manufacturing in the U.S., noting that Intel, Micron and Samsung are also stepping up their investments. If those projects proceed smoothly, Lien said, pressure on TSMC from the U.S. government could ease.

Lutnick made the comments as the U.S. and Taiwan signed an agreement Thursday U.S. time to cut tariffs on Taiwanese goods from 20 percent to 15 percent.

Under the agreement, Taiwanese semiconductor, electronics manufacturing service (EMS), artificial intelligence and energy companies will invest US$250 billion in the United States, while Taiwan's government will provide up to US$250 billion in credit guarantees to support investments by the semiconductor and information and communication technology sectors, the Cabinet said.

However, Lutnick said in the CNBC interview that Taiwan had pledged US$500 billion in U.S. investments, describing the amount as merely a down payment toward bringing the chip industry back to America.

Lien said the public should not be alarmed or discouraged by Lutnick's remarks, stressing that Taiwan has committed only US$250 billion in direct investment, with the remaining US$250 billion consisting of credit guarantees.

He added that Lutnick has repeatedly overstated TSMC's investment commitments as a way of exerting pressure on Taiwan, noting that similar tactics have been employed toward Japan and South Korea.