By Faith Hung, Max A. Cherney and Ben Blanchard
HSINCHU/TAIPEI, Taiwan (Reuters) – Taiwanese contract chipmaker TSMC, whose major customers include Nvidia and Apple, said on Tuesday it had held discussions with some customers about moving its chip factories off the island as tensions rose with China, but such a move would be impossible.
Tensions between China and Taiwan have risen sharply since Beijing last month launched war drills around the democratically governed island following the inauguration of Taiwanese President Lai Ching-te, whom Beijing describes as a “separatist”.
“Instability across the Taiwan Strait is indeed a consideration for the supply chain, but I want to say that we certainly don’t want wars to break out,” said CC Wei, president of Taiwan Semiconductor Manufacturing Co ( TSMC), to reporters after the company’s annual general meeting.
He said it would be impossible to move chip factories off the island, given that 80 to 90 percent of its production capacity is in Taiwan.
Wei did not name the customers with whom TSMC had held talks about a possible withdrawal from Taiwan.
TSMC, which is grappling with a surge in orders for high-end chips used to offer generative artificial intelligence tools and services, has held discussions with ChatGPT creator OpenAI over AI chip supplies , which the Taiwanese company deemed “too aggressive,” Wei said, without elaborating.
“He’s very aggressive, too aggressive for me to believe,” Wei said, referring to OpenAI CEO Sam Altman.
Altman spoke with TSMC last year to discuss a potential partnership to build about three dozen factories to ensure the company would be able to acquire enough silicon to meet its ever-changing needs. increase, according to a source close to the matter.
Discussions were cordial, but TSMC officials made clear that the number of factories Altman proposed was too high, and TSMC was concerned that it would not be able to operate the factories at the required capacity of 80% or more , said the source.
TSMC’s projections at the time did not predict sufficient demand for more than 30 new factories.
It was not clear whether TSMC and Altman planned to build their factories outside Taiwan.
“No one worries”
Despite tensions in China, the topic of a possible war and its impact on chip supply chains was barely discussed at the annual Computex technology show this week in Taipei, unless it was brought up by the journalists with leaders on the sidelines.
“No one is worried about it yet,” Frank Huang, president of Powerchip Semiconductor Manufacturing, told reporters at the event, when asked whether foreign customers were pressuring Taiwanese companies not to not produce there given the tensions.
“I think of course there’s always military activity, or clashes, but again, Taiwan is so important to AI – even the Chinese know that. We’re fine, no problem,” he said. he declares.
Lisa Su, CEO of Advanced Micro Devices, also reiterated the importance of Taiwan in the global chip supply chain, when asked how tensions with China and its war games could affect the industry .
“We do a lot of our manufacturing here with key suppliers like TSMC…And then we also have a number of partners who are helping us build the ecosystem here in Taiwan,” she told reporters at the living room Monday.
“The bottom line, from our perspective, is that it’s really important to have a global ecosystem.”
(Reporting by Faith Hung, Max Cherney and Ben Blanchard; writing by Miyoung Kim; editing by Gerry Doyle and Rashmi Aich)
