Biden and Xi Jing Ping between Taiwan's flag
The United States Secretary of Commerce, Gina Raimondo, stated on Wednesday that a Chinese invasion of Taiwan and the seizure of chip manufacturer TSMC would be "absolutely devastating" for the US economy.
During a hearing in the House of Representatives regarding the potential impact, Raimondo emphasized that "it would be absolutely devastating," declining to comment on the likelihood or specifics of such an event. She added, "Right now, the US purchases 92% of its cutting-edge chips from TSMC in Taiwan."
Last month, Raimondo announced that the Department of Commerce would grant a $6.6 billion subsidy to TSMC's US unit for its advanced semiconductor production in Phoenix, Arizona, along with up to $5 billion in low-cost government loans.
TSMC agreed to expand its planned investment by $25 billion to $65 billion and add a third factory in Arizona by 2030, according to the Department of Commerce's preliminary award announcement.
The Taiwanese company will produce the world's most advanced 2-nanometer technology at its second Arizona factory, expected to start production in 2028, as per the department.
TSMC, the world's largest contract chipmaker and a key supplier to Apple and Nvidia, had previously announced plans to invest $40 billion in Arizona. The company aims to begin high-volume production at its first US plant in the first half of 2025, Commerce stated.
In 2022, Congress passed the Chips and Science Act to boost domestic semiconductor production with $52.7 billion in research and manufacturing grants, aiming to reduce US dependence on Asia for chip production. Lawmakers also approved a $75 billion public credit.
A 2023 US government document estimated that a significant disruption in manufacturing in Taiwan could lead to up to a 59% increase in US prices for logic chips paid by domestic producers.
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