TSMC Zhang Zhongmou: Globalization is almost dead, and free trade is almost dead

According to Nikkei, the father of Taiwan's chip industry said geopolitics has completely changed the situation facing semiconductor manufacturers and warned that "globalization and free trade are almost dead" and are unlikely to make a comeback.

TSMC founder Chang Chang spoke at an event in Phoenix, Arizona on Tuesday as the company marked the first installation of the symbolic equipment at its new factory.

It's TSMC's first advanced chip factory in the United States in more than two decades, and Chang said there's still a lot of "hard work" to make it a success.

He compared the current $40 billion project to when TSMC built its first U.S. factory in Camas, Washington, in 1995, just eight years after it was founded as the world's largest contract chipmaker.

"Twenty-seven years have passed and [the semiconductor industry] has witnessed big changes in the world, big changes in the world's geopolitical landscape," Zhang said. "Globalization is almost dead, free trade is almost dead. A lot of people still hope they can come back, but I don't think they will come back."

His comments come amid growing concerns that tensions between the United States and China over chips are dividing the global technology supply chain into two camps. Washington's crackdown on Beijing's chip ambitions, most recently reflected in new restrictions introduced in October, has made it increasingly difficult for companies such as TSMC to serve Chinese customers.

Chang said he had always dreamed of building a chip factory in the United States because of his background. He was educated and worked in the United States for decades. But his first experience didn't go well.

"I think this is a dream come true," Zhang said. "But it [the first factory] had a cost problem. We had a people problem, we had a culture problem. The dream of realization turned into a nightmare of realization. It took us several years to get out of that nightmare, I decided I needed to postpone my dreams."

In the decades that followed, TSMC focused on building cutting-edge chip production capabilities in its home market, a strategy that helped the company lower costs while honing its technological know-how.

Chang said the tool installation event - a key milestone in building a chip factory - marked the end of a phase in which its U.S. bid is paying off.

"The romance of the beginning is gone, the initial excitement is gone and there's a lot of hard work," the industry veteran said. But Zhang added that TSMC, with support from the U.S. government, is more "prepared" than building a chip factory in the U.S. for the first time.

A large delegation of top chip and tech industry CEOs attended the event, which was also attended by U.S. President Joe Biden, who hailed the plant as a victory for the United States in its push to domestically manufacture cutting-edge chips. TSMC announced that day that it would triple its investment in Arizona to $40 billion in order to bring its most advanced chip technology to the country.

Washington wants to bring vital semiconductor production back to its shores, citing national security concerns and supply concerns. Many industry executives agree that the era of globalization is in retreat and that local sourcing is now a priority.

Lisa Su, chief executive of chip developer AMD, told Nikkei Asia on the sidelines of the event that supply chain continuity is now one of the top priorities for companies like hers.

"The entire semiconductor ecosystem is ready to work together. ... The industry has gone through a lot in the past few years. It is very important to have more geographically diversified production capacity," Su said, referring to the unprecedented chip shortage . "Ultimately, what we need to do is ensure we have a resilient supply chain for our most important chips."

Apple CEO Tim Cook has also embraced the idea of ​​outsourcing chip production, despite years of Apple relying on global suppliers to lower the cost of its "American-designed" products.

"The advances we've made in Apple silicon over the past few years have transformed our devices. It unlocks new levels of performance for our users, allowing them to do things they couldn't do before," Cook said in a statement. said during the event. "Now, thanks to the hard work of so many people, these chips can proudly bear the label 'Made in the USA.'" This is a very important moment. This is America’s opportunity to usher in a new era of advanced manufacturing. "

"Building fabs is obviously very hard work," Nvidia CEO Jensen Huang told Nikkei Asia on the sidelines. “Today’s event signals that TSMC will become a fundamental partner in every company’s goal of achieving [supply chain] resiliency. This will make TSMC even stronger. As TSMC improves the resiliency of its own supply chain [by building factories in the U.S.], it will It also gives us resilience.”

Apple, AMD and Nvidia will be the first customers of TSMC's Arizona fab.