Taiwan pressured to prioritise US carmakers for chips

5 May 2021

The US government is pressuring Taiwanese semiconductor suppliers to prioritise hard-pressed carmakers.

US commerce secretary Gina Raimondo told an Americas Society event pressure was being exerted on Taiwan's largest producer Taiwan Semiconductor Manufacturing Company (TSMC).

“We’re working hard to see if we can get the Taiwanese and TSMC, which is a big company there, to prioritise the needs of our auto companies since there’s so many American jobs on the line,” Raimondo said.

“Not a day goes by that we don’t push on them.”

US auto executives started warning of a chip shortage late last year and were soon forced to close plants and temporarily lay off tens of thousands of workers for varying periods of time.

Ford last week announced plans to cut its second-quarter production by half. In April GM cut production shifts for its full-size pickups due to the months’ long chip shortage, which is costing car companies billions of dollars.

Apple has warned the global semiconductor shortage means it is unable to make enough iPads and Macs to keep up with demand.

Luca Maestri, Apple’s chief financial officer, estimated lack of supply would shave off $3bn-$4bn from the company’s revenue over the next three months.

Taiwan is a global centre for semiconductor production, boasting some of the world’s biggest and most advanced plants.

Taiwan’s key role in the chip supply chain has led other countries to pressure it to ease the supply crunch.

“Right now we make zero per cent of leading edge chips in the United States. That’s a problem – we ought to be making 30% because that matches our demand,” Raimondo added.

“It is definitely the case that we have to reshore much of our supply chain.”

This week Intel’s new CEO Pat Gelsinger predicted it would take more than two years to resolve the chip shortage and at least several months to even ease it.

He said Intel was reworking some of its factories to increase production and address the chip shortage in the auto industry. However semiconductor factories require massive investment and the huge chip fabrication plant being built by TSMC in Taiwan for about $20bn is estimated to be the world’s third most expensive building.

“We have a couple of years until we catch up to this surging demand across every aspect of the business,” Gelsinger said.

“Covid showed that the global supply chain of chips is fragile and unable to react quickly to changes in demand.”

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