According to Mark Liu, chairman of TSMC, it’s “economically unrealistic” for major economies to build additional chip production capacity. His comment is directed at the US, Europe and China, which are working out plans to expand local semiconductor manufacturing capacity for strategic independence. That makes sense for chips used in infrastructure or defense applications, said Liu, but bringing back complete supply chains would be “totally not efficient.”
Liu also commented on the current chip shortage, pointing to imbalances and uncertainty in the supply chain as the main cause rather than a lack of production capacity. That uncertainty came from the Covid-19 pandemic and rushed orders, as electronics companies tried to fill a gap left by Huawei, which was blacklisted by the US.
Liu said that Washington-Beijing tensions had brought the most uncertainties for the supply chain. “When you sanction Huawei, all the other rival players are jumping in to grab the market share it left, and when you impose export control rules, some chip developers are worried and shift their production to other suppliers. That really creates imbalance in the supply chain, and that causes a lot of unpredictability.”