Taiwan Semiconductor Manufacturing Co., better known as TSMC, will hold a “tool-in” ceremony at a … [+]
Taiwan manufacturers have long been a key part of the global supply chain for U.S. brands ranging from Apple to Gap. Supply chain pressures brought on by Covid lockdowns in China, heightened military tension between Beijing and Taipei, and changing U.S. technology policy toward the mainland are opening the door to deeper and new types of collaboration, according to a top American business representative in the country.
New manufacturing projects in the U.S. by large companies such as iPhone maker Hon Hai Precision and Apple and chipmaker Taiwan Semiconductor Manufacturing, or TSMC, suggest room for their suppliers to invest in America, American Chamber of Commerce in Taiwan President Andrew Wylegala said in an interview on Saturday.
By doing so, they would be following their own customers, mitigating political risk and solving bottlenecks in Taiwan such as limited land supplies and a chronic power shortages, said Wylegala, a nearly 15-year U.S. Department of Commerce veteran in Asia before joining Amcham Taiwan in 2021.
“External shocks (such as Covid) have disrupted Taiwan, and there is a new risk premium” for businesses, Wylegala said. “Maybe this is a chance that Taiwan can introduce some of its own disruptions” by expanding its overseas investment; it will find a eager and complementary partner in the U.S., he said.
The close business relationship between the U.S. and Taiwan isn’t well recognized, Wylegala said. “I don’t think it gets enough attention and credit for just how solid, mutually productive, and profitable it is,” he said. Taiwan is the No. 11 U.S. trade partner and No. 8 goods export market, for instance.
American Chamber of Commerce in Taiwan President Andrew Wylegala.
“It’s a strong relationship in trade and investment, in technology and strategic partnering, and in the fundamental strengths that Taiwan offers in terms of economic freedom, the rule of law and vibrant democracy. Even though we have the global downturn, supply chain disruptions and the cross-Strait challenge, there’s still a lot of strength and vigor.”
After President Donald Trump focused on mainland China trade, the Biden administration has given a shot in the arm to Taiwan ties with the “U.S.-Taiwan Initiative on 21st-Century Trade” intended to advance business through improvements in 11 areas.
That push aligns with what has been an upbeat mood about its economy among U.S. companies. An Amcham Taiwan survey released in January 2022 found that more than 87% of respondents expressed confidence in Taiwan’s economic growth over the next 12 months; 83% were positive about the outlook over the next three years. In addition, a record 90% indicated a degree of confidence in their organization’s revenue growth prospects over the next 12 months; 91% said they are very or somewhat confident in those prospects over a three-year time span.
Though growth expectations have eased since amid rising global interest rates, Taiwan’s expected 3% GDP growth this year is better than many other countries, Wylegala said. “The fundamentals are still there, and that creates the prospects for us to make the best out of a bad macroeconomic and global scenario” through Taiwan’s big tech competitiveness and ecosystems.
The U.S., for its part, needs a boost in manufacturing, especially of semiconductors. The country is “trying to reconstitute and create supply chains that have long ago left or never existed in the U.S.,” he said. The U.S. push to increase domestic chip production through initiatives such as the $52 billion CHIPS and Science Act complements a Taiwan strength. Among Taiwan-headquartered semiconductor businesses investing in the U.S., GlobalWafers on Thursday will break ground on a new $5 billion wafer factory in Texas (see CEO interview here). Next week, TSMC will make a “tool-in” ceremony at a new $12 billion facility in Arizona (see related post here).
Sandra Oudkirk, the director of the American Institute in Taiwan — the de facto U.S. embassy in … [+]
Taiwan expansion in the U.S. would be “in their style with a few multinational leaders, but not a Korean or Japanese model,” Wylegala said. Rather, he expects smaller and medium-sized companies that specialize in components and part of a larger local ecosystem in Taiwan to follow their largest customers.
“Taiwan can come out very, very well,” with more global investment and address some of its bottlenecks at home, he said. “Taiwan also confronts constraints in land, labor, water, talent and the requirement to be closer to customers” given its strained ties with the mainland, and global investment can be a solution.
“I see a real opportunity here provided that the message gets through to government and business,” Wylegala said. At a time of global stress, “the rest of the world is not sitting still.”
See related posts:
U.S. Commerce Secretary To Attend Ceremony At TSMC’s New $12 Bln Chip Plant In Arizona On Dec. 6
Taiwan Economy Grew 4% In Quarter Marked By Military Tension With Beijing
Asia Power Businesswomen Talks About GlobalWafer’s New $5 Bln Plant in U.S.
Ageless And Peerless In An Age Of Fabless
Taiwan Billionaire Bank Worried But Not Scared About Strained Ties With Mainland China
Taiwan Banks Cut Loans In China Amid Slow Economic Growth, Military Tension
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