The trade war between the US and China that has been going on since the era of President Donald Trump has made many technology companies caught in a vortex of conflict. One of them is TSMC (Taiwan Semiconductor Manufacturing Company).
TSMC is widely regarded as the single most crucial semiconductor vendor globally, capable of producing state-of-the-art chips. This strategic industry requires significant investments and increased sophistication as semiconductors become more advanced.
The company's leading factories, including some of the most advanced, are based in Taiwan. This self-governing island maintains close ties to Washington but is seen by Beijing as a rebellious province.
TSMC has accommodated some of Washington's demands, such as submitting production data to US authorities complying with US sanctions that bar it from supplying chips to certain companies.
Apple, a customer of TSMC, is expected to use advanced processors for the next generation of iPhones. The company, headquartered in Taipei, is also building a 5-nanometer fabrication plant in Arizona. The factory in Arizona aims to supply better processors to technology companies in the United States.
TSMC's compliance with US sanctions, which deny Huawei Technologies access to advanced chips, has dealt a blow to the Shenzhen-based Chinese telecommunications giant while pushing China to achieve technological independence.
On the other hand, Taipei's tightened protections against sensitive technology amid allegations of theft by Chinese, Hong Kong, and Macao firms make it difficult for Taiwanese businesses to set up factories on the other side of the Taiwan Strait.
On Thursday (2/17/2022), Taipei passed a draft revision of the island's national security law. The new law also includes the "crime of economic espionage."
The rules are designed to address potential threats from China to steal key technology and hunt down high-caliber professionals. Violators of this rule face up to 12 years in prison.
According to Sravan Kundojiala, senior analyst at Strategy Analytics, TSMC is well aware of its difficulties, as evidenced by its inclusion in all its annual reports on the Chinese military invasion as a business risk.
“In the past, [TSMC] had problems with Chinese investments, which required permits,” Kundojiala said. “I believe [hiring a political analyst] is not uncommon, but is increasingly becoming an important part of the story.”
TSMC is indeed seeking to recruit talent with political expertise to assist the company with business analysis and decision making and navigate the deepening US-China competition.
The Taiwanese giant on Wednesday (2/16/2022) posted a job opening for a business intelligence analyst who is “interested in translating geopolitical and economic changes to impact the [integrated circuit] industrial supply chain.”
According to the ad, the ideal candidate should have a doctorate in international relations or political economy, be able to “connect the dots,” and articulate recommendations to companies for strategic planning.
Chip Demand Soars, TSMC's Performance Increases
The effort to recruit business intelligence analysts comes when TSMC faces increasing challenges as relations between the United States and China have yet to show improvement, despite Joe Biden's reign as the White House ruler.
The two superpowers compete to secure access to semiconductors that are essential for producing various electronic devices, such as smartphones, computers, and notebooks, to automotive.
It is undeniable that the trade war between China and the US has made TSMC's position difficult. Chip production is limited because Chinese vendors are no longer free to operate. However, this tension has pushed TSMC's performance to increase.
The Hsinchu, Taipei-based vendor reported revenue of $15.7 billion for the three months to December 2021, with a profit of $6 billion, beating most analyst expectations. With further growth forecast in the coming quarters, the company's share price skyrocketed to a record high of Tw$683 ($24.57 US).
As the world's largest contract chip manufacturer, TSMC has faced a wave of global chip shortages, with customers queuing up to get a share of their chip foundry capacity on-demand or special orders.
To drive growth momentum, TSMC, in an earnings call with investors, outlined plans for capital investments of between $40-$44bn (the company spent $30bn in 2021) in Taiwan and beyond to ensure its continued market dominance.
With a substantial capital expenditure and a reasonably dominant market share, no one can deny that TSMC is a company that has a strategic position in the chip industry today.
However, TSMC needs to be aware of business and geopolitical factors to avoid problems in maintaining its dominance in the global chip market.