Semiconductor manufacturing [Image Source: Getty Images]

Taiwan Expands United States Semiconductor Supply Chain in Arizona


The Taiwan based semiconductor manufacturing company TSMC announced on Friday, May 15, 2020, plans to invest $12 billion for the building of a new semiconductor manufacturing plant in Arizona. This project is projected to create 1,600 new jobs in technical and professional fields, and “thousands of indirect jobs in the semiconductor ecosystem.”

The COVID-19 pandemic has disrupted the future of certain global industries, and US unemployment rates are the highest since the Great Depression, with 35 million Americans facing career instability. Additionally, the COVID pandemic has highlighted a number of new challenges to global supply chains. One of those supply chains threatened is access to semiconductor production. Semiconductors are a “key element for the majority of electronic devices”. Chances are you are reading this article on your laptop, or mobile device and that is all made possible by a quarter inch piece of carefully processed rare earth mineral known as a semiconductor.

The semiconductor is a concern for every United States industry to remain connected to the modern world, but it is also a matter of national security, with the US Department of Defense (DoD) addressing concerns over sustainable availability of this key technological component for military equipment.

The investment by TSMC is important in a number of ways. First, this adds an additional US-based manufacturing site for this critical asset, and second provides a new professional career opportunity for the 122,600 Arizona residents put out of work by the downturn of the hospitality industry. Entry level semiconductor manufacturing positions require a high school diploma or an associate’s degree, while shifting to a career in the engineering elements of this field requires extensive education to include bachelor's and graduate-level schooling.

United States relations with Taipei improved recently with the donation by President Tsai of two million medical masks to aid US healthcare workers in the fight against COVID-19, and now again with the filling of the semiconductor void.

As a top 10 trading partner for the United States, 5th largest Indo-Pacific Greenfield investor ($16.2 billion dollars between 2003 and 2018), and 5th largest purchaser of US military equipment in the Indo-Pacific at the sum of $26.7 billion, Taipei is invested in ensuring the United States unfettered access to the semiconductor supply chain.

Indo-Pacific Foreign Military Sales by Country (Current US$)

[schema_chart chart="regional-map" data="173" series="Major FMS 2009-2019 (Current US$)" axis="Country" region="asia_pacific"]

Beyond defense and economics, Arizona, shares two sister city relationships with Taiwan - between Phoenix and Taipei, and Chandler and Tainan. While a location in Arizona has yet to be confirmed for the factory site, those in threatened industries are provided an opportunity to consider vocational retraining into the lasting job market coming to Arizona.

Jeffrey D. Bean, East-West Center in Washington Visiting Fellow argues “Adjustments to enhance resiliency and mitigate disruption through developing semiconductor supply chains and investments outside of China” and the US partnership with Taiwan has stepped up to begin to fill that void.

Charity Borg is a research intern in the Young Professionals Program at the East-West Center in Washington. She is a Captain in the United States Air Force and graduated from Northeastern University with a Master of Science degree in international relations in 2019.