The Taiwan Semiconductor Manufacturing Co accounts for more than half of the global semiconductor production. Such is the hold of the TSMC on the global market that its revenue in April reached nearly NT$240 billion ($7.46 billion), up 20.9 percent month-on-month and 59.6 percent year-on-year. The figure was record high for the period and the second highest in the company's history — its October 2023 revenue was slightly higher.

From January to April, the TSMC's cumulative revenue was NT$830 billion, up 26.2 percent year-on-year, with the strong demand for 3-nanometer and 5-nanometer advanced chip process technology being the main driver of the revenue surge in April.

As the world's largest contract chip maker, the TSMC's clientele includes tech giants such as Apple and Nvidia. And with Apple launching a new series of iPads on May 7 and ramping up its efforts to develop AI chips, the TSMC stands to benefit significantly.

But since both Apple and Nvidia are US-based companies, their heavy reliance on the TSMC has been a cause of concern for the US administration. So the administration is steering the TSMC into a carefully laid trap. For instance, in early May, US Commerce Secretary Gina Raimondo said the US purchases 92 percent of its cutting-edge chips from the TSMC, so losing the company would cause "absolute devastation" to the US economy. One month before that, the Joe Biden administration had already said it would invest up to $6.6 billion to support the TSMC's $65 billion investment plan to set up three chip factories in Arizona that would produce the world's most advanced chips.

The administration's funding, despite comprising just 10 percent of the TSMC's total investment, has tied the company to the US, attracting substantial investment to a sector that is critical to the US with minimal financial commitment and embedded political gains.

TSMC Chief Executive Officer C.C. Wei is acutely aware of the global economic uncertainties and geopolitical tensions that could further impact consumer confidence and end-market demand. So despite its industrial and technological advantages, the TSMC, constrained by Taiwan's political landscape, has to bow to US political and economic pressures.

Semiconductors remain Taiwan's last competitive stronghold globally. And the shifting of TSMC technology or capacity to the US would shrink this last asset of the island. The US aims to control the TSMC's technologies and hollow out the company by using the CHIPS and Science Act.

Interestingly, the opening of the TSMC's first production unit in the US has been delayed — from this year to the next — ostensibly because local workers don't have the expertise needed to install some sophisticated equipment and for a general lack of skilled workers. The deeper problem is that the TSMC's factories in the US cannot hire skilled workers from abroad to expedite the process, leading to repeated delays. This shows that the setting up of TSMC factories in the US means exploitation of the company by the administration.

The Chinese mainland has for years been one of the largest markets for the TSMC. Official data from the island's financial department show that in the first four months of this year, Taiwan's exports of integrated circuits to the mainland (and the Hong Kong Special Administrative Region) amounted to $26.01 billion, which was 15.55 times more than its integrated circuit exports to the US and accounts for 53.1 percent of the island's total global exports. The figure is lower (in relative terms) than that for the same period last year, when exports to the mainland were 27.57 times higher than those to the US.

According to the General Administration of Customs, in the first quarter of this year, the mainland's imports from Taiwan amounted to 320 billion yuan ($44.33 billion), with a trade deficit of 200 billion yuan. It had a trade deficit of 350 billion yuan in integrated circuits for the whole year. Despite the overall positive trends in the foreign trade economy, the mainland has a trade deficit with Taiwan, including in integrated circuits, underscoring the mainland's role as a stable and major market for the TSMC.

In fact, the mainland's new quality productive forces offer Taiwan enterprises new opportunities and momentum to integrate into and participate in the mainland's high-quality development, which promotes inclusiveness and openness.

The TSMC operates two facilities on the mainland: TSMC Nanjing Company Limited and its Fab 16, and TSMC China Company Limited and its Fab 10. And since the mainland is the TSMC's largest and most stable market, aligning its strategic planning with the development of the mainland's new quality productive forces would be the ideal choice for the company.

Should the Taiwan authorities, driven by political motives, enforce policies that cause the TSMC to overly depend on the US market and disrupt the harmonious economic relationship between the TSMC and the mainland market, the impact on the company and the island's economy as a whole would be catastrophic.

The author is head of the Institute of Taiwan Economics, Central University of Finance and Economics. The views don't necessarily reflect those of China Daily.

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