(Bloomberg) -- Taiwan Semiconductor Manufacturing Co.’s founder Morris Chang said the the company will soon face its “most severe” challenges in driving growth at a time that the US is controlling the flows of cutting-edge chips to China.
“TSMC is now truly a turf all major powers want to secure,” Chang said at a company event in Hsinchu on Saturday, amplifying a concept he first raised in 2019. “Free trade of semiconductors, particularly the most advanced semiconductors, has died. In such an environment, our challenge lies in how to continue to drive growth.”
The go-to chipmaker for Apple Inc. and Nvidia Corp., TSMC makes 99% of the world’s AI accelerators. The company is expected to book record revenue this year on robust artificial intelligence demand and its share price has almost tripled in value since late 2022 following OpenAI’s launch of ChatGPT.
Still, the Taiwanese company is restricted from making the most powerful artificial intelligence semiconductors for Chinese customers as the US works with allies including Japan and the Netherlands to restrict China’s access to cutting-edge chips and equipment. China still accounts for more than 10% of TSMC’s revenue.
When the Chinese tech champion Huawei Technologies Co. was still a TSMC customer before 2020, the Taiwanese chipmaker even relied on China for about 20% of its sales at one point.
TSMC stopped shipping to Huawei in September 2020 after the US banned all chipmakers using even the tiniest amount of American technology from doing business with the Shenzhen-based tech firm without Washington’s approval.
However, the Taiwanese chipmaker discovered this month that chips it made for a specific customer ended up with Huawei, Bloomberg has reported. TSMC halted shipments to the client around mid-October after it realized semiconductors fabricated for that entity had found their way into Huawei products. The chipmaker has since notified the US and Taiwanese governments.
TSMC said earlier this week that it is committed to complying with all applicable rules and regulations and it had proactively communicated with the US Commerce Department. It reiterated it had not supplied to Huawei since mid-September 2020.
Executives didn’t address the Huawei issue on Saturday, though Chang said that TSMC has a strong team that will ensure its success. The founder also congratulated staff on potentially another record-breaking year in 2024.
Chief Executive Officer C.C. Wei meanwhile said the company is fully confident it will increase its technology leadership, and reiterated that its new chipmaking plant in Arizona is “progressing well.” The executive said TSMC now plays a even more critical role in the global chip industry.
TSMC has been building new plants in Arizona, Japan, and Germany to mitigate concerns about growing tensions with China, which claims Taiwan as part of its own. The chipmaker has achieved early production yields at its first plant in Arizona that surpass similar factories back home, Bloomberg News has reported.
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