As we all know, TSMC is the world's most advanced chip manufacturer in semiconductor foundry, with a market share of more than 55%, and high-end chips account for as high as 92%. In 2021, Taiwan's exports amounted to US$446.4 billion, of which TSMC exclusively accounted for about 12%. The development of upstream and downstream industries it drives has formed a huge joint effect on the entire Taiwan economy. Because of this, Taiwanese netizens call it the "Shengshan of Protecting the Taiwan Strait".
International Monetary Fund predicts that this year, Taiwan per capita GDP will surpass Japan and South Korea and become the number one in East Asia. In 2021, Japan's per capita GDP was US$35,278, South Korea's per capita GDP was US$32,645, and Taiwan's per capita GDP was US$33,011. In the past two years, Taiwan's per capita GDP has soared sharply, exceeding US$7,000.
According to IMF estimates, Taiwan's per capita GDP will increase from US$33,140 to US$35,510 this year. This has achieved transcendence with Japan and South Korea. Why can Taiwan’s per capita GDP surpass Japan and South Korea? The answer is semiconductor industry!
Taiwan has the world's most complete semiconductor industry chain , and semiconductor design ranks second in the world, accounting for 27%; sealing and testing ranked first in the world, accounting for 20%, among which MediaTek accounts for the second in the global market share , among which Sun Moonlight company occupies 27% of the global market share; wafer manufacturing firmly ranks first in semiconductor manufacturing, with a market share of up to 64%.
In 2021, the economic growth rate of Taiwan Province reached 6.57%, setting a new high in 11 years , and the per capita GDP also increased significantly. Since the outbreak of the new crown epidemic, Taiwan has been able to successfully avoid the impact of the epidemic, highlighting its advantages in the semiconductor industry. Global demand increased sharply last year, resulting in a chip shortage, but Taiwan made a lot of money, especially in the field of chip manufacturing. Taiwan Province's important position in the world cannot be replaced by other countries and regions.
In addition, foreign trade contributes the most to Taiwan's economy, and the semiconductor industry is the most important export industry among them. Taiwan’s electronic manufacturing industry is Taiwan’s core competitiveness and the main source of fiscal revenue and and people’s income. It can be said that the semiconductor industry has supported half of Taiwan's economy.
TSMC is the leader of Taiwan's semiconductor industry, and its core technology is a reflection of Taiwan's core competitiveness. TSMC's annual revenue in 2021 was approximately US$56.8 billion, accounting for 7.35% of the GDP772.7 billion in Taiwan Province. Among the top 5 wafer foundries in the world, the revenue is more than the last 4, including more Samsung , UMC , GPU , and SMIC.
But this is only revenue, and there are other driving effects. Its upstream and downstream supply chains and hundreds of customers have driven the output value of to 2.89 times and the employment multiple of 8.12 times.
2021 marks the 35th anniversary of TSMC's establishment. Founder Zhang Zhongmou pointed out when listing TSMC's achievements over the past 35 years that if TSMC bought TSMC's stock when it was established, it would be able to make 1,000 times now.
. As the current situation of the Federal Reserve continuous hikes hrs hrs hrs continue to depreciate, the exchange rate of the New Taiwan dollar against the US dollar has depreciated by 11.7% since the beginning of 2022, but the profit margins of TSMC and UMC benefited from the strong US dollar. It is inferred that the foreign exchange effect may contribute 4.68 percentage points to TSMC's operating profit since the beginning of this year.
At present, TSMC's relocation has caused anxiety across the island, causing the semiconductor industry, which Taiwan has always been proud of, to face "de-Taiwanization" and poses the risk of being hollowed out. Data shows that Taiwan’s investment in the United States is three times that of the United States’ investment in Taiwan. If the United States continues to increase its investment, it means that it will take away all the technology, talents and funds of Taiwan’s entire semiconductor industry chain.
In fact, since the 1990s, IT has been a pillar industry of Taiwan's economy, and semiconductor foundry is the pillar of Taiwan's IT. It can be seen that losing the semiconductor industry means losing the pillar of for Taiwan's economic development. In addition, Taiwan's economy is difficult to create new fulcrums.
However, the purpose the United States wants to achieve is not only TSMC, but also the return of the global chip industry. After TSMC, the next step may be MediaTek, and even emptying the entire semiconductor industry in Taiwan. Currently, the output value of Taiwan's semiconductor industry has accounted for 1/4 of Taiwan's GDP. If it is really empty, it will undoubtedly be a waste of money for Taiwan's economic development.
The upstream and downstream related industries driven by the semiconductor industry will also be severely hit, causing a huge joint effect similar to dominoes to the entire Taiwan economy. This will result in a severe blow to the economy, a significant increase in the number of unemployed people, a decline in people's income, a decrease in consumption, a large number of enterprises go bankrupt, and the economy will regress at least 10 years.
The outcome of TSMC's migration to the United States is likely to result in the company's eventual disappearance. The advantage of TSMC is its low cost. Because of the low cost, it can earn higher profits from than its peers, and only then can it invest more money in the production research and development.
Zhang Zhongmou once said, "Chips can be widely used and can almost be attributed to the cost that has been dramatically reduced in the past years, and almost all the reduced costs can be attributed to the innovation and efficiency of the supply chain." This is true. For any enterprise, innovation is the primary driving force for its survival and development.
. TSMC relies on the mainland to obtain cheaper costs and a broad market. The huge market in the mainland covers raw materials, equipment and terminal consumer markets, which is an indispensable part of the entire semiconductor industry. Taiwan is close to the mainland and has natural geographical advantages. Moreover, the rapid development of the mainland economy has also provided confidence in the investment and research and development of Taiwan's semiconductor industry, and is the confidence for the development of Taiwan's semiconductor industry.
After TSMC moves to the United States, the cost will increase by 55%, while TSMC's net profit in 2021 is 37%. If the production cost increases by 55%, TSMC will change from a profit-making company to a loss-making company. Without profits, the company will lose the funds for R&D investment. In this way, under today's fiercely competitive market environment, TSMC's leading advantage in the global semiconductor foundry field is difficult to maintain.
In fact, industrial development should follow the market. TSMC's relocation can only benefit the United States, but for Taiwan, it is harmful but not beneficial.
After the Biden administration's chip bill was introduced, the first choice was South Korea's Samsung, who planned to move Samsung to the United States. However, although South Korea is usually an ally of the United States, South Korea's performance is still very tough on issues related to the country's vital interests. Samsung proposed a plan to invest in and build factories in the United States, rather than relocate as a whole. Therefore, with the repeated mediation of the South Korean president, the United States has always been difficult to achieve its goal.
So now the United States has set its target of chip manufacturing backflow on TSMC. What Americans have never imagined is that the Taiwanese authorities and Zhang Zhongmou are so easy to deal with, and they easily give up TSMC, as if they regard it as a gift to the United States.
Conclusion
After TSMC moved to the United States as a whole, with the gradual outflow of technology, talents and equipment, it will cause Taiwan's economy to lose its core competitiveness, and at the same time it will have an impact on the development of related industries, thereby adversely affecting the development of the entire Taiwan economy. In this regard, the sense of in the capital market of has always been the most sensitive. In the past year, the sharp decline in TSMC's stock price is enough to illustrate everything.
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