While we are all conjuring visions of what advanced packaging and in fact transistors themselves will look like in the coming decades, political maneuvering is occurring that just might have an equal impact in reshaping our industry in the future.

No need to rehash to the story of how chip manufacturing and nearly all packaging has moved offshore over the last 40 years. IFTLE has also discussed over the past years how our government has come to view this as a threat to both our economy and our national defense  (See IFTLE 422).

A TSMC chip plant in the USA?

Nikkei Asian Review now reports that Washington is pressuring TSMC to make chips in the U.S.

Reportedly, Washington has upped the pressure on TSMC to produce its military-use chips in the U.S., in order to ensure that the world’s biggest chip foundry can manufacture the high-security components free of potential mainland China interference. U.S. Commerce Department officials reportedly visited Taiwan 3 times in 2019 including a meeting with TSMC founder Morris Chang and Chairman Mark Liu.

TSMC makes computer chips used in American F-35 fighter jets and faces growing American pressure to begin producing in the U.S. or offer another security-focused solution before the U.S. elections this November. In addition to chips for F-35 jets, TSMC makes Defense Department approved “military-grade” chips that may be used by some of its other American clients for classified military purposes.

A senior Taiwanese government official reportedly told Nikkei. “The U.S. government wants chips that go into military projects to be built on American soil………..that’s for national security concerns, and they don’t plan to back off on that.”

TSMC holds a >50% share of the world’s chip foundry business and supplies computer chips to Chinese Huawei as well as American companies such as Google, Qualcomm, and Intel. They also supply high-performance chips for U.S. military suppliers such as Xilinx, which in turn makes components for American F-35 fighter jets and satellites.

TSMC has stated that it “…would not rule out building or buying a high-specification plant in the U.S. to resolve such concerns”, though adding that higher operating costs would probably result. TSMC stated “We have never ruled out, building or acquiring a fab in the United States, but currently there is no concrete plan,” when Nikkei sought comment for their article.

Is the U.S. worried about Chinese incursion into Taiwan?

The problem appears to be that the US does not view Taiwan as completely safe since China has not ruled out the possibility of taking control of the island by force. This is supported by the statements of the Chinese Foreign Ministry spokesman indicating that he hoped the international community would continue to “support the just cause of Chinese people to oppose the secessionist activities for ‘Taiwan independence’ and realize national reunification.”

TSMC’s work for Chinese telecom giant Huawei only adds to the perceived level of risk. The U.S. administration has increased restrictions on the use of U.S. technology by Huawei, which Washington views as being controlled by the Chinese government and thus being a significant security threat.

Last year Huawei asked TSMC to transfer more chip production to the TSMC  $3 billion advanced plants in Nanjing, which accounts for 10% of TSMC’s revenue. Chinese clients in total reportedly provide around 20% of TSMCs revenue. The US, according to Nikkei, accounts for 60% of TSMC’s sales, so is it out of line for the US to request the same treatment?

TSMC foundry rival, GlobalFoundries, has an advanced chip facility in New York State but is considered unable to meet U.S. demands for the latest chip technologies needed in advanced applications, such as military uses.

TSMC tells the U.S. it can meet Pentagon security standards

In Nov 2019 TSMC indicated that it would be willing to work with U.S. customers to help them abide by their government’s security mandates when it comes to developing semiconductors for military and national security clients.


Things also appear to be heating up with Chinese supplier Huawei who is reportedly urging their US suppliers to break the law by moving offshore.

Last December there were reports from the Dept of Commerce that Huawei, the Chinese government’s major electronics producer, was encouraging its suppliers to violate U.S. law by telling them to move operations offshore in a bid to avoid U.S. sanctions. Last May, the U.S. government placed Huawei Technologies Co Ltd on a trade blacklist known as the entity list, over national security concerns, forcing some suppliers to apply for special licenses to sell equipment to the company.

Huawei is already the biggest global supplier of networking equipment and is now likely to move toward making all components domestically. China already has a policy seeking technological independence by 2025.

Huawei is the world’s leading provider of networking equipment, but it relies on U.S. components including computer chips. About a third of Huawei’s suppliers are American. It is the 2nd largest smartphone supplier in the world, behind Samsung but ahead of Apple. Its business segments also include telecommunications networks, smart devices, and cloud services.

The FBI, the NSA and other US agencies have raised issues over the close ties between Huawei and the Chinese Communist Party, and in 2014 the US banned the company from bidding on government contracts. At a Senate Intelligence Committee hearing in February 2018, top US intelligence chiefs said Huawei and another Chinese technology company, ZTE, posed potential national security risks to the US and warned American companies about doing business with them.

In May the US issued an executive order barring US companies from using information and communications technology from anyone considered a national security threat. The same day, the Commerce Department placed Huawei and 70 of its affiliates on its “Entity List,” which is a trade blacklist that bars anyone on it from buying parts and components from US companies without the government’s approval. In particular, US officials are concerned that Huawei might sell products to US companies or our allies compromised by “back doors” that allow Chinese government hackers access to data or surveillance. Of specific concern was China’s passage of the  “National Intelligence Law” in 2017, which, reportedly requires corporations to assist in offensive intelligence operations.

How this all works out will have significant effects on the advanced packaging community…

For all the latest in Advanced Packaging stay linked to IFTLE……………………





Phil Garrou

Dr. Philip Garrou is a subject matter expert for DARPA and runs his consulting company…

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