Just so you know up front what this is about, China believes Taiwan belongs to them and has bullied the world into having little to do with them regarding trade. But since China needs to be held accountable for their deception over the Coronavirus, the Trump administration announced that the US would be partnering with the Taiwan chip company TSMC for a new $12B plant in Arizona to provide at least 1,600 new jobs.
✳️Big News ✳️@TWSemicon is building its new semiconductor facility in PHOENIX! We’re thrilled to continue work w/ them. Will create over 1,600 high-tech jobs & 1000’s more. 2021 construction planned. This brings $12B capital expenditure. PHX is the future! https://t.co/wMIJWh6lpN
— Mayor Kate Gallego (@MayorGallego) May 15, 2020
Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest manufacturer of silicon chips. TSMC will build a $12B plant in Arizona, and in doing so, come under severe restriction to sell anything they produce to Huawei, the Chinese tech company. Here’s why.
Wired reported (emphasis mine):
In a possibly coordinated move, the US Bureau of Industry said Friday that it would amend its foreign-produced direct product rule to restrict Huawei from using chips made with US technology. Most chipmakers, including TSMC, use US technology in manufacturing. So the change effectively cuts Huawei off from the advanced chips made by international companies, including TMSC—a major blow for the world’s number two smartphone maker and potential dynamite for US-China relations.
Cutting off Huawei’s access to the best chips “is like China trying to kill Google and Apple at the same time,” says Paul Triolo, practice head at the Eurasia Group, a consultancy focused on global technology policy. He expects Beijing to retaliate by targeting US companies that manufacture or sell into China.The Chinese government has previously said that further restrictions on Huawei would cause it to place US companies such as Apple, Cisco, and Qualcomm on an “unreliable entity list” and impose restrictions. A government source told Global Times, a publication tied to the Chinese government, that the government would proceed with this and also suspend purchases of Boeing airplanes.
The Trump administration is keen to limit Huawei’s access to advanced technology over alleged intellectual property theft and perceived ties to the Chinese government. Some within the US intelligence community are especially concerned by Huawei’s leading position in supplying advanced 5G wireless technology worldwide. They believe this could effectively give Chinese intelligence a backdoor into many global communications.
Huawei has been a concern for the US Intelligence community for some time. The FCC banned Huawei in November of 2019.
The Fifth Domain noted,
…Concerns about the cybersecurity of Huawei and ZTE products are widespread across the U.S. government.
These two companies pose a great security risk because Chinese intelligence agencies have opportunities to tamper with their products in both the design and manufacturing processes…
…James Lewis, senior vice president and director of the technology policy program at the Center for Strategic and International Studies, said the worries extend beyond back doors, adding that Huawei has immediate front door access to U.S. networks through software updates.
“Every day or every week they pump updates or patches … and we don’t have the ability to say there isn’t a hidden command in that” update that is designed to cause disruption, Lewis said, like making phone calls drop or turn off hospital networks.
The new U.S. plant paid for by Taiwan is a rub in the eye to China. there are other TSMC plants in the United States, but this one will produce the “5 nanometer” silicon chips needed for our military high end communiation devices. And they will be prevented from selling the chips to China. The plant won’t be built until 2021.
The U.S. welcomes TSMC’s intention to invest $12B in the most advanced 5-nanometer semiconductor fabrication foundry in the world. This deal bolsters U.S. national security at a time when China is trying to dominate cutting-edge tech and control critical industries.
— Secretary Pompeo (@SecPompeo) May 15, 2020
“This plan is the result of years of close collaboration among TSMC, the Governor of Arizona and his staff, and the Administration, particularly our Assistant Secretary of Commerce Ian Steff,” Ross added. “This announcement is the product of strong cooperation between federal, state, and local governments, leveraging the unprecedented investment climate for manufacturers created by President Trump. Our global team of Commerce professionals stand ready to work with additional semiconductor companies looking to expand their operations and investments in the United States.” U.S. Secretary of Commerce Wilbur Ross
Featured photo: Screenshot of TSMC via Market Watch