The fate of the global economy could be determined by TSMC.
The company said last week it was investing billions in Arizona.
The US economy will be protected in the event of a Chinese invasion of Taiwan, according to experts.
There is a chance that the US could face a recession next year.
Many experts say that moves to secure the US's vulnerable electronics supply chains aren't enough.
Taiwan Semiconductor Manufacturing, the world's biggest chipmaker, announced last week that it would be opening a second factory in Arizona, increasing its investment in the state from $12 billion to $40 billion.
Over 600,000 wafers are expected to be produced annually by the two factories by the year 2026.
Biden said in a speech that the investment could be a game-changing one.
Biden said that the investments are helping build and strengthen the supply chain.
The US has taken steps to increase domestic chip production because the country is reliant on TSMC's Taiwan factories for the manufacturing of products. The company accounts for over half of the global market for chips used in phones and cars.
There could be trillions of dollars in economic losses if the island is invaded by China.
Glenn O'Donnell, the vice president and research director at Forrester, told Insider that if China invaded Taiwan, it would be the biggest impact on the global economy. This could be larger than 1929.
It's just a matter of time before an invasion happens, according to many experts.
The Arizona factories are a step in the right direction for the US as it seeks to reduce its dependence on Taiwan, but experts disagree on the impact they will have on the economy.
Administration advisors believe they could secure the chip supply.
The National Economic Council acting deputy director for industrial policy told CNBC that the two factories could meet the entire US demand for US chips when they are completed. That is the definition of resilience. We don't have to depend on anyone else to make the chips.
The chief analyst at SemiAnalysis disagrees. 600,000 wafers per year is not close to the US demand given that TSMC produced over 14 million wafers last year.
He said that it's impossible to satisfy the US's needs.
Even if production went up, the reliance on overseas supply chains would not be erased.
William Alan Reinsch, a senior advisor at the Center for Strategic and International Studies, a national security think tank, told Insider that additional fab plants are important, but they depend on raw materials like polysilicon where the US is not self-sufficient. Creating a more resilient supply chain is more than just a single plant.
Despite being the largest foreign direct investment in US history, the Arizona plants are unlikely to prevent a Chinese invasion of Taiwan.
Martijn Rasser, a former CIA officer who is now a security and technology expert at the Center for a New American Security, said that the new Fabs won't do much to reduce the economic risk of a Taiwan contingency. The bulk of TSMC's fabrication capacity remains on the island.
To truly achieve supply chain resilience, Rasser says, the US must only boost production further, but needs similar investments in all areas of the chips supply chain.
The challenge is to increase our capability while recognizing the inherent limitations on our ability to do that.
Business Insider has an article on it.
All Rights Reserved © 2024
