TSMC Headquarters in Hsinchu, Taiwan
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As sabre-rattling over China's invasion of Taiwan intensifies, Two Apple suppliers have confirmed that they could eliminate chip production lines outside the country if the need arises.
Tensions between Taiwan and China continue to rise, with no signs of stopping anytime soon. With China insisting that Taiwan is its territory and its government unwilling to rule out military action, there are fears China could try to take control of the country by force.
In March, a US admiral said China could invade Taiwan by 2027 due to its growing military power. Since the US Congress approved an $8 billion aid package in April to improve Taiwan's defenses, the Biden administration has also sought assurances from the private sector.
USA Officials conveyed concerns about Chinese interference to their counterparts in the Netherlands and Taiwan, Bloomberg reports. The concerns include concerns about what could happen to production lines used to create processors, including TSMC's lines used to make chips for Apple.
ASML Holding is a Dutch company that produces chip manufacturing equipment for extreme ultraviolet (EUV) processing. This includes chip production lines operated by TSMC on behalf of Apple, including the iPhone and Apple Silicon families of chips.
ASML reassured the Dutch government of the potential threat of a Chinese invasion. Two people familiar with the discussions say ASML has the ability to remotely shut down its equipment if such a threat arises.
There are fears that the equipment could fall into the hands of China, something that other governments are trying to avoid.
War spoils, competitive advantage
Each machine, the size of a bus and costing more than $217 million per unit, is used to create chips with the smallest commercially available transistors. Although ASML supplies its equipment to customers in China, there are concerns that the expensive equipment could be used as spoils of war.
Worries that China will take the machines and use them to create new chips have put governments on guard.
This already includes the Netherlands banning ASML from selling its EUV equipment to China at all. This was a request from the US, which also directly asked ASML to cancel deliveries to customers in China.
Despite this, ASML still expects China to become the largest market for its equipment.
The US has a secondary reason to prevent China from gaining access to specialized equipment. The United States is keen to develop chip manufacturing on its shores and does not want to give China any advantage.
This manufacturing boost includes a $6.6 billion subsidy provided to TSMC in April to build a third manufacturing plant in Arizona.
With Taiwan already producing 90% of the world's advanced chips, the prospect of China taking over and gaining a major advantage in hardware manufacturing is unbearable for the US government.
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