A Taiwanese contract chipmaker whose key clients include Nvidia and Apple, said on Tuesday that it has discussed transferring some of its chip operations off the island as tensions with China rose, but that such a move would be unfeasible.
Tensions between China and Taiwan have risen considerably since Beijing initiated war games surrounding the democratically ruled island last month, following the inauguration of Taiwan President Lai Ching-te, whom Beijing regards as a “separatist”.

“Instability across the Taiwan Straits is indeed a consideration for the supply chain, but I want to say that we certainly do not want wars to happen,” Taiwan Semiconductor Manufacturing Co. (TSMC)  Chairman C.C. Wei spoke to reporters following the company’s annual general meeting.
He claimed that moving chip manufacturing off the island would be impossible because Taiwan accounts for 80–90% of the industry’s production capacity.

Wei did not name the customers with whom TSMC had discussed a potential move out of Taiwan.
TSMC, which is dealing with rising demand for high-end chips needed to provide generative artificial intelligence tools and services, held negotiations with OpenAI, the originator of ChatGPT, over AI chip supplies, which the Taiwanese company deemed “too aggressive,” according to Wei.
“He is very aggressive—too aggressive for me to believe,” Wei stated, alluding to OpenAI CEO Sam Altman.

Photo: Open AI

According to a source familiar with the subject, Altman spoke with TSMC last year about forming a partnership to develop approximately three dozen plants in order to ensure that the company could buy enough silicon to meet their continuously expanding demand.
The discussions were courteous, but TSMC officials made it plain that the number of factories Altman proposed was excessive, and TSMC believed it would be unable to operate the factories at the required 80% or greater capacity, according to the source.

TSMC’s estimations at the time did not anticipate sufficient demand for more than 30 additional fabs.
It was unclear whether TSMC and Altman discussed building fabs outside of Taiwan.
“NOBODY IS WORRIED.”
Despite China concerns, the possibility of a war and its influence on chip supply chains has received little attention at the annual Computex technology trade expo in Taipei this week, unless reporters bring it up with executives on the sidelines.
“Nobody is worried about this yet,” Frank Huang, chairman of Powerchip Semiconductor Manufacturing told reporters at the event when asked if international clients were pressuring Taiwanese enterprises not to produce there due to tensions.
“I believe there will always be military activity or showdowns, but Taiwan is so essential to AI that even the Chinese understand this. We are fine, no problem,” he replied.
Advanced Micro Devices When asked about the impact of tensions with China and its war exercises on the sector, CEO Lisa Su underlined Taiwan’s position in the global semiconductor supply chain.
“We perform a lot of production here with important vendors such as TSMC… “We also have a number of partners who help us build the ecosystem here in Taiwan,” she told reporters at the exhibition on Monday.
“The bottom line from our perspective is that it’s really important to have a global ecosystem.”