It’s a nightmare scenario that looms over the global technology industry: the possibility of an invasion of Taiwan by China. In one fell swoop, the entire world could be suddenly cut off from its advanced silicon manufacturing technology. Most notably, no more chips from TSMC for US-based companies like Apple, AMD, Nvidia, and Intel. The impacts of such a move would be felt far and wide. Now, the US Commerce Secretary has weighed in on what economic harm it would cause here in the States. “It’s a deep and immediate recession,” the Secretary said in a recent interview.
U.S. Secretary of Commerce Gina Raimondo made the remarks on CNBC’s ‘Closing Bell’ with Sara Eisen. They came amid a discussion of the still-pending CHIPS Act, which the Secretary was promoting. This largely bipartisan bill includes $52 billion in subsidies along with $20 billion in tax credits for US chip-making expansion. Those funds will be used for US-based fabs run by companies like Intel. The host noted that this is a lot of money to give to one industry. This is especially true, she said, when other industries like AI and Biotech could also use some taxpayer dollars.
Secretary Raimono responded that without semiconductors, those industries wouldn’t even exist. Not only that, the US buys 90 percent of its semiconductors from Taiwan. Therefore, access to Taiwan’s technology poses both an economic and national security risk for the US. She also stated a cold, hard fact: “Right now, the US does not produce any leading edge chips in our country.”
The host noted that some of the world’s top chip design firms are US-based though, which is true. AMD and Apple rely on TSMC for a lot of their silicon designs. Nvidia will also be using it for Ada Lovelace, and Intel has tapped it for Meteor Lake as well. This lead the Secretary to issue a warning. “If you allow yourself to think about a scenario where the United States no longer had access to the chips currently being made in Taiwan, it’s a scary scenario,” she said. “It’s a deep and immediate recession. It’s an inability to protect ourselves by making military equipment. We need to make this in America. We need a manufacturing base that produces these chips, at least enough of these chips, here on our shores because otherwise, we’ll just be too dependent on other countries.”
The heart of the issue is the about-to-be-voted-on CHIPS Act. This bill has been stuck in legislative gridlock for over a year. However, a slimmed-down version just passed the Senate this week, and it will now go to the House of Representatives for a vote. Backers of the bill are hoping for quick passage, as Congress is famously on vacation for the entire month of August. If the bill doesn’t get passed before then, there’s concern it might never pass. That’s because when lawmakers return from their vacation, they might become focused on the upcoming midterm elections.
In the meantime, the US semiconductor industry is waiting with bated breath for its passage. Or at least, some of the industry wants it passed ASAP. Companies like AMD, Qualcomm, and Nvidia are reportedly concerned that it unfairly favors Intel. The legislation is expected to be up for a vote in the House by the end of next week.
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