Nicholas Montella, a former executive at the Us Chamber of Commerce, joined TSMC in May as head of government relations at tsat. Just a few months ago, Peter Cleveland, Intel’s former chief lobbyist, became TSMC’s vice president of global policy.
According to Bloomberg, TSMC’s move is aimed at easing the impact of deteriorating Sino-US relations on its operations.
Bloomberg Report Screenshot
TSMC has confirmed their appointments, according to personal data on LinkedIn in Montella and Cleveland.
Mr Montella has previously focused on policies in Japan, South Korea and the Asia-Pacific Economic Cooperation (APEC).
TSMC is the world’s largest wafer foundry, while Huawei is its second-largest customer. Last year, Huawei contributed about 14% of TSMC’s total revenue.
A new round of U.S. restrictions on Huawei has been pushed to the heart of tensions. If the Commerce Department finally enforces the ban, TSMC’s future orders from Huawei will need to apply to Washington for an exemption.
On the other hand, Taiwan media reported on May 25, the supply chain revealed that the new U.S. ban on China-china may disrupt the pace of TSMC orders and capacity expansion, if the U.S. side does not let up, TSMC is likely to announce in July’s earnings statement next year’s full-year capital expenditure.
As a result of the 120-day grace period granted by the U.S., TSMC has made every effort to arrange for the delivery of an additional 500 million U.S. dollars (about NT$12 billion) to HiSilicon within 120 days, and to seek a proposal from U.S. equipment manufacturers to the U.S. Department of Commerce during the two-week consultation period.
The Commerce Department’s decision on Huawei came just hours after TSMC said it would build a $12 billion leading 5nm chip plant in Arizona. The decision is aimed at allaying U.S. national security concerns and shifting more high-tech manufacturing to the U.S.
At the time, a source said TSMC was in talks with the Trump administration about plans to create jobs in the U.S. and produce sensitive components in the U.S. for safety reasons.
However, Keith Krach, the State Department’s undersecretary for economic growth, energy and environmental protection, has previously said there was no guarantee that TSMC would obtain a licence to ship Huawei because of its commitment to build a fab in the US.
Douglas Jacobson, an export control lawyer in Washington, D.C., said that while the U.S. government licenses Microsoft and Google to sell services to Huawei, it is because they are U.S. companies and that the Trump administration is putting protecting U.S. businesses and jobs as a top priority and is unlikely to give TSMC a license to ship Huawei, zDNet reported on May 18.
If TSMC can’t get a license, Jacobson argues, there are two ways to circumvent the U.S. ban: stop making Huawei-designed chips from U.S.-made devices, and sell chips that aren’t designed by Huawei.
TSMC’s “Hidden Worries”
TSMC Chairman Liu Deyin said in a conference call in late April that TSMC was evaluating plans to build until the U.S. plant, and that the current cost gap was unacceptable and that TSMC was already working hard to close it.
TSMC said at its first-quarter earnings presentation that the company bucked the trend in the first quarter of 2020, achieving a record net profit of T$119 billion (about 28.35 billion yuan). Revenue in the first quarter reached T$310.6 billion (about C$74 billion), up 42% year-on-year. Among them, 7nm process revenue accounted for up to 35%, 10nm accounted for only 0.5%, 16nm accounted for 19%, 16nm and more advanced process accounted for 55%.
Huawei contributed TSMC’s revenue to TSMC last year to TSMC’s T$152.876 billion (about 36.4 billion yuan), an annual increase of more than 80 percent, and its share of total TSMC revenue increased from 8 percent to 14 percent, Taiwan’s Central News Agency reported on April 25. Apple, the largest customer, contributed T$247.213 billion (ABOUT 58.9 billion yuan) in revenue last year, an annual increase of more than 10 percent, increasing tse-heavy’s share of total tSMC revenue from 22 percent to 23 percent.
Since Huawei is one of the leading manufacturers of Advanced Process Technology for TSMC, if the United States strengthens export controls against China, it will have an impact on the short-term operation of TSMC, which is reported to be a “hidden worry” for TSMC.
In addition, TSMC’s worries are not only from Huawei’s direction, but also from TSMC’s main customers.
In response tomedia inquiries on May 16th, China made it clear that China would resolutely defend the legitimate rights of its enterprises and urged the U.S. to immediately stop “unreasonable repression” of Chinese companies such as China. The Trump administration’s actions “destroy edgy manufacturing, supply chains and value chains around the world.”
The Global Times quoted sources as saying that if the U.S. finally implements the plan, China will fight back forcefully, or involve U.S. companies such as Qualcomm, Cisco, Apple and Boeing.
Observer columnist Ning Nanshan 17 analysis, Qualcomm revenue is highly dependent on China, downstream manufacturers Huawei, Xiaomi, OPPO, vivo and other Chinese brands are its big customers, the Chinese market revenue accounted for more than 50%; Cisco is no longer dependent on the Chinese market for revenue, with less than 3% of revenue from China in 2018.