China’s government has an intense craving to take control of TSMC, reveals a report shared by Bloomberg today. The financial news organization has published some alarming quotes from Chen Wenling, chief economist at the government-run China Center for International Economic Exchanges. In brief, Chen called on Chinese authorities to “seize TSMC” if the US and the West begin to implement Russia-war style sanctions on China. She was speaking at the Chongyang Institute for Financial Studies at Renmin University at the end of May.
On the university stage, Chen told attendees, “If the US and the West impose destructive sanctions on China like sanctions against Russia, we must recover Taiwan.” However, the reasoning contained within this sentence is clearly topsy-turvy. The US and other democratic powers only imposed severe sanctions on Russia after it invaded neighboring Ukraine and refused to withdraw. It is expected very similar sanctions would be applied on Chinese interests worldwide if China invades Taiwan, but not if it maintains the status quo. It is curious why Ms. Chen has put the cart before the horse.
TSMC Coveted by the CCP
In another segment of her speech, Chen claimed that the seizure of TSMC would be a great asset for China, to help it reconstruct its industrial and supply chains. This may be so, but her statement that “we must seize TSMC” sounds extremely aggressive.
Moreover, there were more comments in the senior economist’s speech which appeared to encourage a Chinese military assault. Chen warned the audience at Renmin University that TSMC was quickly transferring technology to the US where it is building multiple factories. “We must not let all the goals of the transfer be achieved,” she exhorted.
China Sanctions and Trade War Today
The US and its allies imposed technology sanctions during the Trump presidency in order to stifle China’s advanced weapons development, and they remain in place under President Biden. Some barriers have also been applied to the trade of Chinese companies operating in security sensitive sectors like telecoms, especially where it is seen that the Chinese business has strong military links.
Actions like the above have spurred China to try and become technologically self-sufficient, for both hardware and software. We have reported on numerous China developed CPUs, GPUs and computer systems in recent months and such developments seem to be accelerating due to the tech trade restrictions imposed on China. However, the privately owned and highly competitive businesses that have fought to become the best in their fields (e.g. AMD, Apple, Arm, IBM, Intel, Nvidia, Samsung, Qualcomm, TSMC, etc.) continue to research and invest. They won’t be easy to catch, as they are moving targets.
China’s latest rhetoric suggests there’s a growing faction that’s not interested in catching up through normal means, instead hoping to close the gap via a hostile takeover of Taiwan. That could be disastrous for many of the companies just mentioned, not to mention the global technology landscape.