Reliance

In 2022, US President Joe Biden officially signed the CHIPS and Science Act, a form of protectionism for the domestic manufacturing industry and a reduction in dependence on the Taiwan Semiconductor Manufacturing Company, commonly known as TSMC (Hart et al., 2022). However, the question is, is it possible for the US to truly disengage from TSMC, which we know controls over 60% of the world’s most advanced and largest chip production?

In an era of increasingly advanced globalization and the continued reliance on artificial intelligence (AI), 5G, and even chip-dependent strategic weapons systems, countries are constantly striving to maximize their potential to become the best. This is evident in the United States’ efforts to finally pass a regulation known as the CHIP and Science Act in 2022. The goal is to provide significant and dedicated capital to the domestic manufacturing industry, enabling it to optimize its existing potential.

Some of the model efforts undertaken by the United States government include allocating $52.7 billion in public funds to support research, development, manufacturing, and workforce training in the semiconductor sector. Approximately $39 billion is specifically directed as domestic manufacturing incentives, while a 25% investment tax credit is provided to companies investing in domestic semiconductor manufacturing facilities (The White House, 2022; Shivakumar et al., 2024, 4-5).

Given America’s active movement and ambitious goal of rapidly reducing its reliance on Taiwan for its chip supply, we can be quite optimistic. Because the action is clearly visible, and the capital outlay is significant. However, it cannot be denied that many factors will ultimately determine America’s success in breaking the curse of long-standing dependency. For example, whether the domestic industry is capable of providing such a large production capacity, and if so, how long will we have to wait for it to truly materialize.

The reality is that TSMC still leads the world in the production of the most advanced generation of chips, with TSMC accounting for 62% of the global chip market, while the United States only accounts for around 6% of the total global chip production. This is a stark contrast, and it would take tens of times greater speed or capability to even match TSMC’s position. While Intel and Samsung are aggressively expanding, TSMC remains the only manufacturer capable of producing chips below 3 nanometers for commercial use. Even one of its advanced chip factories in Arizona, a symbol of its strategic location, remains dependent on lithography machines and technical expertise sourced from Taiwan.

The next factor relates to efforts to adjust production standards for commercialization. Building a semiconductor industrial facility or company requires considerable time, significant costs, and a highly skilled workforce. This is because the semiconductor industry is one of the most capital- and skill-intensive sectors in the world (Hyatt et al., 2025). Large amounts of capital or investment alone are not necessarily sufficient to generate initial capital for this industry. All needs are interconnected and must be met simultaneously. Examples include a comprehensive ecosystem of suppliers, specialist engineers, and a complex global supply chain.

A comprehensive and interconnected resource base is key to a country like the United States’ readiness to reduce its dependency. A supplier ecosystem represents key partners who will meet the raw material needs for chip manufacturing, such as ultra-pure silicon, high-precision chemicals, and even extreme ultraviolet (EUV) lithography machines, which are produced exclusively by ASML in the Netherlands. Without a mature and integrated supplier ecosystem, efforts to expand domestic fabrication capacity will only result in physically existing facilities that cannot operationally match the scale and efficiency of TSMC.

In addition to supplier constraints, the United States also faces significant challenges in the availability of specialized engineers. The semiconductor industry requires not only general engineering personnel but also thousands of lithography process experts, circuit designers, and materials specialists, many of whom have been concentrated in East Asia, particularly Taiwan and South Korea. As Wessner (2022) explains, TSMC’s advantage lies not only in technology but also in the human capital it has built over decades something that cannot be replicated simply by allocating billions of dollars.

Beyond that, the global semiconductor supply chain is one of the most complex in the world. A single chip can involve more than 50 cross-border manufacturing steps, from design in the US to wafer production in Taiwan, packaging in Malaysia, and testing in Singapore. This international supply chain structure suggests that complete self-sufficiency is nearly impossible. Even if the United States could build a state-of-the-art factory, dependence on global suppliers remains inevitable, particularly for lithography machines, industrial chemicals, and precision optical components.

Based on this explanation, we know that the CHIPS Act has indeed made a promising start. According to the Semiconductor Industry Association (2024), the US’s share of domestic production has increased to 18% in 2024 and is projected to further increase to 25% by 2030 if all projects proceed smoothly. However, it cannot be denied that TSMC remains a central player in the global technology chain. As long as the US cannot match Taiwan’s lithography excellence, engineering expertise, and production ecosystem, its dependence is unlikely to truly end.

The conclusion is that the CHIPS Act is indeed an opportunity to break the chain of chip dependence on TSMC. Ultimately, we can see the success of this strategy in attracting investment, expanding production capacity, and clarifying the US’s position against China in the global technology competition. However, returning to the original question: will the CHIPS Act truly eliminate the United States’ dependence on TSMC? The answer is yes, but only partially, and certainly not in the near future. TSMC remains the world’s leading center of chip innovation as long as leading-generation technology remains concentrated in Taiwan, and the structural dependence on the US will not be completely eliminated.