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USA-China Semiconductor War Finds New Battleground in Arizona

Travis Cunha

Jan 6, 2023

On December 7th, 2022, president Joe Biden and Taiwan Semiconductor Manufacturing Company Limited (TSMC) CEO Morris Chang celebrated the construction of a new three-nanometer chip plant in Arizona, slated to open in 2024. The initial $12 billion-dollar invested, initially announced under the Trump administration, has since swelled to over $40 billion dollars, one of the largest foreign investments in United States history and the largest ever for Arizona. The increased investment from TSMC followed Biden's signing in August 2022 of the CHIPS and Science Act, which provides tax cuts and subsidies to international semiconductor companies. “By making more semiconductors in the United States," Biden said, "this bill will increase domestic manufacturing and lower costs for families," The White House also released a Fact Sheet stating, “These funds also come with strong guardrails, ensuring that recipients do not build certain facilities in China and other countries of concern.” The Chinese Commerce Ministry condemned the Act as revealing its “Cold War mentality” of the 20th century and one “counter to the common aspirations of people” in both China and the United States. But increased warnings from China have not deterred the US from seeking to decouple the mainland economically from its breakaway province of Taiwan and to prevent peaceful reunification.



Northern Arizona had among the worst economic downturns in the country during the COVID-19 pandemic. The unemployment rate in Phoenix in 2020 was 6.5%, and more than 9,000 of the residents filed for bankruptcy. The city's unemployment rate has since dropped to 3.2%. The new TSMC plant may further strengthen an economic recovery in the region. Phoenix real estate has already benefitted as engineers from Taiwan begin to relocate there along with their families. TSMC is already training local employees in Taiwan to prepare them for life working in the new Arizonan facility. The influx in new investment from TSMC has achieved what some publications in Asia have called the “TSMC effect”, in which a local economy is revived by the semiconductor supergiant building a factory nearby. TSMC was an economic boon to the Japanese city of Kikuyo, and Phoenix hopes to reap similar benefits.


The process of making semiconductors requires many other resources such as water, chemicals, natural gases, and sophisticated vacuum machines, spurring economic activity beyond the facility. The Japanese news site Nikkei Asia released a bar graph portraying the extent of investment flowing into Arizona to build and maintain a new chip factory:



But Phoenix is just one city. Communities across the United States in various states of decline are in desperate need of ways to replace crumbling infrastructure, create good jobs, and a better quality of life. If this is in fact the richest country in the history of the world, why should Americans have to rely on foreign investment to fill the void? We need a government focused on improving life for the American working class, not on waging a hybrid war with China that benefits no one. Cities across the country are still reeling from the economic impact of the 2020 pandemic, yet our government continues using our tax dollars to provoke wars and create turmoil, laundering billions through the war in Ukraine to weapons makers like Lockheed Martin and Northrop Grumman.

 

We need a government that makes international trade deals on the basis of cooperation, not cynicism and hostility. The US claims to promote “free trade,” even as it imposes unilateral sanctions on China to prevent that country's international trade and development of next-generation microchips. The US seeks to uproot TSMC from Taiwan to bolster its own chip industry and deprive mainland China of trade with the chip behemoth. A paper from the US Army War College recently even broached the idea of blowing up TSMC facilities in Taiwan in the event of a reunification effort by Beijing.


Imagine the wealth generated from tourism alone if we instead had constructive and positive foreign relations with countries like China, Russia, Cuba, Iran, and North Korea. Dingding Chen of The Diplomat, wrote an article detailing how the United States would benefit from signing onto the Belt and Road Initiative. Chen argued that the United States could join and remain critical of China: “By joining the projects, the United States would actually be in a better position to monitor China’s practices and offer constructive criticisms, all of which in the long run would only make the initiative more effective and transparent.” So long as neocons in Washington have their way, peace and cooperation with China will be impossible. We can only hope the people of the United States will see through the propaganda in this information war against China and other so-called “enemies” of the United States. The real enemies are the imperialists, who seek to contain and hold back the potential of people around the world. 

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