Arizona governor to focus on semiconductors in Taiwan visit

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FILE - Arizona Republican Gov. Doug Ducey speaks during a bill signing in Phoenix, Arizona, April 15, 2021,. Ducey is to arrive in Taiwan on Tuesday for a visit focused on semiconductors, the critical chips used in everyday electronics that the island manufactures. (AP Photo/Ross D. Franklin, File) (ASSOCIATED PRESS)

TAIPEI, Taiwan (AP) — Arizona Gov. Doug Ducey arrived in Taiwan on Tuesday for a visit focused on semiconductors, the critical chips that are used in everyday electronics and have become a battleground in the technology competition between the U.S. and China.

His visit is the latest in a recent string by U.S. politicians that have angered China, which claims the self-governing island off its coast as part of its territory and says the visits encourage Taiwan independence forces.

Ducey is on a mission to woo suppliers for the new $12 billion Taiwan Semiconductor Manufacturing Corp. (TSMC) plant being built in his state. He is traveling with the Arizona Chamber of Commerce and Industry president and the head of the state's economic development agency.

He will meet with Taiwan President Tsai Ing-wen, business leaders and university representatives in the semiconductor industry, Taiwan's Ministry of Foreign Affairs said in a statement.

The governor's office said he will travel to South Korea and meet with South Korean President Yoon Suk-yeol and business leaders later this week.

“The goal of this trade mission is to take these relationships to the next level – to strengthen them, expand them and ensure they remain mutually beneficial.”

American states are competing to attract a multibillion-dollar wave of investment in chip factories as the U.S. government steps up spending on expanding the U.S. semiconductor industry with a recently passed law. Last week, the Indiana governor visited Taiwan for a similar purpose.

Taiwan produces more than half the global supply of high-end processor chips.

U.S. officials worry that the United States relies too heavily on Taiwan and other Asian suppliers for processor chips used in smartphones, medical devices, cars and most other electronic devices.

Those worries have been aggravated by tensions with China over technology and security. The potential for disruption was highlighted by chip shortages due to the coronavirus pandemic that sent shockwaves through the auto and electronics industries.

Beijing fired missiles into the sea near the island starting on Aug. 4 after U.S. House Speaker Nancy Pelosi visited, disrupting shipping and air traffic, and highlighting the possibility that chip exports might be interrupted.

A law approved by Congress on July 29 promises more than $52 billion in grants and other aid to develop the U.S. semiconductor industry and a 25% tax credit for investors in chip factories in the United States.

State governments are now promising tax breaks and grants to lure chip factories they hope will become centers for high-tech industry.

Intel Corp., the only major U.S. producer, announced plans in March 2021 to build two chip factories in Arizona at a cost of $20 billion. The company has had another facility in Arizona since 1980.

In January, Intel announced plans to invest $20 billion in a chip factory in Ohio.

TSMC, headquartered in Taiwan and which makes chips for Apple Inc. and other customers, announced plans last year to invest $3.5 billion in its second U.S. manufacturing site on the northern outskirts of Phoenix, Arizona.

The company recently completed construction of the main buildings at the $12 billion north Phoenix facility and can now start moving in manufacturing equipment, with production expected to start by 2024, according to Ducey's office. TSMC's decision to build the facility has led other Taiwan-based suppliers to expand in Arizona, with investments totaling $1 billion already announced.

Ducey's five-day trip to Taiwan and South Korea comes as the Republican governor prepares to leave office because of term limits in January. One of the former businessman's major focuses in his eight years in office has been on boosting Arizona's economy by adding to its manufacturing base. New electric vehicle companies have begun production, adding to its existing semiconductor firms.

South Korea's LG Energy Solutions announced in April that it planned to invest $1.4 billion to build an electric vehicle battery manufacturing facility on land it purchased in the Phoenix suburb of Queen Creek. The company later said it would reassess its plans because of changing global economic conditions. Arizona development officials continue to work with LG.

U.S. semiconductor manufacturing has long been established in Arizona, and the state has more than 200 production facilities in addition to Intel and the new TSMC plant.

TSMC's first U.S. semiconductor wafer fabrication facility is in Camas, Washington. It also operates design centers in San Jose, California, and Austin, Texas.

South Korea’s Samsung Electronics says it will break ground in 2024 for a $17 billion chip factory near Austin, Texas. The state says it is the biggest single investment to date in Texas.

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McDonald reported from Beijing, China. Associated Press Reporter Bob Christie contributed from Phoenix.