The technology market takes a hit: What do we know? – Opinion
American financial markets commentator Lewis Humphries takes a look at how the interaction between technology giants in the United States and their Asia Pacific region counterparts and colleagues is affecting the currency values globally
By Lewis Humphries, a financial markets industry commentator based in North America
It’s well-known that the Donald Trump administration remains loyal to inherently protectionist economic policies, which seek to change existing trade agreements and reduce America’s reliance on outsourcing and Asian exports.
To this end, the Department of Commerce has recently tightened restrictions on tech exports to China, Russia and Venezuela, apparently in a bid to prevent foreign governments from using such technology against U.S. interests.
While the precise motivation for this move can be argued at length, the story took on another dimension recently when the Taiwan Semiconductor Manufacturing Co. (TSMC) announced plans to build an advanced chip foundry in the state of Arizona. But what does this mean for both parties, and what role will it play in America’s trade strategy going forward?
The Story so Far
Interestingly, the company (which is established as the world’s largest contract semiconductor foundry) is building the establishment with full federal support, while White House officials are also in talks with Intel to build similar tech foundries stateside.
Clearly, this is part of the Trump’s administration’s attempt to curb tech exports and reduce the nation’s reliance on chip factories based in Asia, with huge employers such as Apple and Qualcomm reliant on such technology.
The plant is scheduled to start the production of chips in 2024, enabling TSMC’s huge American consumer base to fabricate their semiconductor products domestically.
Not only this, but it’s also estimated that the move will create 1,600 jobs in the states and up to 20,000 wafers each month, and in this respect it could be viewed as a progressive economic policy to help North America recover from the Covid-19 pandemic.
What Else Does This Mean for the Participating Economies?
The issue of Covid-19 is an interesting one, as this has definitely helped to underscore the pitfalls of relying on international supply chains and foundries located abroad.
While Taiwan has been largely shielded from the worst effects of the outbreak, however, it remains wholly reliant on exports as its primary source of revenue. Given this, the global uncertainty created by the pandemic and the rising value of the new Taiwan dollar (which is being underpinned by relative economic growth and could ultimately price exports out of the market), it makes sense for the nation’s government to seek out new capital opportunities.
This is particularly relevant when you consider the dominance of the TSMC stock and its exponential growth in the wake of the estimated $12 billion foundry deal, which has also sent the value of the TWD soaring to new highs in recent times.
Ultimately, this represents a win-win scenario for both Taiwan and the U.S., while it will arguably help the latter to strike a blow in their ongoing trade war with China. This type of deal could also provide mutual economic benefits in a post-Covid world, particularly in terms of job creation and sustainable economic growth.
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