Shares in the world’s largest contract chip maker – Taiwan Semiconductor Manufacturing Co Ltd (TSMC) – fell by just under 4% on Wednesday after American rivals Intel unveiled a $20 billion expansion plan.
Taiwan's economy minister sought to downplay the impact of Intel’s announcement but TSMC’s stock dropped 3.9% over news Intel will build two factories in Arizona, and open its plants to outside customers.
The move, seen as a direct challenge to the only two other firms in the world that can make the most advanced chips – TSMC and South Korea's Samsung – pushed Intel’s share price up 6.3%.
Intel is one of the few remaining semiconductor companies that both designs and manufactures its own chips. Rival chip designers such as Qualcomm Inc and Apple Inc rely on contract manufacturers.
TSMC announced plans in May to build its own $12 billion factory in Arizona, in an apparent win by the then Trump administration in its push to wrestle global tech supply chains back from China.
But Taiwan Economy Minister Wang Mei-hua said Intel's plan was "not a challenge" to the island's formidable semiconductor industry.
"First of all I believe that our whole semiconductor ecosystem is very good, and secondly our manufacturers are awesome, and are continually advancing their technology," she said.
Wang said she would be happy to see Taiwan-US cooperation on semiconductors "but of course we still hope they can increase their investment in Taiwan".
- Reporting by Reuters