Morris Chang: globalization is redefined by "national security"

Judy Lin and Monica Chen, DIGITIMES Asia, Taipei 0


Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) founder Morris Chang is again in the limelight, lamenting the "death of globalization." In a keynote speech at the Chinese National Association of Industry and Commerce, Taiwan (CNAIC) on July 4, Chang said "national security" has become the top priority of some countries, redefining globalization to suit their individual self-interests.

Globalization continued to weaken over the past few years, as China began to heavily subsidize its local technology industry, invoking its goal of self-sufficiency in chips by 2025, which has alerted the US to the need for countermeasures, said Chang.

"In a Thucydides trap, national security has taken the top priority," said Chang. "Countries want leadership status in technology because it is related to national security, coupling with the importance of economic leadership, they are placing this above globalization and comparative advantages."

Globalization has been redefined by China and the US, to allow their own companies to make profits abroad and foreign companies to enter their market, on the premise of not harming national security and their technological and economic leadership. But Chang questioned, "Can this still be considered globalization?

"The relationship between the United States and China has been defined as one of competition and cooperation, but now competition is taking precedence over cooperation," said Chang. The only thing is that both sides are not taking war as a premise, through banning certain high technology or passing the CHIPS Act, and raising tariffs to strengthen themselves or weaken the competitiveness of the other side to achieve military or economic leadership.

The US has gone through imposing trade tariffs and export controls by the Trump Administration, and current President Joe Biden has banned the export of advanced manufacturing equipment, advanced chips for high-performance computing, and IC design tools to China along with allies. Now, as the US is also subsidizing the semiconductor manufacturers to set up factories in the US while there remain differences in views between the US and China on intellectual property rights, geopolitical uncertainties have added a huge burden on enterprises.

Morris Chang believes that the basis of globalization is the division of labor based on the Law of Comparative Advantages, and cooperation is formed among countries that each has its own comparative advantage. More than once, Chang said publicly that the semiconductor supply chains will not be able to remain as highly effective and efficient as before, due to the breakdown of globalization.

Chang mentioned that during the inauguration of TSMC's Arizona fab in December 2022, when President Biden said, "the union is coming back," he was a bit uncomfortable with it. He felt that if a good company takes good care of its employees and workers and the management works together harmoniously towards the same goal, it does not need the union at all.

Chang said the US manufacturing industries, such as automobiles and steel, which were specially protected by labor unions, moved overseas, mainly to Asia. This resulted in the shrinking middle class, which also made the US lose its manufacturing capabilities.