Connect with us

Business

The US factory that lays bare the contradiction in Trump’s policy

Published

on


Faisal Islam profile image
BBC A treated image of a TSMC factory, set against a red backgroundBBC

Among the cactuses in the desert of Arizona, just outside Phoenix, an extraordinary collection of buildings is emerging that will shape the future of the global economy and the world.

The hum of further construction is creating not just a factory for the world’s most advanced semiconductors. Eventually, it will mass produce the most advanced chips in the world. This work is being done in the US for the first time, with the Taiwanese company behind it pledging to spend billions more here in a move aimed at heading off the threat of tariffs on imported chips.

It is, in my view, the most important factory in the world, and it’s being built by a company you may not have heard of: TSMC, Taiwan Semiconductor Manufacturing Company. It makes 90% of the world’s advanced semiconductors. Until now they were all made on the island of Taiwan, which is 100 miles east of the Chinese mainland. The Apple chip in your iPhone, the Nvidia chips powering your ChatGPT queries, the chips in your laptop or computer network, all are made by TSMC.

Its Arizona facility “Fab 21” is closely guarded. Blank paper or personal devices are not allowed in case designs are leaked. It houses some of the most important intellectual property in the world, and the process to make these chips is one of the most complicated and intensive in global manufacturing.

A factory building, next to solar panels, in the middle of the desert.

TSMC’s Arizona factory is closely guarded

They’re hugely protective of the secrets that lie within. Important customers, such as Apple and Nvidia, trust this company to safeguard their designs for future products.

But after months of asking, TSMC let the BBC in to look at the partial transfer of what some argue is the most critical, expensive, complex and important manufacturing in the world.

The poster child for Trump’s policy

President Trump certainly seems to think so. He often mentions the factory in passing. “TSMC is the biggest there is,” he has said. “We gradually lost the chip business, and now it’s almost exclusively in Taiwan. They stole it from us.” This is one of the US president’s regular refrains.

TSMC’s recent decision to expand its investments in the US by a further $100bn (£75bn) is something Trump attributes to his threats of tariffs on Taiwan and on the global semiconductor business.

The expansion of the Arizona facility, which was announced in March is, he believes, the poster child for his economic policies – in particular the encouragement of foreign companies to relocate factories to the US to avoid hefty tariffs.

Getty Donald Trump standing in front of a podiumGetty

Trump heralded TSMC’s decision to invest in the US as proof of success for his tariff policy

China is also watching developments carefully. Taiwan’s chip-making prowess has been part of what its government has called its “Silicon Shield”, against a much-feared invasion. While the original strategy was to make Taiwan indispensable in this area of critical technology, the pandemic supply chain difficulties changed the calculus because relying on a single country seemed like a greater risk.

China claims the self-ruled Taiwan as its territory but Taiwan sees itself as distinct from the Chinese mainland.

So, many currents of the world economy, frontier technology and geopolitics flow through this one site and within it lies the essential contradiction of Trump’s economic and diplomatic policy.

He sees this plant as the exemplar of America First, and the preservation of economic and military superiority over China. Yet the manufacture of these modern miniaturised miracles at the frontier of physics and chemistry inherently relies on a combination of the very best technologies from around the world.

The cleanest environment on Earth

Greg Jackson, one of the facilities managers, takes me around in a golf buggy. The factories are almost a carbon copy of the TSMC spaces in Taiwan, where he trained. “I would say these facilities are probably some of the most advanced and complicated in the world,” he says.

“It’s quite the dichotomy. You’ve got really, really small chips with really small structures, and it takes this massive facility with all the infrastructure to be able to make them… Just the sheer complexity, the amount of systems that it takes, is staggering.”

Inside the “Gowning Building”, workers dress in protective clothing before crossing a bridge that is supposed to create the cleanest environment on Earth, in order to protect the production of these extraordinary microscopic transistors that create the microchips underpinning everything.

Konstantinos Ninios, an engineer, shows me some of the very first productions from TSMC Arizona: a silicon wafer with what is known as “4 nanometre chips”.

Watch: TSMC engineer Konstantinos Ninios shows Faisal Islam how transistors are made

“This is the most advanced wafer in the US right now,” he explains. “[It] contains about 10 to 14 trillion transistors… The whole process is 3,000 to 4,000 steps.”

If you could somehow shrink your body to the same scale and get inside the wafer, he says that the many different layers would look like very tall streets and skyscrapers.

Manufacturing manipulation of atoms

TSMC was founded at the behest of the Taiwanese government in 1987, when chip executive Morris Chang was directed to start the business. The model was to become a dedicated foundry for microchips, manufacturing other companies’ designs. It became wildly successful.

Driving the advancement of the technology is the miniaturisation of the smallest feature on chips. Their size is measured these days in billionths of a metre or nanometres. This progress has enabled mobile phones to become smartphones, and is now setting the pace for the mass deployment of artificial intelligence.

It requires incredible complexity and expense through the use of “extreme ultraviolet (UV) light”. This is used to etch the intricate building blocks of our modern existence in a process called “lithography”.

The world’s dependence on TSMC is built on highly specialised bus-sized machines, which are in turn sourced almost entirely from a Dutch company called ASML, including in Arizona.

These machines shoot UV light tens of thousands of times through drops of molten tin, which creates a plasma, and is then refracted through a series of specialised mirrors.

The almost entirely automated process for each wafer of silicon is repeated thousands of times in layers over months, before the $1m LP-sized wafer of 4nm silicon chips is formed.

“Just imagine a particle or a dust particle falling into this,” Mr Ninios says to me incredulously. “The transistors are not going to work. So all of this is cleaner than hospital operating rooms.”

Caution in Taiwan

Taiwan does not have special access to the raw materials – but it has the know-how to stay years ahead of other companies in the intricate process of producing these atomic building blocks of modern life.

Some in the Taiwanese government are cautious about spreading the frontier of this technology off the island. Trump wasted little time in claiming the firm’s decision to bring its highest level of technology to the US was due to his economic policies.

He said this would not have happened without the stick of his planned tariffs on Taiwan and semiconductors. Those I speak to at TSMC are diplomatic about that claim.

Much of this was already planned and subsidised under former US President Biden’s Chips Act.

A woman, wearing a black jacket, sits inside a room, smiling.

The supply chain for semiconductors is global as no single country can do everything at the moment, says Rose Castanares, President of TSMC Arizona

On the walkway into the building are photographs showing Biden’s visit in 2022, with the building site draped in the Stars and Stripes and a banner saying “a future Made in America”.

“The semiconductor supply chain is global,” says TSMC Arizona President Rose Castanares. “There’s really no single country at this moment that can do everything from chemicals to wafer manufacturing to packaging, and so it’s very difficult to unwind that whole thing very quickly.”

‘Non-Red’ supply chains to counter China

As for the semiconductor supply chain, tariffs will not help. The supply chain stretches all over the world. Whether it’s the silicon wafers from Japan, the machines required from the Netherlands, or mirrors from Germany, all sorts of materials from all around the world are required. Now, they could face import charges.

That said, TSMC’s boss was quick off the mark in confirming the expansion of the US site at an event with Trump at the White House. In recent weeks, America’s tech elite – from Apple’s Tim Cook, to Nvidia’s Jensen Huang – have been queueing up to tell the world that TSMC Arizona will now produce many of the chips in their US products.

The global chip industry is very sensitive to the economic cycle, but its cutting-edge technology enjoys very healthy margins, that could cushion some of these planned tariffs.

A black and red sign sits in the middle of the desert. On the sign it says 'TSMC Arizona, Corporation, Fab 21'.

The company was founded in Taiwan in 1987. In March this year, they announced an expansion of their Arizona facility

There are many geopolitical subtexts here. The factory sits at the heart of US strategy to gain technological, AI and economic supremacy over China.

Both the Biden and Trump administrations have developed policies to try to limit Chinese access to the frontier semiconductor technology – from a ban on exports to China of ASML’s machines, to new legislation to ban the use of Huawei AI chips in US software or technology anywhere in the world.

Taiwan’s President Lai this week urged democracies such as Japan and the US to develop “non-Red” supply chains to counter China.

Not everyone is convinced that this strategy is working, however. Chinese technologists have been effective at working around the bans to develop competitive indigenous technology. And Bill Gates this week said that these policies “have forced the Chinese in terms of chip manufacturing and everything to go full speed ahead”.

Trump wants TSMC Arizona to become a foundation stone for his American golden age. But the company’s story to date is perhaps the ultimate expression of the success of modern globalisation.

So for now, it’s a battle for global tech and economic supremacy, in which Taiwan’s factory technology, some of which is now being moved to the Arizona desert, is the critical asset.

BBC InDepth is the home on the website and app for the best analysis, with fresh perspectives that challenge assumptions and deep reporting on the biggest issues of the day. And we showcase thought-provoking content from across BBC Sounds and iPlayer too. You can send us your feedback on the InDepth section by clicking on the button below.



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Stock markets shrug off tariff letters after Trump says August 1 tariff deadline ‘not 100% firm’ – business live | Business

Published

on


Introduction: Asia-Pacific markets shrug off new Trump tariff threats

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The TACO trade is back! Many Asia-Pacific stock markets are rising today, despite Donald Trump’s decision to ramp up his trade war by announcing new tariffs on 14 US trading partners.

There’s relief that Trump has announced a new pause before these new levies kick in – a new three-week reprieve kicks the can down the road to 1 August, rather than tomorrow.

This delay will give countries to negotiate trade deals with the US.

Asked if 1 August deadline was firm, Trump indicated it wasn’t exactly concrete, saying last night:

“I would say firm, but not 100% firm. If they call up and they say we’d like to do something a different way, we’re going to be open to that.”

That has encouraged traders to conclude that Trump Always Chickens Out (TACO).

So while there were losses on Wall Street last night after the first tariff letters were released, markets across Asia are taking the news in their stride.

In Tokyo, the Nikkei 2225 has risen by 0.3%, up 118 points to 39,705 points, even though Japan has been threatened with a new 25% tariff from 1 August (slightly higher than the 24% rate announced back in April, before Trump’s 90-day pause which expires tomorrow).

South Korea’s KOSPI has gained nearly 2%, even though Seoul has also received a letter announcing a new 25% tariff.

China’s CSI300 index has climbed by 0.8%. European markets are expected to open flat.

More letters are expected to be sent later this week.

Stephen Innes, managing partner at SPI Asset Management, says traders are pricing in “delay, maybe even dysfunction”, rather than a resolution of the trade war. But that’s enough to keep them bidding.

Innes writes:

Markets didn’t lurch because they’ve seen this show before. Tariff hike, rhetoric spikes, and then—like clockwork—comes the sudden pivot: “We’re still open to talks.” This is policy by poker tell. And by now, investors are familiar enough with the bluff to call it and fade the fear.

However…Ipek Ozkardeskaya, senior analyst at Swissquote Bank, fears there is too much “unexplained optimism”, adding:

The deadline extension is not good news, per se. It simply adds to the uncertainty. It’s yet another sign that the deadline won’t be a line in the sand, and that tariffs set in the coming days and weeks won’t be carved in stone, either.

They will be constantly changed — raised, lowered — and used as a go-to threat in every situation.

The agenda

  • 9.30am BST: UK’s Office for Budget Responsibility to release its latest Fiscal risks and sustainability report

  • 10am BST: Marks & Spencer chair Archie Norman to face business and trade committee to discuss M&S’s cyber attack

  • 11am BST: Office for Budget Responsibility press conference

  • 12pm BST: Post Office Horizon IT Inquiry to release Volume 1 of its Final Report

Share

Updated at 

Key events

European stock markets have also opened higher, led by Germany.

The German DAX index rose by 50 points, or 0.2%, to 24,125, in early trading, amid some relief that European negotiators have another three weeks to reach a trade deal with Washington.

France’s CAC has inched up by 0.1%, with Spain’s IBEX gaining 0.14%.

Jochen Stanzl, chief market analyst at CMC Markets, says:

Donald Trump has once again retreated from imposing tariffs, allowing the DAX to rise above the 24,000-point mark. It appears that investors are eager to test the previous week’s highs once more, but the success of this endeavor will depend on the daily news regarding trade policy, which is expected to remain volatile. The trade issue continues to be a source of uncertainty for the stock market, and without a trade agreement with the U.S., a sustainable continuation of the rally could prove challenging.

This morning, the European Union faces both positive and negative news. On the positive side, the pause on tariffs has been extended until August. Trump seems to be sticking to his pattern of initially making threats before showing a willingness to negotiate. He likely understands that implementing reciprocal tariffs would be more harmful than beneficial to the ongoing discussions.

However, the negative aspect is that sector-specific tariffs on cars, auto parts, aluminum, and steel will remain in effect until August 1. This latest development is not cause for great celebration, as the EU has struggled to effectively counter the already high tariffs that are currently in place during the negotiations.”





Source link

Continue Reading

Business

Company Turns To AI For Cost Cutting, Ends Up Paying US Woman Rs 1.7 Lakh To Fix Errors

Published

on


“Maybe I’m being naive, but I think if you are very good, you won’t have trouble,” she expressed her views about concerns around AI. According to Skidd, AI can be an excellent tool when used correctly. Like her, there are many writers who are earning by fixing AI-generated content.

A digital marketing agency co-owner, Sophie Warner, shared a similar experience, noting how her clients were using ChatGPT for their issues first.

“Earlier, clients would message us if they were having issues with their site or wanted to introduce new functionality,” Warner said. “Now they are going to ChatGPT first.”

She said clients using ChatGPT for website code had reported issues. These include sites crashing down or leaving them vulnerable to hackers. She revealed that such a move cost one of her clients £360 (Rs 42,000) and three days of service disruption, the BBC report added.  

Similar instances have occurred in the past where businesses trying to cut costs with AI have ended up paying more. In June, a Swedish fintech company, Klarna, made headlines for a similar incident. The company announced that it was organising a large-scale recruitment drive to hire staff again, two years after firing more than 700 employees to replace them with AI. 



Source link

Continue Reading

Business

AI video becomes more convincing, rattling creative industry

Published

on


[NEW YORK] Gone are the days of six-fingered hands or distorted faces – artificial intelligence (AI)-generated video is becoming increasingly convincing, attracting Hollywood, artists, and advertisers, while shaking the foundations of the creative industry.

To measure the progress of AI video, you need only look at Will Smith eating spaghetti.

Since 2023, this unlikely sequence – entirely fabricated – has become a technological benchmark for the industry.

Two years ago, the actor appeared blurry, his eyes too far apart, his forehead exaggeratedly protruding, his movements jerky, and the spaghetti did not even reach his mouth.

The version published a few weeks ago by a user of Google’s Veo 3 platform showed no apparent flaws whatsoever.

“Every week, sometimes every day, a different one comes out that’s even more stunning than the next,” said Elizabeth Strickler, a professor at Georgia State University.

A NEWSLETTER FOR YOU

Friday, 2 pm

Lifestyle

Our picks of the latest dining, travel and leisure options to treat yourself.

Between Luma Labs’ Dream Machine, launched in June 2024, OpenAI’s Sora in December, Runway AI’s Gen-4 in March 2025, and Veo 3 in May, the sector has crossed several milestones in just a few months.

Runway has signed deals with Lionsgate studio and AMC Networks television group.

Lionsgate vice-president Michael Burns told New York Magazine about the possibility of using AI to generate animated, family-friendly versions from films such as the John Wick or Hunger Games franchises, rather than creating entirely new projects.

“Some use it for storyboarding or previsualization” – steps that come before filming – “others for visual effects or inserts”, said Jamie Umpherson, Runway’s creative director.

Burns gave the example of a script for which Lionsgate has to decide whether to shoot a scene or not.

To help make that decision, they can now create a 10-second clip “with 10,000 soldiers in a snowstorm”.

That kind of pre-visualisation would have cost millions before.

In October, the first AI feature film was released, Where the Robots Grow, an animated film without anything resembling live action footage.

For Alejandro Matamala Ortiz, Runway’s co-founder, an AI-generated feature film is not the end goal, but a way of demonstrating to a production team that “this is possible”.

Resistance everywhere

Still, some see an opportunity.

In March, startup Staircase Studio made waves by announcing plans to produce seven to eight films per year using AI for less than US$500,000 each, while ensuring it would rely on unionised professionals wherever possible.

“The market is there,” said Andrew White, co-founder of small production house Indie Studios.

People “don’t want to talk about how it’s made”, White pointed out. “That’s inside baseball. People want to enjoy the movie because of the movie.”

But White himself refuses to adopt the technology, considering that using AI would compromise his creative process.

Jamie Umpherson argues that AI allows creators to stick closer to their artistic vision than ever before, since it enables unlimited revisions, unlike the traditional system constrained by costs.

“I see resistance everywhere” to this movement, observed Georgia State’s Strickler.

This is particularly true among her students, who are concerned about AI’s massive energy and water consumption as well as the use of original works to train models, not to mention the social impact.

But refusing to accept the shift is “kind of like having a business without having the internet”, she said. “You can try for a little while.”

In 2023, the American actors’ union SAG-AFTRA secured concessions on the use of their image through AI.

Strickler sees AI diminishing Hollywood’s role as the arbiter of creation and taste, instead allowing more artists and creators to reach a significant audience.

Runway’s founders, who are as much trained artists as they are computer scientists, have gained an edge over their AI video rivals in film, television, and advertising.

But they are already looking further ahead, considering expansion into augmented reality and virtual reality, for example, creating a metaverse where films could be shot.

“The most exciting applications aren’t necessarily the ones that we have in mind,” said Umpherson. “The ultimate goal is to see what artists do with technology.” AFP



Source link

Continue Reading

Trending