Commentary: The cost of over-concentration—How TSMC's liquidity dominance is reshaping Taiwan's banking system

TSMC’s Q1 2026 cash hoard—NT$3 trillion—has turned it into a quasi-central bank in Taiwan, China, with local lenders offering deposit rates exceeding TSMC’s own borrowing costs. Technologically, this capital concentration fuels aggressive CoWoS and advanced packaging expansion but starves mid-tier OSATs of credit, skewing the supply chain. Regulatory exposure intensifies: overreliance on one firm makes Taiwan’s financial system vulnerable to export controls or client diversification shocks. Samsung and Intel are exploiting this by promoting localized, “TSMC-alternative” narratives to Western clients. Over the next 12–24 months, TSMC will likely spin off non-core assets or launch strategic funds to alleviate systemic distortion—otherwise, its financial dominance will keep warping regional capital allocation.