HSINCHU, Taiwan -- Taiwan Semiconductor Manufacturing Co. (TSMC) founder Morris Chang warned that the company can expect to face tougher competition, as rivals like Intel leverage the desire of governments around the world to build up chipmaking capacity as a matter of national security.

"In the semiconductor space, there is no globalization anymore; there is no free trade anymore," Chang said Saturday during TSMC's annual Sports Day in Hsinchu, in northwestern Taiwan. "The priority is national security only. I see this global competition going on. Our competitors may take advantage of this geopolitical trend, and want to beat us."

One of the competitors Chang mentioned by name was U.S.-based Intel. The biggest American chipmaker is stepping up efforts to get into contract chip manufacturing, also known as the foundry business, an area dominated by TSMC. Chang pointed out that U.S. President Joe Biden has twice invited Intel CEO Pat Gelsinger to attend his State of the Union address to Congress as the country pushes to rebuild its semiconductor manufacturing industry.

Both Intel and TSMC have announced massive investment plans to build cutting-edge chipmaking plants in the U.S.

When it comes to bringing high-tech manufacturing back to the U.S., "the U.S. chose Intel CEO Pat Gelsinger as the model [to show its ambition], not TSMC Chairman Mark Liu," Chang told reporters at the event. "It's a very high recognition for Intel. It's a big honor for them [to be invited]."ooking ahead, he said Intel will have a good chance of competing only if it can offer its foundry clients the same level of service, reliability, scale and price as TSMC. He said he was not too worried about that happening, but there was still an outside chance TSMC would have to overcome that challenge.

In answer to Nikkei Asia's question about which regions among the U.S., Europe, Japan and Southeast Asia have the best chance of emerging as winners in the chip race, Chang singled out Japan and Singapore.

"I think Japan and Singapore have good conditions for [chip manufacturing]," he said. "The working culture in Japan is also very good." He recalled the positive experience he had five decades ago, when he helped Texas Instruments set up a chip packaging and assembly facility in Kyushu, in southwestern Japan. "Water and electricity are abundant there as well."

TSMC is building an $8 billion facility in Kyushu and is planning another, more advanced plant there. Progress on the first plant has been going more smoothly than at TSMC's more expensive cutting-edge facility in the U.S. state of Arizona.

Looking at the chip industry over the long term, the 92-year-old emphasized how powerhouses can rise and fall.

He pointed to the U.S. chip industry as an example, which according to him had its heyday from 1955 to the early 1970s. "Back then, its chip manufacturing environment was very good, just like Taiwan's environment today. But it changed over time and became not as good. But the U.S. has upgraded, and now many high-value chip developers have emerged."

Chang said the chipmaking environment in Taiwan, where TSMC is based and has the majority of its chip production, could also change over the next 20 or 30 years as the economy continues to evolve, just like the U.S.

"Who will be the next chip manufacturing powerhouses? Maybe India, Vietnam or Indonesia. Who knows?"

CHENG TING-FANG, Nikkei Asia chief tech correspondent