Semiconductor update

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What is different in a year. When TSMC held its 2020 annual general meeting of shareholders, the company has not yet confirmed its plan to continue to open a chip factory in the United States.

Now, not only TSMC’s new $12 billion construction is underway Manufacturing plantOr the fab, in Arizona, but the company is still having in-depth discussions on the factory in Japan, and even considering manufacturing in Germany.

This transition marks the end of an era in the semiconductor industry. Since its establishment 35 years ago, TSMC Almost all the production capacity is in Taiwan.

This focus has helped TSMC become the world’s largest foundry chip manufacturer, whose output now accounts for more than half of all custom chips in the world. In turn, this scale allows the company to obtain high profits: gross profit margin is about 50%.

It also liberated semiconductor companies in the United States, Europe, and Japan to focus on areas other than manufacturing and create value without the massive investment required by today’s chip factories.

But under pressure from Washington, European capitals and Tokyo governments, the company’s management is bringing screwdrivers to TSMC’s well-functioning machine. The company’s chairman Mark Liu told investors this month that “the new geopolitical environment” Call Distribute TSMC’s fabs more widely outside its home country.

John Lee, a technical analyst at the Mercator China Institute in Berlin, said that pushing the semiconductor manufacturing industry back to various regions “is indeed a country-driven thing.”

The resulting changes are likely to affect the tried-and-tested symbiotic relationship between TSMC and the rest of the semiconductor supply chain. In other words, TSMC’s customers must pay the price for dispersing fabs around the world.

According to a Report According to a report released by the Boston Consulting Group and the Semiconductor Industry Association (BCG/SIA) in April, the total cost of ownership of fabs in the United States is 25% to 50% higher than that in Asia.

In Europe, compared with Asian production, chip manufacturing has a “cost disadvantage” of 30-40%. according to Greg Slater, Intel’s director of regulatory affairs.

“It’s hard to imagine that the funds trapped now will be enough to make up the 40% gap,” Lee said of the Western government’s commitment to subsidies for TSMC and other chip manufacturers to build fabs in the country.

According to the BCG/SIA research, compared with the United States, the financial support of the governments of China, Taiwan and South Korea accounts for 40% to 70% of the cost advantages enjoyed by chip manufacturers in these countries.

TSMC has made it clear that its customers will have to bear part of the cost. “[We] Facing the challenge of manufacturing cost. .. Therefore, we are consolidating our wafer prices,” CEO CC Wei said earlier this month.

The question is what these changes will really gain.

Initially, the US government, which was the first to promote the return of chip production capacity, did so to reduce the dependence of its defense supply chain on foreign sources, especially those countries that are vulnerable to China’s interference.

But in the past year, under the impact of global chip shortages, some automakers’ production has been temporarily suspended, and governments have lobbied for TSMC’s new production capacity to protect their industries from such bottlenecks in the future.

Industry experts said that by transferring chip production capacity to multiple countries, it is almost impossible to achieve national security goals and supply chain resilience goals at the same time. Li believes that the situation in EU countries may be weaker than the situation in the United States or Japan.

In the worst case, efforts to shape the chip supply chain in accordance with the goals of national industrial policy may undermine or even destroy it.

Morris Chang, the founder of TSMC, who retired three years ago, recently warned that the effort to reflow chips is equivalent to a “back in time” in the semiconductor supply chain.

As Taiwan’s special envoy to the Asia-Pacific Economic Cooperation Forum, Zhang Say: “What may happen is that after spending hundreds of billions and years, the result is still a less self-sufficient and costly supply chain.”

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