The global chip supply is expected to get some relief from Taiwan Semiconductor Manufacturing Co (TSMC) and the other Taiwanese Semiconductor manufacturers next year. A Taiwan government think tank forecasts output will grow 25.9% in 2021 to a 4.1 trillion New Taiwan dollars ($147 billion). Producers are struggling to keep up with the surging demand even as they invest in new capacity.
A recent report published by Taiwan government think tank, The Industry, Science and Technology International Strategy Center (ISTI) forecasts output to grow 25.9% in 2021 to a 4.1 trillion New Taiwan dollars ($147 billion). ISTI said 2022 output is expected to continue expanding next year to NT$4.5 trillion, driven largely by advanced chips,
Taiwan Semiconductor Manufacturing Expansion
Taiwan Semiconductor Manufacturing Co is the world’s largest contract chipmaker, and as such the most critical and focal point of the global supply crunch given how critical chips are to the modern economy. TSMC’s total capacity last year was about three times greater than its rival’s foundry capacity.
TSMC said on Nov. 9 that it will build a $9 billion new factory in the southern city of Kaohsiung. The aim is to roughly double its capacity expansion over the next three years to cater for the rapidly growing demand for chips used in high-performance computing (HPC) applications and electronic devices.
A new fab in Japan is to produce 22-nanometer and 28-nanometer chips, while a new plant in Kaohsiung is to focus on 7-nanometer and 28-nanometer chips, the company said after its board of directors approved a capital budget of US$9.04 billion.
Construction of the two fabs is scheduled to begin next year, with mass production expected to begin in 2024.
“We started speeding up our capacity expansion at the beginning of last year, but the semiconductor supply chain was still unable to catch up … with demand growth,” TSMC senior vice president Y.P. Chin (秦永沛) told a semiconductor forum organized by National Cheng Kung University in Tainan.
TSMC said it expects the global semiconductor industry to show compound annual growth of more than 10 percent from this year to 2025, outpacing growth of 7 percent in the five years to last year and 3 percent from 2000 to 2015.
To seize this opportunity, TSMC is approximately doubling the pace of its capacity expansion from this year to 2023, compared with the three years to last year, Chin said.
Taiwan has an advantage over other countries and regions in helping chipmakers to build cost-effective fabs, given its sound semiconductor ecosystem and supply chains, which took the nation 30 years to foster, Chin said.
“Although many countries consider semiconductor manufacturing to be a national security issue amid geopolitical tensions, it is not easy to make chips locally,” Chin said.
The semiconductor industry is capital-intensive, technology-intensive and labor-intensive, he said, adding that it might be easy for wealthy countries to raise capital to make chips, but a semiconductor ecosystem and supply chains cannot be created overnight.
“We are very optimistic about Taiwan’s semiconductor industry for at least for the next 10 years,” he said.
Semiconductor Bottleneck
Taiwan’s Ministry of Economic Affairs held a joint seminar with Mizuho Bank in Taipei to encourage Japanese investment in the island. The majority of chipmaking equipment and materials used in Taiwan comes from Japan.
Producers are struggling to meet demand also from supply constraints of upstream materials. For example 300mm silicon wafers supply for cutting-edge chips, is not growing quickly enough. “Semiconductor production could face a bottleneck in 2022,” warns the Industry Research Division at Tokyo-based Mizuho Bank.
“We especially value our relationship with Japan,” Deputy Economic Minister Chen Chern-chyi said.
Lora Ho, TSMC senior vice president for Europe and Asia sales, called on Japanese suppliers to invest in production of gases and liquid materials for the semiconductor industry in Taiwan.
With the talk of the US doing the rounds of American brokerage houses after US President Biden said he would invest in US chip production. TSMC founder Morris Chang (張忠謀) last week said that it would “not … be a possible task” to rebuild semiconductor supply chains in the US due to high costs.
Source: Taipei Times Nikkei Asia