TSMC is accelerating its global expansion, receiving robust support from governments in Japan and China. In the first half of this year alone, TSMC secured nearly NT$8 billion in subsidies from the two countries, bringing its total government aid from Japan and China to NT$62.5 billion(approximately USD $1.96 billion).

According to the Central News Agency, TSMC’s financial reports show that its subsidiaries—JASM in Japan and Nanjing in China—received these subsidies to support their plans to establish and operate manufacturing facilities in Kumamoto and Nanjing. The funds are primarily earmarked for real estate, plant, and equipment purchases, as well as to offset construction and operational costs.

TSMC reported that it received NT$7.051 billion in subsidies from Japan and China in 2022, followed by NT$47.545 billion in 2023, and an additional NT$7.956 billion in the first half of this year, totaling NT$62.5 billion.

Governments worldwide have increasingly recognized semiconductors as vital strategic assets, spurring a race to subsidize the industry’s growth. With TSMC’s cutting-edge technology leading the global market, it has become a key target for investment incentives from various governments. TSMC has already established a presence in Kumamoto, Japan, and Arizona, U.S., and is expanding its 28nm capacity in China.

On August 20, TSMC broke ground on its European Semiconductor Manufacturing Company (ESMC) in Dresden, Germany, marking the start of its initial land preparation phase for a new wafer fab. This expansion extends TSMC’s global footprint from the U.S., China, and Japan to Europe.

The groundbreaking ceremony, hosted by TSMC Chairman C.C. Wei, was attended by German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen. The European Commission also announced its approval of a €5 billion German subsidy package under EU state aid rules, demonstrating its support for the ESMC project.

TSMC’s Kumamoto plant is progressing rapidly, with its first wafer fab set to begin mass production of 12nm, 16nm, 22nm, and 28nm process technologies in the fourth quarter of this year. A second fab is scheduled to start production in 2027, utilizing 6nm, 7nm, 12nm, 16nm, and 40nm process technologies.

In Arizona, TSMC’s first wafer fab is on track to begin 4nm process production in the first half of 2025, with a second fab expected to commence 2nm production in 2028. The company also plans to construct a third fab that will deploy 2nm or more advanced technologies.

In April, the U.S. Department of Commerce announced a USD $6.6 billion subsidy for TSMC’s advanced fab in Arizona. However, TSMC has yet to receive these funds and does not speculate on future government subsidies.

(Photo credit: TSMC)

On June 30, South Korea’s SK Group announced that its chip manufacturer, SK Hynix, will invest KRW 103 trillion (approximately USD 75 billion) by 2028 to enhance its chip business, with a particular focus on AI development.

According to a report from Commercial Times, SK Group recently concluded a two-day strategy meeting, after which it announced a full-scale effort to develop the AI capability, putting more emphasis on areas such as high-bandwidth memory (HBM), AI data centers, and AI voice assistants. SK Group further stated that 80% of the KRW 103 trillion, roughly KRW 82 trillion (USD 60 billion), will be dedicated to developing HBM.

HBM is widely used in generative AI chipsets, and SK Hynix is currently the exclusive supplier of HBM3 chips to NVIDIA. In the first quarter of this year, SK Hynix’s revenue more than doubled year-on-year to KRW 12.4 trillion, exceeding market expectations. Additionally, the company turned profit with an operating income of KRW 2.89 trillion, compared to a loss in the same period last year, primarily due to the high-margin HBM chips.

SK Group stated that by 2026, the group will invest KRW 80 trillion in AI and semiconductors, while continuing to streamline its businesses to increase profitability and return value to shareholders. Its plan to invest in AI chip development aligns with the South Korean government’s semiconductor policy.

As per a previous report from WeChat account DRAMeXchange, in January 2024, Korea launched the “World’s Largest and Best Semiconductor Supercluster Construction Plan,” proposing an investment of KRW 622 trillion (~USD 454 billion) by 2047, which is to build 16 new plants, inclusive of R&D facilities, and construct “Semiconductor Supercluster” in semiconductor-intensive cities such as Pyeongtaek, Hwaseong, Yongin, Icheon, and Suwon in southern Gyeonggi Province. It’s estimated that the chip production capacity will reach 7.7 million wafers per month by 2030.

According to another report from the Chosun Daily, starting from July, the South Korean government will also begin offering incentives and subsidies to semiconductor companies, launching a 26 trillion won (USD 19 billion) funding program to support the industry.

Read more

• [News] South Korea to Boost Semiconductor with a 26 Trillion Won Subsidy Program Starting in July
• [News] A Subsidy Wave Sweeping in the US, Europe and Japan amid the Cut-Throat Chip Competition

(Photo credit: SK Hynix)

In recent years, global semiconductor market has seen cut-throat competition. Amid complicated international environment, countries and regions such as South Korea, the United States, Japan, and Europe have launched chip subsidy measures to strengthen the development of their domestic semiconductor industries.

To revive semiconductor production, the United States officially passed the CHIPS and Science Act in 2022, which includes a fund of approximately USD 52.7 billion for supporting the semiconductor industry and an investment tax credits worth USD 24 billion to companies.

• Subsidy Application System for Semiconductor Manufacturing Fab Closed

Since December 2023, several semiconductor companies have received subsidies from the U.S. government under the CHIPS and Manufacturing Act. Preliminary statistics showed subsidy amounts reached billions of dollars, including Intel (USD 8.5 billion), Micron (USD 6.14 billion), Samsung (USD 6.4 billion), TSMC (USD 6.6 billion), GlobalFoundries (USD 1.5 billion), and Microchip Technology (USD 162 million).

From this it can be seen that early U.S. subsidies in the semiconductor sector mainly focused on semiconductor chip manufacturing. However, due to limited funds and the large number of applications, the CHIPS program office previously announced plans to close funding application system for semiconductor manufacturing plants until “further notice.”

And it’s worth noting that lately, another semiconductor company announced it had received U.S. chip subsidies, indicating the government’s target has shifted to the semiconductor materials sector.

• Entegris Received a Subsidy of USD 75 Million

On June 26, the U.S. Department of Commerce and semiconductor materials company Entegris jointly announced that Entegris would receive a USD 75 million chip subsidy from the U.S. government.

It is reported that Entegris has signed a non-binding preliminary terms memorandum (PMT) with the U.S. Department of Commerce. As per the CHIPS and Science Act, the Department of Commerce will provide Entegris with a direct fund of up to USD 75 million.

This fund will support the development of a state-of-the-art factory in Colorado Springs, supporting the company’s Advanced Materials Handling (AMH) and Microcontamination Control (MC) divisions. The aim is to produce products critical to the future of U.S. semiconductor manufacturing.

The factory is planned to put into initial commercial operation in 2025 and will be constructed in multiple phases: The first phase will support the production of front-opening unified pod (FOUP), currently entirely produced abroad, and liquid filtration membranes. The second phase will support the production of advanced liquid filters, purifiers, and fluid handling solutions.

Front-opening unified pod is an important product for transporting and protecting wafers in the semiconductor manufacturing process. The U.S. Department of Commerce press release stated that Entegris mainly supplies products for Intel, TSMC, Micron, and GlobalFoundries, holding a significant position in the global semiconductor supply chain.

Read more

• [News] A Subsidy Wave Sweeping in the US, Europe and Japan amid the Cut-Throat Chip Competition
• [News] US Allocates USD 39 Billion Subsidy to Semiconductor Industry for Establishing Plants

(Photo credit: Entegris)

Following grants to Intel and TSMC, the US administration reportedly plans to announce next week a USD 6 to 7 billion subsidy to Samsung for constructing a semiconductor fab in Taylor, Texas, aimed at increasing chip production capacity.

According to sources cited by Reuters, this funding initiative, set to be announced by U.S. Commerce Secretary Gina Raimondo, will back four projects at Samsung’s site in Taylor, Texas. These projects include a previously disclosed USD 17 billion chip manufacturing plant, along with an additional plant, an advanced packaging facility, and a research center.

Furthermore, the plan involves Samsung’s investment in another undisclosed location. As part of the deal, Samsung’s investment in the U.S. is projected to more than double, exceeding USD 44 billion.

In 2022, the U.S. Congress passed the CHIPS and Science Act, allocating USD 52.7 billion for research and manufacturing grants, alongside USD 75 billion in government loans, aimed at boosting American semiconductor production and reducing reliance on China and Taiwan. As per the Semiconductor Industry Association (SIA), the U.S. share of global semiconductor manufacturing capacity declined from 37% in 1990 to 12% in 2020.

Samsung is poised to become the third-largest recipient of subsidies under the semiconductor act, following TSMC. The US administration is set to provide USD 6.6 billion in aid to TSMC, which plans to build a third chip plant in Arizona with a total investment of USD 65 billion.

According to the latest information released by TSMC, Arizona’s first fab is on track to begin production leveraging 4nm technology in first half of 2025. The second fab will produce the world’s most advanced 2nm process technology with next-generation nanosheet transistors in addition to the previously announced 3nm technology, with production beginning in 2028.

The third fab will produce chips using 2nm or more advanced processes, with production beginning by the end of the decade. Each of the three fabs, like all of TSMC’s advanced fabs, will have cleanroom area approximately double the size of an industry standard logic fab.

Previously, the U.S. government announced that Intel would receive USD 8.5 billion in federal subsidies and USD 11 billion in loans. Intel is planning to invest USD 100 billion across four states in the U.S. for building and expanding fabs, and is also seeking an additional USD 25 billion in tax credits.

Regarding the rumored subsidy to Samsung, the U.S. Department of Commerce, Texas Governor Greg Abbott’s office, and Samsung have declined to comment on the matter.

Read more

• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab

Against the backdrop of geopolitical influences, the concentration of advanced semiconductor manufacturing processes in Taiwan has raised concerns among international companies. According to TrendForce data, as of the end of 2024, over 70% of global advanced process manufacturing capacity is still located in Taiwan.

Governments worldwide have responded by offering generous subsidy policies to attract semiconductor foundries to establish plants locally. The dynamics of Taiwan’s semiconductor fabs in the global setting and changes in the global production landscape have become a focal point of industry attention.

Per TrendForce’s data, when considering the equivalent 12-inch wafer production capacity, in 2023, Taiwan held a global share of approximately 47%, followed by China at 26%, South Korea at 12%, the United States at 6%, Singapore at 4%, Japan at 2%, Germany at 1%, and others at 2%. By 2027, the distribution is expected to shift, with Taiwan’s share decreasing to 42%, China increasing to 28%, South Korea at 10%, the United States at 7%, Singapore at 6%, Japan at 3%, Germany at 2%, and others at 1%.

Examining recent developments in the overseas expansion of Taiwan’s semiconductor foundries, Powerchip Semiconductor Manufacturing Corporation (PSMC) has officially announced the establishment of its first 12-inch fab, JSMC, in Sendai, Miyagi Prefecture, Japan. According to TrendForce’s research, the plant is planned to have a total capacity of around 40Kwspm, starting with a 40nm node and gradually transitioning to 28nm, primarily serving domestic clients in Japan while seeking subsidies and tax incentives for semiconductor.

JSMC’s construction is scheduled to commence in 2024, with full-scale production expected by 2027. With the establishment of PSMC’s overseas fab, TrendForce estimates that PSMC’s overseas production capacity will grow from 0% in 2023 to 9% in 2027.

The progress of TSMC’s second fab in Kumamoto, Japan, has garnered significant industry attention recently. On another note, The German cartel office has approved Bosch, NXP, and Infineon’s investment in TSMC’s German fab, ESMC. Each company will acquire a 10% stake, while TSMC will retain substantial control with over 50% ownership.

According to TrendForce’s research, ESMC’s total planned capacity is around 40Kwspm, focusing on 28/22nm and 16/12nm processes, with construction expected to start in the second half of 2024 and mass production in 2027. TrendForce predicts that TSMC’s overseas production capacity will increase from 9% in 2023 to 15% in 2027.

As for UMC, TrendForce’s research indicates that the overseas production capacity is projected to increase from 42% in 2023 to approximately 47% by 2027. Additionally, UMC’s Fab12i in Singapore has a production capacity of approximately 60Kwspm, with plans for manufacturing processes ranging from 55/40nm to 28/22nm. Moreover, UMC’s Fab12M in Japan is expanding its capacity by around 10Kwspm in collaboration with Denso.

Regarding Vanguard International Semiconductor (VIS), it was previously reported by Nikkei that VIS plans to construct its first 12-inch wafer fab in Singapore, primarily focusing on the demand for automotive chips. However, VIS has not yet officially announced any related developments. According to TrendForce’s research, if VIS does not have new plans for investment in a 12-inch fab, its estimated spending required for the operation of various fabs in 2024 is approximately $94 million, representing a nearly 70% decrease compared to previous years.

Explore more

• TrendForce Foresees China’s Mature Wafer Processes to Expand to 33% by 2027, Japan Secures Advanced Processes
• China’s Wafer Fabs Hits 44 with Future Expansion 32, Mainly Targeting on The Mature Process