According to a report by TechNews citing an article from the international column Project Syndicate, Burn Lin, former R&D Vice President of TSMC, Chintay Shih, former President of the Industrial Technology Research Institute, and Chang-Tai Hsieh, an Academia Sinica member and economics professor at the University of Chicago Booth School of Business, collaborated on an article titled “How America’s CHIPS Act Hurts Taiwan.”

In the article, they collectively elucidated how US semiconductor subsidies weaken TSMC’s strength, rendering the entire semiconductor industry more vulnerable. Additionally, they expressed concern that if China were to blockade or invade Taiwan, the supply chain would become compromised.

The US CHIPS and Science Act, aiming to address this issue with a USD 52 billion subsidy, seeks to encourage semiconductor manufacturers to relocate to the United States. However, according to the report addressing on the design of the bill, its objectives may not be achievable and could even weaken Taiwan’s most crucial industry, posing a threat to Taiwan’s security.

Concerns Arise Over Chip Act Threatening Taiwan’s Security

Currently, the semiconductor industry is dominated by specialized companies distributed globally. TSMC specializes in contract manufacturing, focusing primarily on high-end chips. Other important companies include AMD, NVIDIA, Qualcomm, ASML, Tokyo Electron, and Arm.

Specialization in the industry offers two major benefits.

Firstly, each part of the global supply chain can concentrate on its core expertise and advance further, benefiting other supply chains. Secondly, the production capacity of each link in the global supply chain increases, enhancing resilience against demand shocks.

The cost of specialization is that the industry becomes vulnerable to supply shocks. This issue is not unique to Taiwan; all segments of the supply chain face potential bottlenecks.

However, unlike other segments, Taiwan is reportedly confronted with territorial claims from China. Therefore, the United States and Japan have offered substantial subsidies for TSMC’s relocation. TSMC is constructing new factories in Kumamoto, Japan, and Phoenix, Arizona, in the United States.

Currently, Fab 1 in Kumamoto has been completed according to plan, and many of TSMC’s suppliers have also set up shop there. However, the Arizona plant is substantially behind schedule, and fewer TSMC suppliers have followed suit to establish operations in the United States.

Moreover, TSMC’s experience at its Portland plant in Washington state over the past 25 years has raised doubts about the prospects of the Arizona plant. TSMC struggled to find competitive workers there; even with identical training and equipment, production costs in the U.S. were still 50% higher than in Taiwan. Therefore, TSMC chose not to expand its Portland plant further.

Still, the fundamental issue lies in the fact that while American workers are skilled in chip design technology, they lack the skills required for chip manufacturing, which is crucial in this field.

The article further mentions that TSMC’s Phoenix plant will continue to struggle because there is a shortage of American workers with the skills necessary for semiconductor manufacturing.

As warned by TSMC’s founder, Morris Chang, in 2022, seeking economic security by relocating semiconductor manufacturing to the United States is an expensive exercise in futility. Furthermore, while the USD 52 billion subsidy from the United States may seem substantial, it is insufficient to establish a self-sufficient semiconductor ecosystem in Phoenix.

Additionally, the article points out that Taiwan’s industrial planners have deliberately chosen a niche market built upon existing manufacturing advantages, without attempting to replicate the model of the leading Intel at that time, due to the scarcity of Taiwanese workers with the necessary design skills. Similarly, Japan’s subsidies for TSMC are likely to succeed because Japan already possesses an ample supply of skilled manufacturing workers.

The article also highlights three major risks brought about by the US chip act at the end:

Firstly, if TSMC shifts its focus and loses its investment in innovation, the biggest losses will be incurred by its customers and suppliers, most of which are American companies.

Moreover, it may hinder AI development, as this field largely relies on TSMC-manufactured advanced chips. Consequently, TSMC may reduce its investment in production capacity in Taiwan, reducing the entire semiconductor industry’s ability to withstand demand shocks.

Lastly, TSMC may lose its way and risk being replaced by other companies, losing its leadership position in the field of advanced semiconductor manufacturing.

Well-Intentioned US Chip Act with Poor Design May Ultimately Harm Taiwan’s Economy

The commentary suggests that despite the well-intentioned nature of the US chip act, its design is flawed. Instead of establishing a sustainable semiconductor manufacturing cluster in the United States, it may result in long-term damage to TSMC and ultimately harm Taiwan’s economy.

A better approach for the United States, per the report, would be to protect its own economic security while strengthening Taiwan’s, committing to defend Taiwan, and building production capacity in countries like Japan. This strategy may be more prudent in the long run.

Read more

• [News] Latest Overview on TSMC’s Global Expansion Initiatives
• Strategic Collaboration Between Intel and UMC to Optimize FinFET Foundry Market with Existing Resources, Says TrendForce

(Photo credit: TSMC)

TSMC has announced the latest appointment of Senior Vice President of R&D Dr. Y.J. Mii and Senior Vice President of Operations Mr. Y.P. Chyn as Executive Vice Presidents and Co-Chief Operating Officers of TSMC today, per TSMC’s earlier press release.

According to the press release, following these appointments, the two Executive VPs and Co-COOs, as well as TSMC’s HR, Finance, Legal and Corporate Planning organizations, will report directly to Chief Executive Officer Dr. C.C.Wei. All other organizations will report to the two Executive VPs and Co-COOs. The new organizational structure will take effect on March 1, 2024.

As per TSMC’s introduction of its executives in the official website, Mr. Y.P. Chin joined TSMC when it was founded in 1987 and has made significant contribution to the Company’s product engineering capabilities throughout his career. He was Director of Fab 1 from 1997 to 1998, and in later positions supported yield improvement in all new generations of advanced technology, including the 28nm, 16nm, and 7nm nodes.

Mr. Y.P. Chin is Senior Vice President of Operations at Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). He is responsible for the operation and management of all fabs in Taiwan and overseas. He also co-leads TSMC’s Overseas Operations Office which is responsible for supporting the company’s global expansion and accelerating the organizational effectiveness of overseas operations.

On the other hand, Dr. Y.J. Mii joined TSMC in 1994 as a manager at Fab 3 and then joined the company’s R&D organization in 2001. In 2011, Dr. Mii was appointed Vice President of Research and Development and later he was promoted to Senior Vice President in November 2016.

In more than two decades of services at TSMC, Dr. Mii has contributed greatly to the development and manufacturing of advanced CMOS technologies in both Fab Operations and R&D. He successfully managed the development of 90nm, 40nm and 28nm technologies. By spearheading the research and development of 16nm, 7nm, 5nm, and beyond, he has helped maintain TSMC’s technology leadership in the foundry segment of the global semiconductor industry.

Read more

• [News] Latest Overview on TSMC’s Global Expansion Initiatives

(Photo credit: TSMC)

Intel, according to South Korea’s media outlet TheElec, is actively promoting its 18A process (equivalent to 1.8 nanometers) to South Korean fabless chip companies.

The report cites industry sources revealing that Intel CEO Pat Gelsinger personally engaged with senior executives of these South Korean fabless IC design companies last year. He briefed them on the latest developments in Intel’s foundry plans.

The same source further indicates that Intel is vigorously marketing the 18A process to South Korean chip startups and pledges various benefits to them.

Last week, Intel unveiled its 14A process, equivalent to a 1.4-nanometer process, and announced that chips utilizing this process will enter mass production in 2027. Intel has also announced that it has secured USD 15 billion in orders during its event Intel Foundry Direct Connect at San Jose.

Intel continues to emphasize its goal of becoming the second-largest foundry by 2030, aiming to surpass current foundry runner-up Samsung Electronics and trailing behind market leader TSMC.

As for the mass production of the 18A process, Intel has indicated that it is scheduled to commence by the end of this year. This signifies that Intel’s process technology will surpass both Samsung and TSMC, as the latter two are currently preparing to launch 2-nanometer processes.

Samsung is planning to utilize the gate-all-around (GAA) transistor architecture, initially developed for the 3-nanometer process, for its upcoming 2-nanometer process. On the other hand, TSMC and Intel have opted to employ the fin field-effect transistor (FinFET) structure for their 3-nanometer chips.

Currently, these three major players are actively vying for customers. A report from the Business Korea has indicated that Samsung Electronics recently secured an order from the Japanese AI startup Preferred Networks (PFN) to produce semiconductors based on the 2-nanometer process.

Per the report, while this Japanese company initially planned to use TSMC’s process for producing their Gen 2 AI chips, they will now transition to Samsung’s 2-nanometer process.

Read more

• [News] Gelsinger Opens Up, as Intel Reportedly Expands Orders to TSMC
• [News] Samsung Secures 2-Nanometer Order from Japanese AI Startup Preferred Networks

(Photo credit: Intel)

U.S. Commerce Secretary Gina Raimondo previously mentioned during an online Intel foundry event that the U.S. must continue investing to regain global leadership and requires “Chip Act 2.”

According to a report from TechNews citing from global media Tom’s Hardware, the U.S. Department of Commerce plans to announce additional subsidies for the semiconductor bill as soon as this week.

Raimondo is scheduled to attend the “Revitalizing American Innovation” conference hosted by the Center for Strategic and International Studies (CSIS) in Washington on February 26th and will unveil the latest subsidies under the “Chip Act.”

In this regard, Intel is expected to receive a government subsidy of USD 10 billion, while TSMC and Samsung may also be included in the latest subsidy list. Samsung Electronics is, according to its own expectation, investing USD 17 billion to construct a foundry in Taylor, Texas, while TSMC is investing roughly USD 40 billion to build a foundry in Phoenix, Arizona. However, it’s rumored that due to the U.S. prioritizing domestic companies, the expected subsidy amounts may differ from those of Intel.

The U.S. government enacted the “Chip Act” in 2022, but subsidies have been modest, with only three American companies currently benefiting, including BAE Systems, GlobalFoundries, and Microchip Technology.

Due to Intel’s investment of USD 43.5 billion in the United States since 2021, constructing new semiconductor plants, sources cited by the report believe that the likelihood of Intel receiving USD 10 billion (equivalent to 23% of the investment amount) is quite high.

Read more

• [News] GlobalFoundries Reportedly Becomes Third Recipient of CHIPS Act Subsidy, Receives USD 1.5 Billion
• [News] US Allocates USD 39 Billion Subsidy to Semiconductor Industry for Establishing Plants

(Photo credit: TSMC)

TSMC’s establishment of a plant in Kumamoto, Japan, with its opening ceremony scheduled for February 24th, has sparked attention regarding the economic growth benefits it brings.

According to TechNews cited Kumamoto Governor Ikuo Kabashima, TSMC’s investment is expected to bring economic benefits to Kumamoto, reaching JPY 6.85 trillion within 10 years. Governor Kabashima even claimed it as a “once in a century” opportunity for Kumamoto.

Firstly, the most noticeable aspect as per the report is the salary increase.

According to the hiring conditions set by TSMC, starting salaries are JPY 280,000 (roughly USD 1,858.65) for university graduates, JPY 320,000 (roughly USD 2124.18) for master’s degree holders, and JPY 360,000 (roughly USD 2389.70) for PhD holders. With an additional four-month bonus and performance dividends, the package even exceeds the conditions offered to fresh graduates by Japanese company SONY Semiconductor.

Additionally, the hourly wage for dispatched workers is as high as JPY 3,000 (roughly USD 19.91), which is more than three times higher than local companies, prompting other industries to follow suit in retaining employees.

Furthermore, the Kumamoto plant has been mostly completed by 2023, with part of the office building already in use, resulting in 400 employees commuting from Taiwan to work. At the same time, TSMC has announced plans to construct a second fab, with construction expected to commence by the end of the year and operations slated to begin by the end of 2027.

Since TSMC’s investment in Japan, it has also attracted at least 35 related supply chain companies to follow suit with investments, thereby altering the local financial ecosystem.

This is because they must provide loan financing and consultation services for employee housing, among others. Consequently, Japanese financial institutions have also begun to focus on Taiwanese companies, including Kumamoto Bank and banks with nationwide reach.

In addition, as per comprehensive reports from Japanese media, some Japanese citizens believe that the establishment of the TSMC plant has significantly changed the atmosphere of the city, making it more vibrant.

A 32-year-old interior decorator from Kumamoto Prefecture mentioned that there are so many new residential decoration projects that he cannot finish them all, and he spends his salary and tips from his supervisor on nightclub expenses or buying cars. One night, he spent JPY 150,000 just at a hotel.

Another bar owner also revealed that he once encountered a customer with tanned skin who spent JPY 300,000 in one night, speculating that he might be the owner of a construction company. Some customers are decked out in designer brands, and one spent JPY 1 million drinking each day for three consecutive days. Additionally, local supermarkets in Kumamoto have even set up a “Taiwanese Food Section.”

Kikuyo Town, Home to 43,000, May Face the Arrival of the ‘Black Ships’

While TSMC has spurred the economy in Kumamoto, some Japanese media have dubbed it the “Black Ship” and “Semiconductor Bubble.”

With skyrocketing land prices and unprecedented hourly wages, some Japanese business owners are forced to make the decision to close shops because the land has become too expensive, and they may not be able to afford the rent in the future.

As per a report from the Japan Times, Kikuyo Town, home to TSMC’s Kumamoto plant, was originally a town of 43,000 people, but residential land prices have surged by over 20% this year, marking the largest increase in over 30 years.

Apart from soaring hourly wages and housing prices, Kikuyo Town will soon face an influx of over 1,700 employees, putting pressure on the town’s roads and transportation systems. Additionally, the high water consumption of fabs raises concerns among locals about whether industrial water usage will affect domestic water supply.

While TSMC has undoubtedly contributed significantly to the local economy, the most profound impact is felt by long-term residents of the town. Nevertheless, it cannot be denied that TSMC has injected vitality into this aging town, making local life more vibrant and dynamic.

TrendForce has previously reported that Japan’s resurgence in the semiconductor arena is palpable, with the Ministry of Economy, Trade, and Industry fostering multi-faceted collaborations with the private sector. With a favorable exchange rate policy aiding factory construction and investments, the future looks bright for exports.

Read more

• [News] Multiple Fabs in Japan to Commence Production Post-2024 Boosting Industry
• [News] Semiconductor Equipment Sales in Japan Reach Nearly JPY 3.3 Trillion in 2023

(Photo credit: TSMC)