At a time when economic globalization has been pronounced dead by economists and industry insiders, Taiwanese semiconductor companies have once again expanded internationally to enhance supply chain resilience, minimizing risks from geopolitical tensions and pandemics.
Taiwan Semiconductor Manufacturing Co’s (TSMC) expansion caught the world’s eye. It launched its first Japanese chip manufacturing facilities in Kumamoto, Japan, on Feb. 24, through Japan Advanced Semiconductor Manufacturing Inc (JASM), in which TSMC owns a majority stake. When the fab begins mass production at the end of this year, the construction of a second Japanese fab, in Kumamoto as well, is also planned. Together with JASM’s first fab, the overall investment is to exceed US$20 billion, with significant subsidies amounting to ￥1.2 trillion (US$7.98 billion) from the Japanese government.
There is speculation that TSMC is scouting sites to build two more fabs in Japan, likely in Osaka, given the construction efficiency. The chipmaker did not comment on such speculation. It took just one-and-a-half years to complete the construction of its first fab, compared with the usual 10 years for large-scale factories. In the US, TSMC plans to build two advanced fabs in Arizona, with the first scheduled to begin mass production in the second half of next year. It plans to build a new fab in Dresden, Germany, in the fourth quarter of this year. Such global footprint expansions are unprecedented, as the chipmaker concentrates its technology research and development and capacity expansion in Taiwan, due to the country’s comprehensive semiconductor supply chains and cost advantages.
To meet demand for automotive chips, the nation’s No. 2 chipmaker, United Microelectronics Corp (UMC), announced a collaboration with Denso Corp in May last year to produce insulated-gate bipolar transistors at a 12-inch fab operated by UMC’s Japanese subsidiary, United Semiconductor Japan Co. Outside Taiwan, it operates a 12-inch fab in Singapore and one in Xiamen, China.
Chipmaker Powerchip Semiconductor Manufacturing Corp is planning to build an ￥800 billion factory in northeast Japan with financing from investment group SBI Holdings Inc and the Japanese government, it said in November last year.
The factory would require an initial investment of ￥420 billion, of which Powerchip and SBI would pay more than half, the firms said.
Raw material suppliers, materials analysis service providers, fab construction companies and factory systems are considering setting up laboratories and sales offices in Kumamoto or in nearby cities since property prices in Kumamoto have soared since TSMC decided to build its fab there.
Materials Analysis Technology Inc (MA-tek), the first local company in the semiconductor supply chain to make inroads into Japan, opened its second lab in Kumamoto in the third quarter of last year, four years after the launch of its first lab in Nagoya. MA-tek said it did not rule out adding a third lab, given robust demand for materials and reliability analysis for automotive chips.
Msscorps Co, which specializes in materials analysis for TSMC and other semiconductor firms, also plans to set up a Japanese subsidiary and sales office in Tokyo to cope with the rising demand for analysis on materials used in advanced technologies in Taiwan and Japan.
One local company executive said this is a rare opportunity for local smaller-scale firms to expand overseas, following in the footsteps of their major clients. As more than 90 percent of local businesses are small or medium-sized, it is a big challenge for them to set up overseas operations. However, with assistance from major clients, it would be easier for them to operate abroad, given the increased demand.
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