Sun, Apr 21, 2024 page3

• Fabs abroad would not forsake tech lead: expert

  • Staff writer, with CNA
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  Taiwan is not at risk of giving away its edge in advanced chip manufacturing by building fabs in countries with strong industrial foundations, a Taiwanese tech expert said.

  The fears that Taiwan would reduce its strategic importance as a result of the US, Europe and Japan inviting the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC), to build fabs in their countries, were misplaced, Digitimes president Colley Hwang (黃欽勇) said, adding that the trend of expanding overseas is a great opportunity.

  Taiwan produces 90 percent of the world’s high-end chips and has more than 50 percent of the global pure-play foundry market.

  

  A semiconductor wafer at the TSMC Museum of Innovation in Hsinchu City is pictured on April 18 last year.

  Photo: Bloomberg

  Hwang, author of World Semiconductor Classic - Quarterfinals in 2030 (決勝矽紀元), said that Taiwan, led by TSMC, would keep its edge in chips until 2030 if there are no major upheavals.

  “The real question is what Taiwan should do now to maintain its competitive edge after 2030” in a world in which major industrial countries are aggressively trying to strengthen their semiconductor sectors as a matter of national security, he said.

  In a less globalized world in which businesses are seeking to diversify away from China, Taiwan should work with other like-minded countries and use their talent to bolster the nation’s semiconductor and information and communications technology (ICT) industries, Huang said.

  That is “what we’re doing now with Germany and Japan,” Hwang said, referring to TSMC setting up fabs in those countries and bringing people from those countries to Taiwan for training.

  Taiwan has catapulted to the top of the semiconductor industry — and maintained its dominance — because of three unique elements: its decisive technological edges, and broad customer base and ecosystem, he said.

  TSMC averages about US$30 billion in capital expenditure a year, which is about 45 percent of its annual revenue, Hwang said, adding that the success rate of the manufacturing yield is peerless.

  It takes more than two years for a company to secure a core customer base, and TSMC has about 500 core customers while Samsung has only about 100, he said.

  Also, compared with Samsung or Intel, TSMC and other Taiwanese contract chipmakers are “harmless” to their customers because they do not develop their own products, he said.

  The third key factor is Taiwan’s industrial ecosystem, he said.

  “Taiwan might not be strong in branding, but the industrial structure embedded in the science parks in Hsinchu, Taoyuan, and Taipei’s Neihu and Nangang includes all kinds of tech companies,” Hwang wrote in his book.

  “These companies specialize in fields ranging from semiconductors and ICT supply chains to AI [artificial intelligence] and low Earth orbit satellites,” he said.

  Their lack of brand affiliation ensures complementary partnerships with multinational companies and entices big players to set up research and development teams in Taiwan, he said.

  “Japan had no technology more advanced than 28 nanometers [before TSMC opening its subsidiary there], and the Kumamoto fab is aiming to have a monthly capacity of 50,000 wafers,” or 100,000 in total once the second fab is completed, he said.

  TSMC’s existing capacity in Taiwan alone is about 1 million wafers per month, Hwang said. “So it would not be easy for them to catch up.”

  Hwang added that he did not think the US, where TSMC has committed to build three fabs, would pose much of a threat to Taiwan.

  Taking advantage of overseas talent as a must for Taiwan because of its low birthrate and dwindling supply of engineers, he said.

  Taiwan’s resource limitations could also be solved by using the abundant land and water provided by other countries, with Kumamoto as an example, Hwang said.

  Taiwan would also be able to take advantage of a less globalized and more regionalized world by going further than China, and working with local talents and companies in many countries such as India and Vietnam, he said.
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