The global semiconductor supply chain is to see a transformation, spearheaded by the US government’s move to tackle chip shortages and safeguard its economy, which would benefit semiconductor foundries, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Fitch Ratings said yesterday.
The US Innovation and Competition Act (USICA), endorsed by the White House and passed by the Senate, would allocate large-scale funding for domestic chip production to alleviate supply chain crunches and ensure dependable semiconductor sourcing. The bill is awaiting passage by the US House of Representatives.
Leading chip makers such as TSMC, South Korea’s Samsung Electronics Co and the US’ Intel Corp would be the biggest beneficiaries due to their specialty in producing leading-edge nodes, Fitch said.
Photo: Tyrone Siu, Reuters
The windfall would extend to capital equipment suppliers such as KLA Corp and ASML Holding NV for supplying the tools used in the production of advanced chips, Fitch said.
The bill is intended to boost global competitiveness in industries deemed critical, with US$250 billion of government investment, it said, adding that about US$52 billion is to fund semiconductor research, design and manufacturing initiatives.
The US Department of Commerce expects the policy to unlock private investment, resulting in US$150 billion or more in funding for seven to 10 new US-based factories.
Several firms have announced expansion plans in the US. TSMC has announced a US$12 billion plan to build a 5-nanometer plant in Arizona, with media reports saying it is mulling up to five additional plants. Intel expects to invest US$20 billion in two new manufacturing facilities in the same state and Samsung intends to spend US$17 billion on a new 5-nanometer plant in Austin, Texas.
US policymakers view the semiconductor industry as strategically important because it supplies the fundamental enabling technologies for advanced defense, communications, big data and artificial intelligence among other industries, Fitch said.
The ongoing semiconductor shortage, driven by a confluence of factors, including inadequate capacity and stronger-than-expected demand, has highlighted supply chain vulnerability, it said.
The predicament also underscores the need to secure a dependable source of semiconductor components as the US’ share of semiconductor production has declined to about 12 percent from 37 percent in 1990, it said.
The global chip shortage has enhanced the bargaining position of foundries, Fitch said, adding that TSMC recently announced price increases of up to 20 percent.
Some chip consumers are making upfront payments to secure supply, Fitch said.
Electric vehicle maker Tesla Inc is expected to pay in advance to secure capacity, while Apple Inc has reserved TSMC’s initial capacity of 4-nanometer for its latest generation MacBook, it said.
TSMC supplies 50 to 55 percent of global semiconductor output and is the only foundry capable of turning out 7-nanometer and even more advanced chips, which enable everything from the latest smartphone models to graphics processing units used in data centers and artificial-intelligence applications.
TSMC’s operations are primarily centered in Taiwan, resulting in heightened geographic concentration risks, as earthquakes, droughts and blackouts have challenged manufacturing, Fitch said.
Ongoing droughts have the potential to affect TSMC’s production volume, as it uses 63,000 tonnes of water per day, it said, adding that Taiwan is also dealing with a COVID-19 outbreak.
JITTERS: Nexperia has a 20 percent market share for chips powering simpler features such as window controls, and changing supply chains could take years European carmakers are looking into ways to scratch components made with parts from China, spooked by deepening geopolitical spats playing out through chipmaker Nexperia BV and Beijing’s export controls on rare earths. To protect operations from trade ructions, several automakers are pushing major suppliers to find permanent alternatives to Chinese semiconductors, people familiar with the matter said. The industry is considering broader changes to its supply chain to adapt to shifting geopolitics, Europe’s main suppliers lobby CLEPA head Matthias Zink said. “We had some indications already — questions like: ‘How can you supply me without this dependency on China?’” Zink, who also
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) received about NT$147 billion (US$4.71 billion) in subsidies from the US, Japanese, German and Chinese governments over the past two years for its global expansion. Financial data compiled by the world’s largest contract chipmaker showed the company secured NT$4.77 billion in subsidies from the governments in the third quarter, bringing the total for the first three quarters of the year to about NT$71.9 billion. Along with the NT$75.16 billion in financial aid TSMC received last year, the chipmaker obtained NT$147 billion in subsidies in almost two years, the data showed. The subsidies received by its subsidiaries —
At least US$50 million for the freedom of an Emirati sheikh: That is the king’s ransom paid two weeks ago to militants linked to al-Qaeda who are pushing to topple the Malian government and impose Islamic law. Alongside a crippling fuel blockade, the Group for the Support of Islam and Muslims (JNIM) has made kidnapping wealthy foreigners for a ransom a pillar of its strategy of “economic jihad.” Its goal: Oust the junta, which has struggled to contain Mali’s decade-long insurgency since taking power following back-to-back coups in 2020 and 2021, by scaring away investors and paralyzing the west African country’s economy.
RE100 INITIATIVE: Exporters need sufficient supplies of renewable energy to meet their global commitments and remain competitive, the economics ministry said Local export-oriented manufacturers, including Taiwan Semiconductor Manufacturing Co (台積電), require sufficient supplies of green energy to maintain their competitiveness and regulations already ensure that renewable energy development adheres to environmental protection principles, the Ministry of Economic Affairs said yesterday, as the legislature imposed further restrictions on solar panel installations. The opposition-led Legislative Yuan yesterday passed third readings to proposed amendments to three acts — the Environmental Impact Assessment Act (環境影響評估法), the Act for the Development of Tourism (發展觀光條例) and the Geology Act (地質法) — which would largely prohibit the construction of solar panels in some areas. The amendments stipulate that ground-mounted solar
RSS