Taiwan’s semiconductor companies are not facing imminent supply disruptions of essential chemicals or raw materials due to the war in the Middle East, but surges in material costs loom large, industry association SEMI Taiwan said yesterday.
The association’s comments came amid growing concerns that supplies of helium and other key raw materials used in semiconductor production could become a choke point after Qatar shut down its liquefied natural gas (LNG) production and helium output earlier this month due to the conflict.
Qatar is the second-largest LNG supplier in the world and accounts for about 33 percent of global helium output. Helium is a critical and high-value byproduct of natural gas processing, but the shutdown caused price hikes.
Photo: CNA
“In the short term, I think we are not seriously worried about supply,” SEMI Taiwan president Terry Tsao (曹世綸) said in Taipei.
However, companies need to enhance supply chain resilience through “diversifying procurement sources and increasing supply chain transparency,” he said
The supply of helium in Taiwan is sufficient and safe as the nation’s major LNG suppliers have diversified procurement sources to include Australia and the US, the ministry said on Saturday last week. Qatar used to be a major LNG and helium supplier to Taiwan, the ministry said.
Helium plays a critical role in semiconductor manufacturing, particularly for cooling and inert atmospheres during lithography, etching and deposition, affecting the quality of wafers, the ministry said.
The global supply fluctuations would not significantly impact local semiconductor manufacturers’ chip production as they have been recycling helium to reduce costs and dependence on new supply of helium, it said.
SEMI Taiwan did not expect any supply disruption in key materials, if the Iran war is resolved within four to six weeks, given that most chip companies are expanding safety inventories and have supply chain resilience strategies in place after the COVID-19 pandemic.
“The Middle East conflicts may be regarded as a black swan event for petrochemical producers, but not for semiconductor producers,” SEMI analyst Clark Tseng (曾瑞榆) said.
Other key chemical and raw materials such as hydrogen and sulfuric acid that are used massively in chip production can be obtained from multiple sources, Tseng said. However, mounting raw material costs would put chip companies under pressure, he said.
SEMI Taiwan said the world semiconductor revenue is expected to jump to US$1 trillion this year, four years ahead of 2030 as some analysts had projected, from US$775 billion last year.
The association attributed the artificial intelligence boom and surges in memory prices. Global semiconductor revenue would grow to about US$2 trillion in 2035, it said.
Despite the robust growth, Taiwan’s semiconductor companies are facing two major challenges — supply chain resilience and green energy supply, according to a survey among SEMI members.
Supply of green energy has become an issue for local semiconductor companies as most are committed to reach RE100 by 2030 by shifting to renewable electricity entirely. The time is ticking, but renewable energy development in Taiwan has lagged behind the government’s original plan due to scandals surrounding solar energy installations, SEMI Taiwan said.
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