Whether in terms of market commonality or resource similarity, South Korea’s Samsung Electronics Co is the biggest competitor of Taiwan Semiconductor Manufacturing Co (TSMC). The two companies have agreed to set up factories in the US and are also recipients of subsidies from the US CHIPS and Science Act, which was signed into law by former US president Joe Biden.
However, changes in the market competitiveness of the two companies clearly reveal the context behind TSMC’s investments in the US.
As US semiconductor giant Intel Corp has faced continuous delays developing its advanced processes, the world’s two major wafer foundries, TSMC and Samsung, have overtaken it and become the main force in advanced chip manufacturing.
In late November 2021, Samsung announced a US$17 billion plan to build a new fab in Taylor, Texas, fully cooperating with the Biden administration’s policy to increase domestic semiconductor production capacity in the US, attempting to leverage its strengths to surpass TSMC as the leading wafer foundry.
In May 2022, Biden embarked on his first trip to Asia during his term, with South Korea as the first stop. The first item on his itinerary was to visit Samsung’s Pyeongtaek complex to inspect the latest generation of chip production using 3-nanometer process technology — a move of full endorsement of Samsung Group. South Korean President Yoon Suk-yeol was there to receive Biden.
South Korean newspaper the Chosun Ilbo reported at the time that Biden’s visit to the Samsung facility once again confirmed that South Korea’s semiconductor industry is a core strategic asset that supports the strategic value of the US-South Korea alliance. South Korea had broken away from its unilateral reliance on the US for security and established a mutually beneficial alliance on an equal footing.
An editorial in another South Korean newspaper, the JoongAng Ilbo, said that semiconductor diplomacy is the first step in upgrading the US-South Korea alliance, greatly enhancing the pride of the South Korean public and increasing the level of mutual trust in the alliance.
To seize the opportunity to benefit from the subsidies of the CHIPS and Science Act, Samsung has increase its investment in the US, even boasting that it would build 11 wafer fabs in Texas within 20 years, with a total investment of up to US$200 billion.
To compete with TSMC, Samsung’s new plant in Taylor is ambitiously targeting the most advanced 4-nanometer and 2-nanometer chip production. It also promises to establish a complete semiconductor industrial chain ecosystem, including advanced packaging plants, and research and development centers, which is in stark contrast to TSMC’s steady and cautious style.
In April last year, then-US secretary of commerce Gina Raimondo announced that Samsung had received a US$6.4 billion subsidy from the US government.
However, at the end of last year, the US Department of Commerce cut the subsidy to US$4.75 billion, a reduction of one-quarter. The crux of the problem was that construction of the new fab in Texas was behind schedule, and the 2-nanometer process yield of the parent fab in Pyeongtaek was poor, which delayed the new fab in Texas from receiving orders from major customers, forcing the company to announce the withdrawal of South Korean staff and cancel the investment plan for the advanced packaging fab.
At the same time, the first 4-nanometer production line of TSMC’s first wafer fab in Phoenix, Arizona, started mass production ahead of schedule in the fourth quarter of last year.
Moreover, the gap between Samsung and TSMC is widening.
In his speech to the US Congress this month, US President Donald Trump called to scrap the “horrible” CHIPS and Science Act. He wants to repurpose the remaining funds, including to reduce the national debt. This would make Samsung the No. 1 victim. The state of the Samsung investment in Texas is the perfect excuse for the Trump administration to reduce or completely cancel subsidies and TSMC’s US$100 billion investment project puts it in pole position.
Chen Yung-chang is a company manager.
Translated by Lin Lee-kai
China badly misread Japan. It sought to intimidate Tokyo into silence on Taiwan. Instead, it has achieved the opposite by hardening Japanese resolve. By trying to bludgeon a major power like Japan into accepting its “red lines” — above all on Taiwan — China laid bare the raw coercive logic of compellence now driving its foreign policy toward Asian states. From the Taiwan Strait and the East and South China Seas to the Himalayan frontier, Beijing has increasingly relied on economic warfare, diplomatic intimidation and military pressure to bend neighbors to its will. Confident in its growing power, China appeared to believe
After more than three weeks since the Honduran elections took place, its National Electoral Council finally certified the new president of Honduras. During the campaign, the two leading contenders, Nasry Asfura and Salvador Nasralla, who according to the council were separated by 27,026 votes in the final tally, promised to restore diplomatic ties with Taiwan if elected. Nasralla refused to accept the result and said that he would challenge all the irregularities in court. However, with formal recognition from the US and rapid acknowledgment from key regional governments, including Argentina and Panama, a reversal of the results appears institutionally and politically
In 2009, Taiwan Semiconductor Manufacturing Co (TSMC) made a welcome move to offer in-house contracts to all outsourced employees. It was a step forward for labor relations and the enterprise facing long-standing issues around outsourcing. TSMC founder Morris Chang (張忠謀) once said: “Anything that goes against basic values and principles must be reformed regardless of the cost — on this, there can be no compromise.” The quote is a testament to a core belief of the company’s culture: Injustices must be faced head-on and set right. If TSMC can be clear on its convictions, then should the Ministry of Education
The Chinese People’s Liberation Army (PLA) provided several reasons for military drills it conducted in five zones around Taiwan on Monday and yesterday. The first was as a warning to “Taiwanese independence forces” to cease and desist. This is a consistent line from the Chinese authorities. The second was that the drills were aimed at “deterrence” of outside military intervention. Monday’s announcement of the drills was the first time that Beijing has publicly used the second reason for conducting such drills. The Chinese Communist Party (CCP) leadership is clearly rattled by “external forces” apparently consolidating around an intention to intervene. The targets of
RSS