Most countries are making all-out efforts to build their own semiconductor industries to enhance their technological capabilities and chip supply independence through state funding and incentives, particularly given the importance of chips in defense and artificial intelligence (AI) applications. Any progress made by government-supported chipmakers stokes fear about whether Taiwan Semiconductor Manufacturing Co (TSMC) would be able to safeguard its competitive edge.
Since 2018, when TSMC overtook Intel in the tech race with its 7-nanometer chips, the Hsinchu-based powerhouse has extended its industry dominance by producing the world’s most advanced semiconductors. The industry has moved on to 2-nanometer process technology, and TSMC is slated to start volume production of those chips by the end of this year, while Intel is struggling to secure orders for its 18A technology. Samsung Electronics is reportedly planning to delay production of its 2-nanometer chips to next year.
TSMC said its new-generation chip process, dubbed A14, is on track to start volume production in 2028, while Intel has said it is considering abandoning a similar process technology unless customers show sufficient interest, given the massive costs of research-and-development amid its own financial difficulties.
The US government last month reached a rare equity investment agreement with Intel to take a 10 percent stake in the chipmaker using US$8.9 billion in government grants under the CHIPS and Science Act, with an aim to secure a technological edge in semiconductors. US President Donald Trump reportedly attempted to secure stakes in TSMC, Samsung or Micron Technology in exchange for US government subsidies that were promised by the previous administration under the act. However, Trump eventually gave up on the idea, reports said.
Meanwhile, Rapidus Corp, backed by the Japanese government, said it has prototyped its first 2-nanometer chips and plans to start volume production in 2027. The three-year-old Japanese chip company could compete with TSMC as it said it had reached “identical logic densities” with TSMC’s 2-nanometer chips, the Wccftech Web site reported. That breakthrough has become a popular subject in the semiconductor industry, with the possibility that Rapidus could challenge TSMC’s leading position.
Doubts were soon raised in the absence of key data such as yield rates, or the number of functional chips produced by Rapidus. Semiconductor veteran C.Y. Shu (許金榮), vice chairman of semiconductor equipment maker Hermes-Epitek Corp, said it was premature to judge Rapidus’ technology capabilities because of insufficient information. As Rapidus primarily targets fabless semiconductor companies as customers, particularly those focused on specialized AI chips, such small-scale orders would not be enough to support its operations in the long term, Shu said. Japan would pay a high cost to build its own “silicon shield,” he said.
China has not given up on its efforts to advance its semiconductor manufacturing capabilities, although access has been restricted to key equipment used in producing advanced chips. Meanwhile, the EU wants to double Europe’s share of global chip production to 20 percent by 2030 through the EU Chips Act.
The global chip industry is facing intensifying competition, with more governments seeking to secure a foothold or maintain their position in semiconductors through financial incentives or tariff policies, such as the US’ semiconductor imports levy. Without a similar “chips act” in Taiwan, the government should be stepping up efforts to come up with industrial policies that help safeguard the nation’s competitive edge in semiconductors to keep driving Taiwan’s economy.
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