A global shortage of semiconductors has prompted many countries, including the United States, to rush to build more chipmaking facilities. In May 2020, Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, agreed to build a $12 billion facility in Arizona.
Manufacturers have less than five days supply of computer chips, Commerce Department says
In a bid to encourage this and other construction projects, the Senate last summer passed a bipartisan measure, known as the Chips Act, to spend $52 billion on subsidies to manufacturers. But that legislation is still deadlocked in wrangling in Congress.
“TSMC has already started building in Arizona, basically because of trust. They think the chip law will be passed by Congress,” said Ming-Hsin Kung, minister of Taiwan’s National Development Council and TSMC board member, in an interview in Washington, DC.
But the speed of construction depends on the grants received, added Kung, who was in Washington to attend the annual SelectUSA foreign investment summit.
Once completed, the Arizona plant and a group of surrounding suppliers, including a Taiwanese chemical company that has also begun investing in the site, will create several thousand jobs, Kung said.
One hurdle TSMC faced: There aren’t enough trained semiconductor engineers in the region to staff the facility, Kung said. The company has therefore started sending new employees to Taiwan for training, including qualified professionals in other types of engineering, he said.
Around 250 have already made the trip for training, including hands-on work at TSMC’s chip factories. “They are not only there for conferences. They have to go there and participate in the operation,” he said.
The United States and TSMC “want the American facilities to operate as efficiently as the Taiwanese facilities,” Kung said. “Otherwise it means TSMC [will] lose tons of money on their investment.
Taiwan also wants to strengthen cooperation with the United States in other areas, including electric vehicles, biotechnology and 5G technology, the minister said, adding that he hopes Taiwan’s work to address the global shortage. chip company had proven to be “a reliable partner in the global supply chain.
Taiwan’s chip factories, operated by TSMC and others, were already operating at full capacity but managed to increase output by around 5% in recent months to try to ease shortages, he said.
The lack of chips has hampered many types of manufacturing around the world, particularly automotive production, forcing factories to shut down for weeks until they can get more chips.
Kung predicted that the global supply of automotive chips in particular will remain tight for another year or two, and that the total demand for all kinds of chips will continue to grow for another 10 to 20 years as more and more types of equipment and consumer goods will become digital. .
The rise of electric and autonomous vehicles will put a particular strain on chip supply because these cars require more chips, he said.
The Arizona plant will produce chips with five-nanometer-sized transistors, a type of high-tech semiconductor used in consumer electronics but not in today’s automobiles. Automotive chips are usually made to older designs which are larger and less cost effective for chip makers to produce, which is why they are rare. For comparison, the average human hair is about 60,000 nanometers thick.
About 75% of chip production today takes place in East Asia, and more than 90% of the most advanced chips are made in Taiwan, an island that China has regularly threatened to take by force if the Taiwan’s democratically elected government declared its legal independence.
Asked about this threat and how it influences Taiwan’s investment decisions, Kung said the island has faced this risk for 40 years.
“The risk is certainly there, but we still have to develop our own economy and our own industrial supply chain, even with this kind of potential risk,” he said.