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Semiconductor shortage: New factories in Taiwan for 120 billion US dollars

Only recently we reported on the investments that the federal government and the EU want to put into Intel’s chip factory in Magdeburg. The reason for this is the semiconductor shortage. The subsidies with which the EU supports such projects in the course of the new European Chips Act seem like peanuts, however, if one takes a look at the far east of our globe. Taiwan wants to invest an impressive 120 billion U.S. dollars in new chip factories. Is the market in the Far East running away from us once again?

Fight against semiconductor shortage

The Corona pandemic not only caused great health suffering to many people. A total of 6.31 million people have died from the Covid 19 disease to date, but the economy has also struggled since the pandemic spread of the virus in 2020. Lockdowns, isolations and quarantines are still causing disrupted supply chains and idle factories around the world. More than any event before, this crisis has shown us how dependent the West is on low-cost production in Asian countries. Eventually, a global semiconductor shortage emerged. At first, this only affected consumer electronics such as graphics cards and game consoles. But it quickly spread to other industries as well. Even today, car manufacturers have to impose month-long waiting times on their customers for a new car.

This gave rise to a desire for greater independence, and not only in the West. On top of that, the Far East seems to want to counteract future bottlenecks with a gigantic growth of new chip factories. In 2022 and the following years, the island state wants to invest almost 120 billion US dollars in the production of semiconductors. Two big names are to receive the money. On the one hand, there is TSMC, the world market leader in chip production. The other company, UMC, is no less well-known and already has gigantic production halls. Even if the money itself has probably not yet flowed, the two companies are already hard at work. Thus, the Nikkei Asia news agency states that TSMC is already said to have built four new plants for the production of semiconductor technology.

State-of-the-art semiconductor technology

In addition to the four fabs already completed, TSMC is planning four more. What is particularly exciting about this is that the manufacturer already wants to be prepared for future technology. Accordingly, the four additional planned factories are to specialize in chip technology in the 3-nanometer process. These are particularly expensive plants. After all, the new production method also involves state-of-the-art and, above all, expensive technology. In particular, special exposure machines with strong UV light must be used. These require so much space that the factories have to be built even higher than conventional chip factories.

At least 20 new fabs in Taiwan

The plans sound really amazing, which the island state has already formulated. Thus one would like to establish at least 20 new chip factories for the semiconductor production. It seems that TSMC will concentrate on the flagship technology in the field of upcoming semiconductors. UMC, on the other hand, also manufactures classic components for semiconductors, which are produced in up to 22-nanometer processes. Of course, we are not talking about small factories, but rather so-called gigafactories. So it is not surprising that the factories are to be built on an area of more than 2 km².

Taiwan has several interests

Of course, the 120 billion U.S. dollars that the project is to devour do not come from Taiwan alone. Instead, TSMC and UMC are also to pay a huge portion out of their own pockets. Particularly promising research projects with the goal of finding modern manufacturing processes sometimes devour gigantic amounts in the billions. TSMC is still the global leader in this area. With such a large project, the question naturally arises as to whether Taiwan really needs so many chips. Of course not.

Ryzen CPU
Chip technology from TSMC is used, among other things, in AMD’s Ryzen CPUs.

Experts rather suspect political intentions behind the semiconductor offensive of the island state. One would like to be able to supply the West with any amount of semiconductor technology to be considered worth protecting. After all, the state, which is independent of China, has feared a sudden invasion of the gigantic neighboring country for years. Since TSMC already supplies many large Western corporations, such as Apple or AMD, with chip technology, this intention should be quite promising.

Independence of the West only in the distant future

Even if the USA and the EU are currently trying with all their might to set up their own semiconductor industry, it will still take many years to become independent of Asia. So for the time being, it will not be possible to tackle the semiconductor shortage alone. A look at the figures from Knometa Research makes it clear why. For example, Taiwan alone produced just under one-fifth of the world’s semiconductors in 2021 and ranks second globally, just behind South Korea. Overall, Asian countries produce 75 percent of the world’s semiconductors. It will not be possible to replace this huge share any time soon. This will take many years, especially if the investment sums do not increase significantly. Compared to Taiwan and the other semiconductor producers from the Far East, the figures from the West seem almost laughable.

Simon Lüthje

I am co-founder of this blog and am very interested in everything that has to do with technology, but I also like to play games. I was born in Hamburg, but now I live in Bad Segeberg.

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Only recently we reported on the investments that the federal government and the EU want to put into Intel’s chip factory in Magdeburg. The reason for this is the semiconductor shortage. The subsidies with which the EU supports such projects in the course of the new European Chips Act seem like peanuts, however, if one … (Weiterlesen...)

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