Geopolitics Distorting Chip Market, Locating Fabs Locally No Guarantee Of Competitive Edge: TMSC CEO On 'De-Taiwanification' Of Semiconductor Industry

Taiwan Semiconductor Manufacturing Co (TSMC) chief executive officer C.C. Wei has said that the trade and technology rivalry between U.S.A and China is "distorting" the global semiconductor market and erasing the benefits of 'globalization'

Addressing concerns over Taiwan losing its competitive edge in the semiconductor industry due to concerted attempts by countries like U.S to locate commercial fabs locally, TSMC CEO said that merely building a fab would factory will not create any competitive advantage.

The possibility of “de-Taiwanization” of the semiconductor supply chain has emerged after TSMC unveiled plans earlier this month to build a second chip manufacturing facility in Arizona  that will produce 3nm process technology and is set to open in 2026.

The new plant is being built in addition to the first fab at the TSMC Arizona site, which is set to begin production of N4 process technology in 2024. The two fabs are expected to create around 10,000 high-tech jobs.

Wei made the remarks while delivering an address on challenges facing the semiconductor industry at a forum held by Monte Jade Global Science and Technology Association in Taipei.

"Geopolitical confrontation has distorted the entire market. Previously, you make a product and could sell it to the whole world. Now, some products are not allowed to be sold, some countries say that you are not allowed to enter, while some say you can only use certain [local] products," the CEO said hinting at the fallout of the acrimonious confrontation between U.S and China.

"The situation has destroyed all the productivity and efficiency brought by globalization. Even if saying destroying is too strong, these barriers will seriously affect the benefits of a free economy like in the past. This is really bad." he added

Acknowledging that  every country wants to have the capability to make chip located within their borders, he said that merely acquiring machinery or technology will produce capability for chip-making.

Wei also said that building a chip industry requires a complete ecosystem developed by the accumulated efforts of many suppliers and other players over several decades.

"Everyone wants to build their own semiconductor factories, but is that realistic?" Wei asked.

"If it was that easy, there would be chipmaking plants everywhere in the world already." he said

Semiconductor design involves “brainwork,” but there is a shortage of engineers in most countries, he observed.

Commenting on the current challenges facing the semiconductor industry, he said that the industry was no longer advancing as quickly at the pace defined by Moore’s law, a phenomenon he attributed to the extreme costs involved in semiconductor production.

“One machine equipped with extreme ultraviolet lithography costs 200 million euros [US$211.9 million], and one fab needs 20 to 30 of them,” he said.

Also Read: As Countries Pour Billions To Onshore Chip Manufacturing, TSMC Founder Morris Chang Calls Shift Towards 'Semiconductor Self-Sufficiency' As Costly Mistake