Technology

Supply Chains In 2022: The Year Of Global ‘Chip Atmanirbharta’

  • As per report, TSMC, along with Samsung and Intel, are looking to invest close to $380 billion over the next 10 years to build new factories in Taiwan, South Korea, America, Japan, Germany, Ireland, and Israel.

Tushar GuptaDec 27, 2022, 11:50 AM | Updated 12:01 PM IST
Semiconductor revenue race

Semiconductor revenue race


America, Japan, Germany, and even India, all began their pursuit for ‘Chip Atmanirbharta’ in 2022.

Ten to fifteen years from now, when several of the large economies would have a well-established semiconductor manufacturing ecosystem, the year 2022 would be recalled as the tipping point.

This is the year when globalisation and liberalism took a back seat and trade protectionism gathered momentum as the supply chain shocks emerging from China and the threat to Taiwan took precedence. 

Earlier this month, Asia Nikkei reported that the Taiwan Semiconductor Manufacturing Co (TSMC) was in talks to set up its first European plant in Germany to cater to the growing demand of the region’s automobile industry.

In 2021, the first casualty of the semiconductor supply chain crisis, in America, was the automobile industry, prompting companies to cut production hours and order layoffs.

The likes of Ford, Toyota and General Motors, all reported a drop in output, thus resulting in action from the White House. 

If the talks between TSMC and German authorities attain a fruitful conclusion, construction on the new plant could begin in 2024. The Taiwanese company was in talks earlier this year as well, but the invasion of Ukraine delayed the discussions.

However, TSMC, as of now, is not looking to build advanced microchips, but will focus on 22-nanometer and 28-nanometer technologies.

Automobiles, unlike gaming computers or smartphones, do not rely on very complex chips. In Japan, in collaboration with Sony, TSMC is planning to work on similar technologies. 

TSMC, along with Samsung and Intel, are looking to invest close to $380 billion over the next 10 years to build new factories in Taiwan, South Korea, America, Japan, Germany, Ireland, and Israel as per a report in Asia Nikkei.

In the United States alone, investment worth $200 billion was committed after the Chips and Science Act. The US remains the global leader in semiconductor design and research and development, yet the majority of chip manufacturing has moved to Asia, a trend President Joe Biden wants to reverse. 

Earlier this month, top officials of the Biden government were present in Arizona during the installation of equipment at the $12 billion semiconductor facility being built by the Taiwan Semiconductor Manufacturing (TSMC).

The production of advanced microchips will begin at this plant as early as late-2023, and the first customers would be Apple and Nvidia. Already, TSMC is planning to double its production at the Arizona plant. While the initial plan was to focus on 5-nanometer technologies, TSMC will now make chips using the 3-nanometer technology. 

Samsung and Intel are also not far behind, with the former building a $17 billion plant in Texas. Intel is building a $20 billion plant in Arizona apart from one in Ohio. Intel is also working on a plant in Germany, New Mexico, and Ireland.

However, the company is far behind TSMC and Samsung who lead the foundry market share, globally. Samsung, in order to catch up with TSMC, has committed an investment worth $115 billion over the next 10 years to expand its foundry business and chip design unit. 


The Biden administration announced that it would impose restrictions on 31 Chinese companies, effectively blocking their ability to obtain core US technologies.

The Biden administration added China's top memory chipmaker Yangtze Memory Technologies (YMTC) and 30 other Chinese entities to a so-called ‘unverified’ trade list.

Already, some senators were pushing for investigations against Apple for their deal with YMTC in September 2022.

YMTC was to supply 3D NAND memory chips to Apple. The latter, however, was forced to reassess the decision, given the pressure from the senators, and also citing YMTC’s closeness to the Chinese government. YMTC was also a supplier to Huawei. 

Nvidia and Advanced Micro Devices (AMD) were also restricted from supplying high-end graphics processors and AI chips essential for high-performance computing processes.

The repercussions from the restrictions were immediate. In less than a week, China’s chip companies took a hammering on the stock market, losing as much as $8.6 billion in market value.

Lam Research, Applied Materials, and KLA Corporation, critical players in the semiconductor production process, have halted their sales and other supplies to China.

Put simply, the US wants to cripple China’s ability to produce advanced semiconductors (3-14 nanometre process technology).

Thus, the cost of these restrictions will be felt by Chinese chipmakers, especially those working on cutting-edge technologies for next generation computing.

This also impacts production in China, the conventional factory of the world. For instance, the latest Androids and iPhones, gaming laptops, Macbooks, and other high-end devices, all use semiconductors in the 5-10 nanometre spectrum. 

One of the most interesting aspects that captures the desperation around Chip Atmanirbharta has been documented by Chris Miller in his book Chip War: The Fight For The World’s Most Critical Technology.

In 2021, the grandson of Samsung’s founder, Lee Jay-yong, serving a sentence for bribery was paroled by the South Korean authorities. 

When asked, the Korean Justice Ministry cited ‘economic factors’ to explain the release of Jay-yong. Media reports, however, indicated that it was more to do with moving Samsung’s semiconductor business towards better decision-making. 

Welcome to the age of chip wars. Over to 2023 now.

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