TSMC in ‘Due Diligence’ on Possible Japan Fab
Taiwan Semiconductor Manufacturing Co. (TSMC) is evaluating whether to build a chip facility in Japan as nations around the world are seeking the top foundry’s help to create secure electronics supply chains.
The company has established a 3D IC research center in Japan, where it has gathered more than 20 Japanese partners, TSMC said at its latest announcement of quarterly results. TSMC will be in charge of the center’s technology development for advanced packaging.
The company is also evaluating the possible start of a new chip fab in Japan, according to TSMC CEO C.C. Wei, speaking at the event.
“In Japan, we are in the due diligence process now to do that with a fab. Let me say that clearly.”
Japan would follow the US and China as TSMC’s latest overseas production sites as the need for semiconductor infrastructure security has increased in recent years. TSMC is expanding its global manufacturing to sustain and enhance its competitive advantages and to better serve customers in the new geopolitical environment, company Chairman Mark Liu said in prepared remarks.
Still, TSMC aims to keep its most advanced technology in Taiwan to meet profit targets. Taiwan is at the center of a technology war, supplying chips to both China and the US, which aim to achieve global dominance in 5G and AI technologies. The business strife is complicated by geopolitics; China considers independently ruled Taiwan a renegade province.
“Taiwan will continue to be the home base and center of R&D for TSMC as the initial phase of volume production of a leading-edge technology has to be in close proximity and closely coupled with R&D,” Liu said. “Due to massive collaborative engineering activities, our leading nodes will continue to be ramped in Taiwan as well.”
The world wants to have a peaceful Taiwan Strait, Liu said referring to the possibility of Chinese military intervention.
Because of the centrality of Taiwan in the semiconductor supply chain, no one wants to disrupt it, he said. The Covid pandemic is already a major disruption for the global economy. The implication is that more disruption would make things much worse.
Liu said TSMC is still learning the cost structure in the US, where it is building a fab in Arizona. Operating costs will have to be shared with TSMC customers, he added. Firmer pricing for silicon wafers will be part of the company’s increased global manufacturing strategy, according to Liu.
“There are several projects still under planning,” Liu said, noting the possibility that TSMC may build a “specialty technology fab” in Japan.
Those projects under evaluation are not part of the current the $100 billion capital expansion budget announced by TSMC over the next three years, he said.
TSMC’s first wave of US-hired engineers arrived in Taiwan in late April for training on 5nm technology, which the company will ramp up at its fab under construction near Phoenix. The equipment move-in is scheduled for the second half of 2022, and phase one production is targeting 20,000 12-inch wafers per month in the first quarter of 2024. TSMC said its 5nm family will be the most advanced high-volume production technology commercially available in the US when the fab opens.
TSMC is considering a second phase of expansion in Arizona based on customer demand, Liu said.
Meanwhile, TSMC is also expanding in China to meet strong demand.
The company completed its phase-one volume ramp in China in the third quarter of 2020 and is reaching 25,000 wafers per month in 16nm technology. TSMC is further expanding in Nanjing with 28nm to meet “urgent” customer need. Volume production will begin in the second half of 2022.
“China remains very strong in a growing market, and we have a large customer base in China,” Wei said. “Our business from China will continue to increase in all the market sectors,” including smartphones, high performance computing, IoT and automotive.
TSMC expects its capacity to remain tight throughout 2021, a situation that will extend “at least” into 2022, according to Wei.
At the 28 nm node, where demand has been particularly acute, TSMC said it will develop specialty technology solutions for customers.
“We expect this structural demand will continue,” Liu said. He didn’t elaborate on a timeframe.
Geopolitics have prompted TSMC to expand its global manufacturing outside Taiwan, according to Liu, including a new administration in Washington. “I think the [Biden administration] is more predictable, more rule-based. I think it’s better for every company to adapt to,” Liu added.
TSMC’s global manufacturing may adjust for customers in various countries to address needs for improved infrastructure and supply security, Liu said.
“It is the customer’s needs that we are adjusting to, based on greater geopolitical developments,” he said.