TSMC (2330) announced that the US factory is scheduled to officially hold the first machine relocation ceremony in early December this year, and US President Biden will attend the ceremony in person.

(Bloomberg file photo)

12 machines in the U.S. factory were moved, and Biden was present in person

[Financial Channel/Comprehensive Report] The United States has made a big move to impose a chip ban on China, and Sino-US relations have deteriorated sharply. Recently, Taiwan's Huguo Shenshan TSMC (2330) announced that the Arizona plant in the United States is scheduled to officially hold the first machine transfer ceremony in early December this year. It is an important step in the relocation of TSMC's production base. It is expected to be trial production in the second half of next year and mass production in 2024.

The outside world believes that TSMC is a pawn used by the United States to check and balance China in the US-China technology war. Some experts believe that the transfer of TSMC is just the beginning, and TSMC may be completely tilted towards the United States.

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TSMC's Arizona plant held a relocation ceremony in early December. In addition to TSMC Chairman Liu Deyin personally leading the company's executives and nearly 300 Taiwanese officials, US President Joe Biden and House Speaker Nancy Pelosi also attended All are on the invitation list, showing that the United States attaches great importance to this investment case.

Biden signed the Chips and Science Act (CHIPS Act) in August this year, which will provide semiconductor companies with a total of $52.7 billion in appropriations. Investment tax credit.

At the same time, companies that receive federal funding are prohibited from making advanced process wafers below 28nm in China for a period of 10 years, and violators will be required to fully refund federal grant money.

The core purpose of the "Chip and Science Act" is to revitalize the domestic semiconductor industry in the United States and strengthen its competitiveness with China.

In addition, the continued shortage of chips has hit everything from cars, weapons, washing machines, etc. The purpose of this legislation is to alleviate the shortage of chips. TSMC's Arizona plant is the first fab to receive subsidies.

Biden signed the Chips and Science Act (CHIPS Act) in August this year.

(Bloomberg file photo)

Semiconductor industry must choose sides

In October, the U.S. Department of Commerce initiated pressure on China. In addition to prohibiting the export of advanced chips to China, it also prohibited the import of semiconductor equipment into China. Finally, it prohibited Americans from assisting China in the development of advanced chips, in an attempt to bring the Chinese semiconductor industry back to its original era. .

According to "Bloomberg" statistics, since the United States released some new measures on October 7, the market value of the global semiconductor industry has evaporated by 240 billion US dollars in just 3 or 4 business days.

According to statistics, China imported 430 billion US dollars of semiconductor products last year, of which 36% came from Taiwan.

It can be said that the current situation of semiconductor companies exporting to China is bound to be adjusted, and one of the most important is "selecting sides".

Although TSMC, Intel, Samsung and SK Hynix have all obtained one-year exemptions, the US-China war continues to rage.

In the face of a strong attack from the United States, semiconductor companies have turned their attention from China. Wei Zhejia, president of TSMC, said at the French conference: "We will continue to increase the proportion of overseas manufacturing."

In addition to the U.S. factory, there are rumors that TSMC may go to Europe to set up factories in Germany. Wei Zhejia responded: "The establishment of a European factory does not rule out any possibility." He emphasized that in addition to increasing production capacity overseas, Taiwan's Hsinchu, Taichung and Kaohsiung also have Expansion plan.

TSMC, a leading semiconductor company, not only has operations all over the world, but its influence on the world should not be underestimated.

TSMC's establishment of a factory in the United States is representative of manufacturing in the United States or shifting the focus of global semiconductor production back to the United States. However, due to the delay in construction of the factory in the United States, even recruiting enough chip engineers has become a major challenge.

TSMC's Arizona plant cannot recruit enough chip engineers, and may find someone from Taiwan to send to the United States.

(Bloomberg file photo)

Arizona workers are hard to find, people plan to recruit from Taiwan

"Nikkei Asia" pointed out in May that when TSMC chose to set up a factory in Arizona, it was very difficult to find enough workers to build the $12 billion 5nm fab north of Phoenix, Arizona. In addition, it was originally planned to move the production equipment into the workshop in September this year, but due to the delay in construction, the supplier has been informed that it will be postponed to Q1 next year.

The report pointed out that TSMC originally planned to recruit talents in the United States and send them to Taiwan for training, but considering the actual recruitment difficulties, the company decided to recruit talents to the United States in Taiwan.

In addition, in terms of salary, TSMC is not as attractive to Americans as it is to Taiwanese. Data shows that the average annual salary of TSMC engineers in the United States is about $118,000, which is lower than Intel's average income of $128,000. , other Silicon Valley technology companies are also targeting these talents, and the salary is more favorable.

The cost of manufacturing chips in the United States is 50% higher than that in Taiwan

Last year, the founder Zhang Zhongmou pointed out the problems of overseas management of Taiwanese semiconductor companies, mainly because there are many excellent engineers and managers in Taiwan, but Taiwanese managers cannot manage as well as Intel in Arizona, and they are made in the United States. The unit cost of a chip is relatively much higher, and Taiwan is not competitive to set up factories overseas.

Zhang Zhongmou believes that the United States' attempt to increase domestic chip production will be an expensive and wasteful futile move. What the United States needs to solve for the development of the chip manufacturing industry is the serious shortage of manufacturing talents.

There is also a cost issue.

Zhang Zhongmou said the cost of American manufacturing is prohibitive.

TSMC's Oregon plant is profitable, but has all but given up on expansion plans.

"We were too naive when comparing costs. The cost of manufacturing chips in the U.S. was 50% more expensive than in Taiwan." He said that TSMC has repeatedly arranged U.S. and foreign personnel for the Oregon factory, but failed to reduce costs much.

Taiwan Strait relations and Sino-US relations have made TSMC caught in the middle, and its position is very embarrassing.

(Bloomberg file photo)

Geopolitical factors force TSMC to diversify production capacity

Taiwan Strait relations are tense. In order to diversify risks, the United States hopes that TSMC will expand its factories in the United States, while the Taiwan government and TSMC both hope to stay in the country. The Taiwan Strait relations and Sino-US relations have caused TSMC to be caught in the middle, and its position is very embarrassing.

TSMC has been established for 35 years, and the factory is based on Taiwan. Currently, there are three factories in Songjiang, Shanghai, China, Nanjing, Washington, USA, as well as the ongoing Kumamoto factory in Japan and Arizona factory in the United States. It can be said that more than 90% of the output is produced. stay in Taiwan.

The Arizona factory will be the most advanced 5nm factory in the United States, with a planned monthly production capacity of 20,000 wafers. In the future, there will be opportunities to cut into 3nm wafers and increase to 40,000 wafers per month in 2026, using 5nm and 3nm wafers. Rice mixed production mode, but TSMC still focuses on Taiwan. It is expected that the latest 2nm (1nm) process will be located in Taoyuan Longtan Park under the Hsinchu Science Park.

TSMC owns about 55% of the world's contract chip manufacturing market, and the US's global wafer manufacturing has dropped from 37% in 1990 to 10% in 2020.

No matter which perspective is used, Taiwan's chip industry, especially the main force TSMC, is an important presence in the global semiconductor industry.

Credit Suisse estimates that if the world can't get Taiwan-produced chips, chip-related production will be severely affected.

Taiwan's chip industry, especially the main force TSMC, is an important presence in the global semiconductor industry.

(US United States file photo)

TSMC's U.S. plant is of strategic significance to the U.S.

TSMC set up a factory in the United States, and it did so under the urging of the U.S. government. The U.S. government subsidized tens of billions of dollars, far below the amount needed to boost local chip manufacturing.

From this point of view, while U.S. production will increase, so will unit costs, political and geographic factors.

Credit Suisse said TSMC's production capacity is expected to cover a market of $171 billion by the end of next year, more than three times what the U.S. chip law can achieve in the next decade.

In the past two years, under the geopolitical conflict, TSMC has set up factories overseas to diversify risks.

Among them, although the production capacity of the US factory is only 20,000 pieces, the TSMC Arizona factory still reserves a very large space for further expansion in the future.

Therefore, in the first ten days of December this time, TSMC's Arizona plant held a machine transfer ceremony, which was regarded by the United States as a way to expand the momentum of American semiconductor manufacturing. For the United States, it is of strategic significance for TSMC to set up a factory in the United States. Therefore, the United States President Joe Biden and Speaker of the House of Representatives Nancy Pelosi are on the invitation list, but whether the Arizona factory in the United States will be further expanded in the future, TSMC's response depends on the mass production of the first factory. whether it is economical.

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