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REGIONS AMERICAS


THEFUNDAMENTALS OF THE INDUSTRY HERE ARE VERY STRONG,ANDIT WILL DOUBLE IN SIZE ANDRECOVER IN THE NEXT 10 TO 15 YEARS


Thegeopolitics of semiconductors


US AUTHORITIES TOUTED TSMC’S $12BN INVESTMENT IN ARIZONA - BUT THE TAIWANESE FIRM AWAITS NEWINCENTIVES. PHILIPPAMAISTER REPORTS


tell you that there are 49 other gover- nors who are a little jealous at this point.” This effusive statement was made not, as one might assume, by an economic development official but by US national security advisor Robert O’Brien. At first glance, the deal simply appears to be another FDI success; in


“C


fact, the US views it as a geopolitical coup that gives the country a huge boost in its economic war with China.


Specialist giant TSMC (Taiwan Semiconductor Manufacturing Company) may not be a household name but within the sphere of semiconductors and high- tech, it is renowned as the world’s largest and most sophisticated foundry – a company focused exclusively on the manufacturing of computer chips under contract to companies around theworld, includingHuawei and Apple. TSMCreported net revenue of $35.8bnfor 2019. Headquartered in Hsinchu, Taiwan – where


the bulk of its facilities are located – TSMC has operations on three continents, including a small existing semiconductor fabrication plant (fab) in Camas, Washington and design centres in Texas and California. “It’s great for our national security to bring


our supply chain home, especiallywhen we are dealing with critical technology, computer chips, dual-use chips, that are not only impor- tant to our civilian world but also to our mili- tary,” says Mr O’Brien. It comes at a time when semiconductor pro-


duction capacity in the US has slumped to just 12% of global capacity, according to SEMI, the global association representing the electronics


42


ongratulations on the TSMC factory that is coming to Arizona. I can


manufacturing and design supply chains. Also at a time when Intel – long the world leader – has announced a year’s delay in deploying its next generation of chips and a possiblemove to outsourced production.


Hopesfor jobs Despite the eye-catching level of committed investment, the fab to be built in Arizona will be small by TSMCstandards. Its cost, $12bn, spread over eight years, is dwarfed by TSMC’s planned $16bn-$17bn capital spending budget for 2020 alone –$1bnmore thanoriginallyannounced. It will produce 20,000 wafers amonth – a fraction of the 100,000 a month its average fab yields – with advanced 5-nanometer technology. The company promises it will create more


than 1600 professional jobs directly, plus “thou- sands of indirect jobs in the semiconductor eco- system”. Construction will begin in 2021 and production in 2024. The plant will allow TSMC to better support its customers and attract global talent, it said. TSMC, however, has repeatedly stated pub-


licly that the deal will only take place if the cost differential between Taiwan and Arizona can be eliminated, calling “a globally competitive environment” crucial to the success of this pro- ject. Such policies, it added, would give it and its suppliers confidence to move ahead with future investments. TSMCchairman Mark Liu said in a call with


industry analysts on July 16 that pending US legislation that would close the cost gap made the difference.


Legal boost Bipartisan support in Congress is expected for the Creating Helpful Incentives to Produce Semiconductors for America Act, which would give manufacturers a 40% refundable invest- ment tax credit for facilities and equipment.


www.fDiIntelligence.com August/September 2020


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