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Taiwanese Government to U.S. Officials – “Chip Shortage For Automakers Will Abate in Q421”
One Step Forward Two Steps Back
The reprieve comes as concerns mount that Taiwanese chip makers aren’t prioritizing the automobile industry, which has been hit hardest by the shortage. The Taiwanese government was responding to a letter written by U.S. senators from Michigan and Ohio—two automobile manufacturing hubs—asking Taiwan to help ensure chip supplies. The government said that while most Taiwanese manufacturers didn’t directly make chips for the car industry, it was working with those who do to “actively resolve” the issue. Auto makers in Europe and Japan such as Volkswagen and Toyota have said over the past month that they will be forced to cut production due to the chip shortage.
There are no quick solutions to the chip shortage as shortages are expected to last well into next year; building new fabs typically takes years. Last year, TSMC announced plans to build a $12 billion fab near Phoenix, Arizona, which is expected to come on-line in 2024. TSMC has announced $100 billion in investment over the next three years. Intel has announced plans to spend $20 billion to build two fabs, also in Arizona, another $3.5B in New Mexico on packaging technology and capacity, $200M on a campus in Haifa, $400M for Mobileye in Israel and $10B to expand its 10nm fab in Kiryat Gat, Israel. Biden announced $50 billion in U.S. government spending on the semiconductor industry as part of the $2 Trillion infrastructure plan. That’s a start but not nearly enough. “About 75% of global semiconductor manufacturing capacity, for example, is concentrated in China and East Asia, a region significantly exposed to high seismic activity and geopolitical tensions. In addition, 100% of the world’s most advanced (below 10 nanometers) semiconductor manufacturing capacity is currently located in Taiwan (92%) and South Korea (8%).“
A complete disruption of Taiwanese foundries for one year could cause the global electronics supply chain to come to a halt; If such a disruption were to be become permanent, it could take a minimum of three years and a $350 billion investment to build enough capacity in the rest of the world to replace the Taiwanese foundries, the study finds.
One Step Forward Two Steps Back
The reprieve comes as concerns mount that Taiwanese chip makers aren’t prioritizing the automobile industry, which has been hit hardest by the shortage. The Taiwanese government was responding to a letter written by U.S. senators from Michigan and Ohio—two automobile manufacturing hubs—asking Taiwan to help ensure chip supplies. The government said that while most Taiwanese manufacturers didn’t directly make chips for the car industry, it was working with those who do to “actively resolve” the issue. Auto makers in Europe and Japan such as Volkswagen and Toyota have said over the past month that they will be forced to cut production due to the chip shortage.
There are no quick solutions to the chip shortage as shortages are expected to last well into next year; building new fabs typically takes years. Last year, TSMC announced plans to build a $12 billion fab near Phoenix, Arizona, which is expected to come on-line in 2024. TSMC has announced $100 billion in investment over the next three years. Intel has announced plans to spend $20 billion to build two fabs, also in Arizona, another $3.5B in New Mexico on packaging technology and capacity, $200M on a campus in Haifa, $400M for Mobileye in Israel and $10B to expand its 10nm fab in Kiryat Gat, Israel. Biden announced $50 billion in U.S. government spending on the semiconductor industry as part of the $2 Trillion infrastructure plan. That’s a start but not nearly enough. “About 75% of global semiconductor manufacturing capacity, for example, is concentrated in China and East Asia, a region significantly exposed to high seismic activity and geopolitical tensions. In addition, 100% of the world’s most advanced (below 10 nanometers) semiconductor manufacturing capacity is currently located in Taiwan (92%) and South Korea (8%).“
A complete disruption of Taiwanese foundries for one year could cause the global electronics supply chain to come to a halt; If such a disruption were to be become permanent, it could take a minimum of three years and a $350 billion investment to build enough capacity in the rest of the world to replace the Taiwanese foundries, the study finds.
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