image source,Joe Biden Facebook
TSMC Chairman Liu Deyin (second from right) gave Biden a wafer as a gift.
Taiwan Semiconductor Manufacturing Company (TSMC), a foundry company headquartered in Taiwan, has expanded its investment in a chip factory in Phoenix, Arizona. Last week, U.S. President Joe Biden (Joe Biden) personally attended the official “installation” ceremony of the second phase of the factory building, and the Taiwan’s TSMC announced that it will reach a monthly production capacity of 20,000 5nm chips (chips) in 2024. Biden announced on the spot “the return of American manufacturing.”
This big show focusing on the industrial policies of the Biden administration was attended by U.S. Secretary of Commerce Gina Raimondo, TSMC founder Zhang Zhongmou, chairman Liu Deyin, and TSMC’s major U.S. customer Apple CEO Tim Cook, Su Zifeng, CEO of Advanced Micro Devices (AMD), and Peter Wennink, CEO of Dutch business ASML (ASML), etc., are known as the “Technology Olympics” grand ceremony.
This major event in the technology world is also full of strong political meaning.
Among them, Zhang Zhongmou said in a speech on the same day that from the perspective of the semiconductor industry and regional political changes, globalization and free trade are “almost dead.” Zhang’s speech sparked heated discussions in the technology community. Many analysts say that after the start of the trade war between the United States and China, mutual “sanctions” have been extended to Australia and China (such as wine), Japan and South Korea (in semiconductor raw materials) and trade disputes across the Taiwan Strait. Semiconductors are the focus of this wave of sanctions. The most important thing is that it is called an indicator of the rise of “economic protectionism”. The World Trade Organization (WTO), which represents the globalization of trade, can do less and less, and its role has diminished.
U.S. President Joe Biden and TSMC Chairman Liu Deyin (right)
On Monday (December 12), Beijing has filed a formal complaint with the United States at the World Trade Organization (WTO). According to China’s Ministry of Commerce, the United States has used “vague national security reasons” to suppress competitors. China has criticized U.S. economic protectionism for undermining the rules of trade liberalization and threatening global supply chains.
However, Chris Miller, author of “War on Chips” and an associate professor at Tufts University in the United States, explained to BBC Chinese that semiconductors are not a fully globalized industry. Responding to reporters in an email, he said the term globalization is always misleading. It is the “few companies” that play a unique and irreplaceable role in this industry.
Details of TSMC’s Phoenix Plant
According to TSMC and the U.S. side, the investment has increased significantly from the original US$12 billion to US$40 billion (approximately NT$1.2 trillion, accounting for about 50% of the total budget of the Taiwan government in 2023). The US called it the largest foreign investment case in the history of Arizona, and announced that Apple would become the plant’s largest customer, and its chips were all produced in the US.
image source,Ethan LIN
The TSMC plant is located in the capital of Arizona, the suburb of Phoenix (Phoenix) with a population of 1.6 million. It is expected that there will be two plants for the foundry of 5-nanometer and 3-nanometer high-end chips. It will be fully operational and is expected to produce 20,000 wafers per month. The plant has been hailed by the media as “the first advanced process chip factory in the United States“, and it also symbolizes the Biden administration’s “key step in strengthening domestic chip manufacturing.” In addition, another 3nm wafer factory planned in the factory area is expected to be put into operation in 2026. TSMC also said that the investment will create at least 10,000 high-tech jobs locally.
At the same time, Taiwan media “Digital Times” revealed that Pat Gelsinger, CEO of TSMC’s rival Intel, flew to Taipei on the day of the ceremony, and then went to South Korea. . All these actions have aroused heated discussions in the global fintech community.
According to the statistics of the British media “Financial Times”, the semiconductor production in the United States only accounts for 12% of the global market. If TSMC’s new plant starts in 2024, it is expected that the US’s global market share will be pushed up to 15%. At the same time, this move also means that TSMC and even the entire chip industry supply chain are changing.
Miller (Chris Miller) told the BBC that the focus of this plant is that TSMC’s customers will not only buy chips in Taiwan, but can be anywhere. “Currently the global chip industry is highly concentrated, with Taiwan producing 90% of the world‘s most advanced processor chips. decline.”
Economic globalization is dead?
However, Zhang Zhongmou, who started from Texas Instruments in the United States and founded TSMC in Taiwan in 1986, witnessed that TSMC finally set up a factory in the United States (a plan to establish a factory more than ten years ago failed). Zhang Zhongmou said at the installation ceremony that “globalization and free trade Death” sparked discussions from all walks of life. Zhang Zhongmou said at the time that the situation facing the global semiconductor industry has changed due to violent geopolitics. He therefore warned that “globalization and free trade are almost at the end of their lives and are unlikely to be revived.”
According to some analysts, Zhang Zhongmou’s speech may refer to the current global chip war against the background of the US-China rivalry and cross-strait regional political influence: the United States is eager to curb China’s semiconductor development, so as to win over or put pressure on TSMC and South Korea’s Samsung Electronics to set up factories in the United States. The actions to improve the US semiconductor ecosystem are no longer concealed.
Liu Peizhen, a researcher at the Taiwan Economic Research Institute, told Taiwan media that the production cost in the United States is relatively high, which is a trend of “anti-globalization”. Setting up factories in the United States, where production costs are high, is different from the previous business and industrial operation model, but it is expected that short-term semiconductor ” Local manufacturing” is an irreversible trend.
Miller emphasized to the BBC that semiconductors have never been a fully globalized industry. Japan, Taiwan, South Korea, the U.S. and the Netherlands are the current navigators of the chip industry, he said, and “their interdependence will not change.” Access to cutting-edge wafer fabrication capabilities.
BBC Newsnight: Could Taiwan’s microchips act as ‘silicon shields’ against Chinese invasion?
Regardless of whether economic and trade globalization has come to an end, some analysts believe that the thinking of the world‘s largest economy has undergone a major change from the fact that the United States has formed factions (or semi-coerced) to invite allies to join in rebuilding the semiconductor ecosystem. White House economic adviser Brian Deese said that the strategic shift of the Biden administration is gradually abandoning the policy of deregulation and tax cuts to allow the market to operate freely in the past 40 years, and shifting to establishing a clear industrial strategy, using government money to attract or Introduce private investment. “TSMC’s visit to the United States and the 2022 Chips and Science Act (Chips and Science Act 2022) are the first steps in this strategy.
Liu Peizhen, a researcher at the Taiwan Institute of Economic Research, told BBC Chinese that TSMC’s investment in the United States has opened the prelude to Taiwan’s semiconductor industry’s industrial strategy of “based on Taiwan and globally focused”. She explained that under the influence of multiple factors such as the U.S.-China technology war and cross-strait geopolitics, the trend of global semiconductor manufacturing capacity moving to Asia over the past decade has begun to shift to the United States. She believes that as TSMC goes to the United States to build production capacity, coupled with the tense competition between the United States and China in the semiconductor industry, the global technology supply chain will be divided into two camps, and it will be more difficult for TSMC to expand its customer service in mainland China in the future. .
Miller emphasized that the biggest challenge facing TSMC and the entire chip industry today is to continuously improve technology. Over the past 60 years, the computing power of chips has doubled every two years, but performance gains are now more difficult than ever. “Geopolitics will reshape China’s role in the industry, but for most companies the main focus will be on upgrading technology, which is where their core business is.”
Taiwan is hollowed out? Who is the loser?
Apart from Zhang Zhongmou, Chairman Liu Deyin of TSMC, and representatives of the Taiwan government, the participants of this entry ceremony, Su Zifeng, CEO of TSMC’s major customer AMD, and Huang Renxun, founder of Inventec (NVIDIA), all have Taiwanese immigrant backgrounds. Therefore, TSMC’s going to the United States to set up a factory has recently become the most concerned topic in Taiwan’s public opinion.
In fact, more than two years ago, TSMC announced that it will set up a factory in the United States for the first time during the new crown epidemic, which has already shocked the technology industry.
After some comments, it was pointed out that TSMC and South Korean electronics giant Samsung Electronics (Samsung) set up factories in the United States, where human capital and construction material capital are relatively high, which does not meet the cost demands of enterprises. Many big factories had to go to the United States under the pressure of the United States.
The White House announced in 2020 that TSMC will set up a factory in the United States. In 2021, the U.S. Department of Commerce will force global semiconductor manufacturers to provide customer information, inventory and orders to the United States before the end of the year. Samsung and other major manufacturers have resorted to a series of “half invitation and half pressure” strategies.
Yoshiko Ota, a well-known Japanese semiconductor commentator, believes that the United States is doing its best to complete its gap in the semiconductor ecological chain and establish a complete supply chain. He said that although the United States is strong in semiconductor design, its manufacturing is weak, it lacks a large foundry, and its back-end processes such as wafer cutting or packaging testing are also weak.
image source,GlobalWafers
In the past, semiconductors were a global ecosystem, that is, the completion of a chip product, from raw materials, design, wafer manufacturing to foundry chip and packaging and testing, etc., was often the collaboration of different companies around the world. But now every country hopes to have its own ecosystem.
Yasuhiko Ota analyzed in his research book “Semiconductor Geopolitics” that after the White House plans to bring TSMC to the United States, the semiconductor industry of other countries will follow in its footsteps and enter the United States from Asia.
The advantage of the United States is that the largest demand for semiconductors in the world is from the automobile industry chain with Detroit, Michigan as the core. The latter’s strong purchasing power hopes to play a magnetic effect and attract Asian semiconductors to come to the United States for production. However, Yasuhiko Ota also emphasized that based on the logic of national security, the US government needs to prevent the development of China’s semiconductors and control the supply chain. “However, TSMC’s business logic is that business is about business, and it must be paid reasonably. These two opposing values are fiercely wrestling behind the investment plan.”
The rivalry between major semiconductor manufacturers and the United States has sparked criticism in Taiwan from pro-China or “U.S. skeptics” of “hollowing out Taiwan” for U.S.-Taiwan cooperation. This remark caused heated public opinion in Taiwan.
The “hollowing out theory” was first pointed out by Chen Fengxin, director of the media department of the former KMT’s Communication Association. She commented that many engineers from TSMC moved their families to the United States to “uproot” Taiwanese talents. TSMC may become the Japanese giant “Toshiba”, It is thrown away after being used up by the United States. Relevant comments were widely circulated among Taiwan skeptics and the media. Chen Fengxin added that “globalization is dead” will make Taiwan’s semiconductor industry worse, and semiconductors will be continuously exploited by Europe and the United States. the greatest victim of communism.”
At the same time, on the day of the transfer ceremony, the Chinese English-language official media “China Daily” also criticized the United States in an editorial for using Taiwan’s semiconductors as a bargaining chip to “compete” with Beijing in an attempt to hollow out Taiwan. The editorial said the Taiwanese government “colluded with Washington to portray TSMC’s relocation as a good thing at the expense of the island’s interests to advance its separatist agenda. The coercive U.S. policy is inherently selfish.
image source,Intel
Wafer fabrication requires strict cleanliness to avoid damage to transistors and circuits.
In the face of hollowing out theory, TSMC, which has always been low-key, was refuted by CEO Wei Zhejia’s speech. When he attended a speech this month, he said that TSMC went to the United States to hollow out Taiwan, which is “no door”. In addition, regarding Taiwan’s semiconductor fear of stepping into Japan’s footsteps, he responded, “Impossible! Taiwan has worked hard for more than 30 years, how could it be knocked down.”
Taiwan’s Ministry of Economic Affairs issued a document emphasizing that the monthly production of 20,000 pieces of TSMC’s U.S. factory accounts for only about 2% of the world’s advanced manufacturing processes, and TSMC continues to invest in Taiwan, except that 3nm has been trial mass-produced in Tainan, 2nm It also began to prepare land in Hsinchu, and the government launched an expansion plan for the 1nm process. In other words, Taiwan still keeps the highest-end chips in Taiwan and does not go to the United States for production. Taiwan’s Ministry of Economic Affairs stated that the so-called hollowing out of Taiwan is an attempt to drive a wedge between the US and Taiwan.
In addition, Huang Qinyong, an analyst of the semiconductor industry and director of Digitimes, commented that “young people in Europe and the United States are very repulsed by the unchanging production line work, not to mention that Taiwan puts first-class talents in semiconductor process management and research and development. It is difficult for TSMC to In fact, there is no need for other countries to copy R&D teams with tens of thousands of people…Maybe it’s just like Taiwan’s relocation of NB (Notebook) factories to China, but it’s just a process of living on water,” Huang Qinyong said.