TSMC has no “concrete” plans to make chips in Europe
Europe is contemplating spending billions of euros to try and improve the strategic supply of chips but it is unlikely that any domestic chip makers will be able to offer any production at or near the leading-edge. The chosen vehicle is likely to be an Important Project of Common European Interest (IPCEI) as a way of handing out a subsidy (see Germany ready to help Europe invest ‘billions’ in chip manufacturing).
However, other geographic regions have offered subsidies to attract the world’s leading chipmakers to set up locally. The notable examples are the US and Japan, which recently have both sought to attract to TSMC to invest in local manufacturing.
TSMC, which was founded in 1987 with the support of Philips Semiconductors, has long been courted to return to Europe in some capacity other than just sales, but it has consistently declined arguing that its success comes from economies of scale from grouping fabs together in Taiwan.
However, in recent years TSMC has broken that rule and besides its multiple fabs in Taiwan now owns one fab in the US and one in China and is commencing the building of a $12 billion leading-edge fab in Phoenix, Arizona (see TSMC hiring for Arizona wafer fab).
Next: Responds to pressure
It can be argued that the fabs in China and in the US were – and are – being located abroad to satisfy political and key customer pressure. In 2020, Japan with similar concerns about securing the supply of leading-edge ICs also tried to persuade TSMC to build a wafer fab there (see Now Japan wants a domestic TSMC fab). However, it appears that Japan has been persuaded that a packaging plant supporting chiplet manufacturing – a technology of increasing significance – is all TSMC can offer (see Report: TSMC, Japan to share cost of Tokyo chip facility).
It is notable that Apple is TSMC’s largest customer and the United States guarantees the sovereignty of Taiwan. The People’s Republic of China considers Taiwan to be a rogue state that it will, at some point, assert control over.
When asked if TSMC would support European strategic objectives by manufacturing in Europe, Maria Merced the president of TSMC Europe, told eeNews Europe: “We have seen the call from the European Commission to boost the European semiconductor industry through the Important Project of Common European Interest (IPCEI) initiative. TSMC does not rule out any possibility, but there is no concrete plan at this time.”
Europe’s customers of global significance are mainly to be found in the automotive sector but they have suffered a serious breakdown of their semiconductor supply chain (see Volkswagen may claim damages over chip shortages). European chip manufacturers such as Globalfoundries in Dresden, Germany, with a mix of process technologies behind the leading-edge may be able to expand to provide more local manufacturing capacity for some automotive needs but the foundry has itself pulled back from pursuing the leading-edge below 10nm.
Europe is facing the strategic choice as to whether it needs to subsidize one of the overseas chip manufacturing leaders to come to Europe and provide leading-edge capability below 10nm or whether it only has the ambition to encourage local development in the more varied and considerably less expensive More-than-Moore domain (see Opinion: Strategy, tactics of European chipmaking are being confused).
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