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US Is Buying Chipmaking Machines From Taiwan More Than Ever

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As the Biden administration seeks to revive the local semiconductor industry, US sales of Taiwanese chip-making gear reached an all-new high record in March. According to information from the Ministry of Finance in Taiwan, the country which is a worldwide hub for silicon manufacturing innovations, witnessed a 42.6 percent increase in its chipmaking equipment exports to the US in March compared to the same month last year, setting an all-time high record of 71.3 million USD (RM314.01 million). However, trade in China went down 33.7 percent, marking the tenth consecutive month of a downward spiral.

Taiwan
Image Source: cnbc.com

Taiwan is a key factor in the worldwide supply chain and residence of Taiwan Semiconductor Manufacturing Co (TSMC) as well as numerous additional key players in the chip industry.

Also Read: Why is Samsung’s cut in chip production good news for industry?

United States officials took action to establish more sophisticated chipmaking within American borders because of concerns over over-dependence on Taiwan island, which China regards as a portion of its own country.

Due to financial aid and assistance from the state and municipal governments, TSMC is building two fabrication facilities in Arizona.

The chip supply chain is beginning to split apart as a result of US measures to restrict China’s access to essential semiconductor equipment, know-how, and goods. One indication of this is the decline in Taiwan’s shipments of semiconductor machines to China.

A month back, Japan also unveiled intentions for new export limits on chip manufacturing equipment, clearly aiming its limitations at China which is the second-largest economy in the world.

Japan’s move to collaborate with the United States and the Netherlands in banning chip manufacturing equipment exports to China has given the allies strong tools to use in the expanding technological conflict.

The commerce ministry of Japan announced this week that beginning in July, exports of 23 different types of chip technology will require government authorization.

This has an impact on a wide range of businesses, which includes Nikon Corp., Tokyo Electron Ltd., and Screen Holdings Co., which have played a key role in China’s efforts to establish a local chip sector.

“Japan joining the export curbs will do great harm to China’s ability to make and develop chips smaller than 16 nanometers,” said Akira Minamikawa, an analyst at research company Omdia.

Source: bloomberg.com

Also Read: U.S. set to further tighten chipmaking exports to China

American businesses like Applied Materials Inc. were immediately impacted by the regulations when the Biden administration published its extensive limits on chip-related shipments to China in October.

Following the announcement that both the Netherlands along with Japan has joined the China restriction, all the main nations that manufacture chipmaking gear are taking part. The most cutting-edge equipment, involving those that produce logic chips at 16 nm or with more complex geometries, are covered by the constraints.

NXP Semiconductors

NXP Semiconductors – A leading semiconductor company that was originally a part of Philips.

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NXP Semiconductors is one of the largest non-memory semiconductors suppliers across the world. The company is famous in the electronics industry for supplying semiconductors for secure identification, automotive, and digital networking sectors. Originally the company was founded in 1953 as a part of Philips and it was known as Philips Semiconductors. But, in 2006 this division was sold to private equity investors who then changed the name to NXP Semiconductors.

Currently, the headquarters of this spun-off company is based in Eindhoven, Netherlands. The company is running its business in more than 35 countries with approximately 31,000 employees. Kurt Sievers is the current CEO and President of NXP Semiconductors. Qualcomm, a few years back, proposed to buy the company but the deal was called off later.

History of NXP Semiconductors

Philips is a multinational conglomerate and back in 1953, it had many divisions and factories spread across many regions. In 1953, Philips started a small-scale production in Nijmegen (a city in Dutch) which became a part of Icoma (a division of Dutch Philips). Over the next two decades many such production facilities and new divisions were established by Philips.

In 1975, Philips acquired Signetics which made the former company the second-largest semiconductor manufacturers in the entire world. Every division of Philips in every other nation had a different name and the company decided to merge all these into Philips Components and renamed it as Philips Semiconductor in 1991. In 1999, Philips Semiconductors acquired VLSI Technology and this acquisition made it the sixth-largest semiconductor company in the world.

Formation of NXP Semiconductors

It was in December 2005 when Philips decided to spin off Philips Semiconductors and make it an independent company. A consortium of private equity investors bought an 80.1% stake in Philips Semiconductors in September 2006. The investors who were involved in this acquisition were  Kohlberg Kravis Roberts (KKR), Bain Capital, Silver Lake Partners, Apax Partners, and AlpInvest Partners. The new name of the company was changed to NXP Semiconductors (from next experience). The company was launched officially during the Internationale Funkausstellung (IFA) consumer electronics show in Berlin. Even after the company was separated from the big brand name of Philips, NXP ranked one of the top 10 semiconductor companies worldwide.

NXP Semiconductors
Image Source: yicaiglobal.com

During the acquisition, Frans Van Houten was the CEO of NXP Semiconductors. He emphasized on the fact that NXP should evolve and enter into the “vibrant media” technologies present in every essential gadget and appliance from smartphones to digital televisions. NXP planned to strengthen its mobile phone and personal business and thus announced the acquisition of Silicon Laboratories’ AeroFONE single-chip phone and power amplifier product lines.

After one year, NXP decided to start a joint venture with STMicroelectronics and NXP’s mobile and personal business unit. But in 2009 STMicroelectronics bought the 20% stake of NXP and it became a joint venture between Ericsson and ST.  The same year NXP decided to sell its Home Business unit to Trident Microsystems. NXP was in a very good shape this time which called for a restructure of its manufacturing plan and it led to a job loss of 4,500 employees.

Major Events in The Company

In 2009, the position of  Frans Van Houten was taken over by Rick Clemmer and under his leadership, the company focussed more on “high-performance mixed-signal” products. In 2010, NXP acquired Jennic, a UK-based company that is now part of its smart home and energy product line. The same year NXP announced its IPO in NASDAQ with a total shares of 34,000,000. At the end of 2010, the company decided to sell its Sound Solutions business for $855 million. In 2012, NXP’s revenue increased by 41% as compared to 2011 and it was mainly because of demand for NFC chips and secure elements. Last year, Kurt Sievers was appointed the new CEO of the company.

Kurt Sievers – CEO of NXP Semiconductors

Since May 2020, Kurt has been serving as the CEO of the company and his main motto for the company is “secure connections for a smarter world”. The focus of the company should evolve with time and the demand of users is always changing with more profound tech and the threats of compromising it. Kurt went to Augsburg University, Germany, and has two master’s degrees in information technology and physics respectively. Kurt has significantly made many acquisitions possible for NXP and played different roles in the company since 1995.

TSMC

TSMC – The World’s First and Most Valued Semiconductor Foundry.

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Taiwan Semiconductor is home to many world-famous technology companies, and several foreign companies have also established their manufacturing units in this small country. Along with that, Taiwan Semiconductor is also known for being the headquarters for the world’s largest dedicated independent (pure-play) semiconductor foundry, i.e. TSMC (Taiwan Semiconductor Manufacturing Company, Limited).

TSMC is a semiconductor contract manufacturing and design company. It designs, manufactures, tests, and ships integrated circuits as well as other semiconductor devices to its worldwide customers. TSMC is one of the largest semiconductor companies in Taiwan, with its chips being used in almost every piece of electronic equipment, from smartphones, laptops, and video game consoles to data centres and F-35 fighter jets.

A Brief Introduction

TSMC is a Taiwanese company with its headquarter located in the Hsinchu Science Park in Hsinchu. The company was founded in 1984 and has most of its shares owned by foreign investors. TSMC mainly deals in the manufacturing of Integrated circuits and related services and serves with the brand names CyberShuttle prototyping service, Open Innovation Platform, and eFoundry online services. WaferTech, TSMC PRC, and SSMC are some of its subsidiaries.

TSMC recorded net annual revenue of NT$1.07 trillion in 2019, with 51,297 employees working for it in its global offices. As per the 2020 records, the company can manufacture 13 million 300 mm equivalent wafers per year. Apple, Huawei, Sony, Qualcomm, Broadcom, and HiSilicon are some famous names that are the permanent clients of TSMC, and the list of clients for the company goes as long as 500 companies from across the world.

The Founding Story of TSMC

The late 70s and the beginning of the 80s was the time when semiconductor technology was emerging at a high pace. In 1985, the Taiwan government appointed Morris Chang, a Taiwanese businessman, having more than 25 years of experience in the field of the semiconductor industry, to help them bring the technology to Taiwan. After establishing the first non-profit research institute ITRI in 1986, the Taiwan government, along with Chang, established the world’s first dedicated semiconductor foundry named TSMC in 1987. TSMC was a joint venture between the Taiwan government with 21% shares, Dutch multinational electronics conglomerate Philips with 28% share, and other private investors owning the rest of the shares in the company.

TSMC
Image Source: openthenews.com

TSMC was founded at the time when companies like Intel, NEC, Fujitsu were already making their chips. But the business idea behind TSMC was to provide the other companies with the chips manufacturing service, saving lots of time and money for them. This idea attracted many customers for TSMC, not only from Taiwan but also the big-name companies from Silicon Valley.

When TSMC had just started its journey, IDMs was ruling the industry. But just in ten years in the business, TSMC was at the level of IDMs. In 1997, the company got listed on the New York Stock Exchange, becoming the first Taiwanese company to do so. The years 2000 onwards have been the year of pure growth for the company, and it added clients like AMD, Apple Inc., Broadcom Inc., Marvell, MediaTek, Nvidia, Qualcomm, Xilinx, NXP, STMicroelectronics and Texas Instruments to its customer list.

By the year 2011, TSMC had increased its research works by 39%. The same year the company also started the trial production of A5 SoC and A6 SoCs for Apple’s iPad and iPhone devices. In 2013, it was among the 100 most valued companies in the world on the FT Global 500 list. In 2014, TSMC was producing A8 and A8X SoCs for Apple, and it became the exclusive producer of A9X. The company surpassed the market capitalization of Intel in 2017 and became the world’s 10th most valuable company in 2020.

Morris Chang, The Founder TSMC

Morris Chang is known as one of the famous businessmen and the founder of TSMC. He was born in Ningbo, Chekiang, on 10 July 1931 and was brought up in British Hong Kong due to the Second Sino-Japanese War. In 1951, he went to the Massachusetts Institute of Technology and obtained a graduate and postgraduate degree in mechanical engineering.

TSMC Founder
Image Source: forbes.com

After completing his education, he joined Sylvania Electric Products, and after working for three years at the company, he joined Texas Instruments in 1958. The latter sponsored Chang’s doctorate, and he joined Stanford University in 1964 to complete a PhD in electrical engineering. Chang spent 25 years of his career at Texas Instruments and was leading the company as the group vice president of its worldwide semiconductor business in the later years. After leaving TI in 1984, he also worked as the COO and president of General Instrument Corporation for one year.

The Taiwanese government wanted to work in the field of semiconductor, so it called back Chang to Taiwan and appointed him as the chairman and president of the newly established Industrial Technology Research Institute in 1985. Under his leadership, TSMC has become the largest semiconductor foundry in the world. During his time at TSMC, he served the company at various ranks, including the chairman and the CEO of TSMC. He retired as the CEO on 5 June 2018 from TSMC.

Chip shortage

Chip shortage to persist for two more years, says Intel CEO.

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The damage caused by the pandemic will take a couple of years to cope up within the silicon industry. During the onset of the pandemic, a miscalculation has caused such a heavy shortage of chips as the demand was unexpected. These chips especially the display drivers are not only used in mobiles or laptops but also in automobiles and smart home devices. So, production and sales of both the tech industry and the automobile industry are coming down or getting negatively affected due to the chip crisis. Because without these chips, the final products will be incomplete.

Intel Corporation’s CEO, Pat Gelsinger, has said that the semiconductor shortage that is having its impact all over the world is not likely to end for a few more years. The company is trying its best to push the workers and increase the production of chips in some of their plants. But even if these plants work at full capacity it will take months before the crisis in the semiconductor industry followed by other industries starts to ease up. Currently, Intel is increasing chip production to address and meet the crisis in the automobile industry.

Increase in Demand and Chip Crisis

Pat Gelsinger has further mentioned that the company and the entire semiconductor industry as a whole will still need a couple of years if it has to meet the demand for chips across every industry. The pandemic followed by the lockdown is the main reason why the demand for chips skyrocketed all of a sudden. With people locked up in their homes, they wanted to buy gadgets like mobile phones, laptops, game consoles, etc to help them cope up with this hard time. Some of us bought good-performing laptops as work from home became the new normal while others bought good televisions and gaming laptops to enhance their source of entertainment.

Chip shortage
Image Source: marketwatch.com

But meeting the rising demand amidst the pandemic was very tough and the main reason is shuttered plants. There were also difficulties in transportation during the pandemic and other logistic shortcomings. The companies are trying their best to boost up the production but with the incoming second wave of COVID-19, it will still take more time to get the chip production back to normal condition.

The Political Agenda

The shortage of chip production is affecting many industries and due to this price of many appliances is increasing. Let alone the companies are trying to recover from the drastic crisis, they have become the center of many political agendas. The Biden administration has informed the companies that he will provide bipartisan support so that government funding is received to address this shortage.

Addressing the shortage, Pat also mentioned that chip manufacturing in the US was 37 percent a quarter of a century ago and now it is 12 percent of the world’s total semiconductor production. Today, Intel is the only company that produces cutting-edge high-end chips on American soil. There should be more semiconductor companies in the US as it will create more jobs and will have control over the industry for the long term.

Impact in other Industries

The shortage of chips has let to a decrease in production and thus lower revenue in other industries especially tech and automobile. Ford has announced that the shortage in chips will lead to a decrease in production by 1.1million vehicles in 2021. The others on the list are Volvo, Jaguar, and Mitsubishi. In the tech industry, Apple has confirmed the strain in supply has impacted the sales of iPads and Macs.

On the other hand, Mark Liu, Chairman of Taiwan Semiconductor Manufacturing Co., has told CBS that the company has tried its best to squeeze as many chips as possible especially for the car companies. He also mentioned within the next two months the company will be able to catch up and fulfill the minimum requirements of the customers.

The main reason that the shortage in the chip industry was amplified because along with the demand for electronics, the demand for cars also increased. After the lockdown was suspended, the covid situation made people nervous about public transport. So, the demand for personal vehicles started increasing.

ROHM

ROHM: The Resistor Pioneer and Leader of the Semiconductor Industry.

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ROHM is a well-known semiconductor industry leader with its roots in Japan. The company started its journey by registering its first patent for a breakthrough utility model called a ‘parallel lead-type fixed resistor’ in 1958, and today it is credited for hundreds of such patents. The company has covered a huge gap so far, and presently, it is one of the major manufacturers and marketers of semiconductor products. Today, the company is expanded to most of the major countries in the world, and as of 2017, 21,308 employees are working for the company globally.

Establishment of ROHM

Initially, ROHM Semiconductors started as Toyo Electronics Industry Corporation, a small electronic parts manufacturing company, in 1958. The company was founded by Kenichiro Sato in Japan. Toyo Electronics was into manufacturing resistors, transistors, and other electronic equipment.

In 1962, ROHM started to manufacture the automatic resistor assembly machine in-house, and the next year, it started to market and develop metal-firm resistors. In 1966, the company was rebranded as ROHM Wako Co., Ltd. With the new name, the company started to manufacture transistors and switching diode, and by the end of the 60s, it also began to work on ICs. The company established its other divisions, including ROHM Apollo Co., Ltd., and ROHM Logistec Co., Ltd., to focus on the new technologies coming.

In 1970, ROHM became the first company in Japan to establish a subsidiary in the U.S. The company started its sales office and an IC design center in Silicon Valley. The said center became the place for the company where it was doing the research work and was developing the ICs. After this expansion, ROHM also entered Asian countries like South Korea, Hong Kong and established ROHM Electronics Asia Pte. Ltd. ROHM also began to invest in LEDs, square-plante chip resistors, rectifying diodes, and network resistors in the same decade.

ROHM
Image Source: upload.wikimedia.org

In 1981, the name of the company was officially changed from Toyo Electronics Industry Corporation to ROHM Co., Ltd. The company also published the “Asian Music”, where it recorded tapes of all volumes. In 1983, the company was listed on the Osaka Security Exchange for the first time. The arrival of Zener diodes and digital transistors in the mid-80s provided ROHM to explore new opportunities.

ROHM became the first company in the world to successfully complete its experiments using the laser diodes with MBE methodology, in 1984. The next year, the company developed its first 4-bit and 8-bit microcontrollers using original CPUs. In 1986, the company listed on the First Section of the Osaka Stock Exchange, and in 1989, it was listed on the First Section of the Tokyo Stock Exchange. It also established the Research and Development Center in 1986. By this time, the company was working on new memory ICs, capacitors as well as liquid crystal process technology. It also established a manufacturing plant in Thailand, the Philippines, Malaysia, the U.K., and Taiwan by the end of the decade.

Growth of the Company

In 1991, the company launched the ROHM Music Foundation. In the next two years, the company was making and marketing the large size LCD public displays and had obtained the ISO9001 certification. In 1995, ROHM partnered with Zycad Corporation of the United States to develop a 100,000 gate FPGA using flash technology. The company opened the VLSI Research Center in 1998. The same year, ROHM started to develop the Dual-Cell system EEPROM and highly reliable Schottky barrier diodes. In 1999, ROHM established its technology centers in Kyoto and Hong Kong. It also started to develop ICs for mobile phones in the same year.

In 2000, ROHM came with a revolutionary concept in system LSI design technology, named REAL SOCKET™, and established the Europe Technology Center. In 2003, the company brought a new platform design environment for the system LSI, naming it the REAL PLATFORM, and in 2006, the company developed the ultra-compact LED “PICOLEDTM. It introduced the world’s first IEEE802.1X-compatible baseband IC for wireless LAN applications in 2007.

In 2010, ROHM introduced the world’s first laser diode to control the beam direction. The next year, the company entered the Indian and the Brazilian markets. In 2012, ROHM was mass-producing the full SiC power modules, LDO regulators, the world’s smallest transistor package, and the industry’s first SiC MOS module with no Schottky barrier diode. In 2013, ROHM partnered with Intel to build a low power consumption power management IC to be used in Intel’s next-generation Atom™ processors.

In the next five years, ROHM developed the industry’s smallest transistors, the first Wi-SUN-compatible universal wireless communication module, the world’s first automotive LDO regulators, and the world’s first trench-type SiC MOSFET.

The Founder: Kenichiro Sato

ROHM was founded by Kenichiro Sato in 1958 in Japan. Sato was born in Tokyo and completed his education at Ritsumeikan University. During his studies, he got to know about resistors and decided to start a resistor manufacturing company. So, he founded the company as Toyo Denki Seisakusho in Kyoto in 1958, while he was still a student.

Apart from making resistors and transistors, Sato was fond of music and was a trained pianist. He even established a music school in 1991 to promote classical music. Sato died at the age of 88 in 2020 after suffering from a long-going illness.

The CEO: Isao Matsumoto

Isao Matsumoto is the serving President and Chief Executive Officer of ROHM as of 2020. Matsumoto had joined the company in 1985 and has been working in different positions and roles for the past 35 years. Before becoming the CEO, he was working as the Director and the Managing Executive Officer of ROHM. He has also been a member of the ROHM board for past many years.

Himax Technologies

Himax Technologies – A company gaining rapid momentum in the semiconductor industry.

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The semiconductor industry is worth more than $450 billion in today’s market. With every passing day, the demand for the semiconductor industry reaches new heights as the demand for powerful and fast electronic gadgets increases. The semiconductor industry is the main provider of some key components for computers, smartphones, television, game consoles, cars, etc. So, if the demand increases or the market expands for the electronic companies it will positively affect the semiconductor industry as well.

One such semiconductor company that has been booming in recent years is Himax Technologies. It is one of the leading suppliers and fabless semiconductor manufacturers that supply across the globe. The company is based in the Tainan city of Taiwan. Founded in June 2001 by Biing-Seng Wu and Jordan Wu, the company has grown massively in recent years and has become one of the prime suppliers of display drivers and timing controllers that are used in a broad range of electronic devices.

A Brief Introduction

Himax Technologies is a company in the semiconductor industry that mainly focuses on providing solutions to display image processing technologies. The display driver ICs and the timing controllers that are produced by Himax are shipped worldwide for television, mobile phones, virtual reality (VR), digital cameras, tablets, etc production.

Himax Technologies
Image Source: himax.com.tw

This 20-years old company has around 2000 employees with foreign offices in China, Korea, Japan, and the US. With more than 3000 patents, Himax has established itself as a leading provider of display image processing solutions for worldwide customers (electronic brands). So, let’s have a look at the variety of solutions provided by Himax.

Solutions by Himax Technologies

Apart from display drivers and timing controllers, Himax Technologies also provides controllers for touch-sensor displays. Some of them are on-call Touch and Display Driver Integration (TDDI) single-chip solutions, LED drivers, LCOS microdisplays for augmented reality (AR), etc.

For digital cameras, the company offers CMOS image sensors and wafer level optics which are also used in mobile phones and laptops. The sensors are also used in camera security systems in many companies. Some of the other major solutions offered by Himax are Monitor and Projector Scalars, Infinity Color Technologies, 3D Color Engine, MEMS Microdisplays, and Controllers ICs, etc.

Keeping up with time, Himax Technologies has recently joined hands with Edge Impulse to provide a better user experience by deploying machine learning (ML) models in Himax AI processors and Google Tensorflow Lite Microcontrollers framework. These products will operate at ultra-low power and Edge Impulse is helping Himax to simplify the creation of neural networks.

Sustainability in the Company

When it comes to a sustainable approach in business, Himax Technologies is on top of the semiconductor industry. Following the current trends and crises worldwide, Himax also uses an energy-saving and waste reduction approach in day-to-day operation. The company strongly believes in sustainable growth thus providing economic, social, and environmental benefits to its workforce. Himax emphasizes designing products in such a way that it reduces pollution and the product itself should operate in low energy. It also invests a major amount in R&D to develop more green products thus minimizing the impact on our environment.

The Founders: Biing-Seng Wu and Jordan Wu

Biing-Seng Wu completed his studies at National Cheng Kung University who worked in a few companies before founding Himax Himax Technologies. He served as the executive vice president of Chi Mei Optoelectronics Corp for four years and currently the Chairman of Himax. Jordan Wu, cofounder of Himax Technologies Ltd is currently serving as the CEO of the same.

Recent crisis in Himax

It will be wrong to say that the crisis is only limited to Himax. The origin of a small crisis in Himax has put the business of electronic brands around the world in jeopardy as well. As mentioned earlier, Himax Technologies produces display drivers and timing controllers as two of their major solutions. But in recent days especially from the onset of COVID-19, an understandable miscalculation has led to a shortage of display drivers in the entire semiconductor industry.

The demand is rising rapidly as the display drivers are used in laptops, cars, game consoles, television’s, smartphones, etc and there is no way Himax can meet the demand even after pushing its entire workforce to the fullest. And, due to this shortage, the price of display drivers and hence the electronics are rising sharply. Though the company is making huge profits, Jordan Wu mentioned in a statement that they are not able to meet the demands of the entire customer base and hence remain unsatisfied.