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TSMC Launches €10 Billion German Plant Amid Global Chip War

TSMC Launches €10 Billion German Plant Amid Global Chip War

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In a significant move to fortify Europe’s semiconductor industry, Taiwan Semiconductor Manufacturing Co. (TSMC) has begun construction on its first European plant in Dresden, Germany. The €10 billion ($11 billion) facility marks a pivotal moment in the continent’s strategy to secure its chip supplies amid escalating tensions between the United States and China. The groundbreaking ceremony, held on Tuesday, was attended by prominent figures including German Chancellor Olaf Scholz, European Commission President Ursula von der Leyen, and TSMC CEO C.C. Wei.

Europe’s Semiconductor Strategy

TSMC Launches €10 Billion German Plant Amid Global Chip War

Image Source: bnnbloomberg.ca

Germany is at the forefront of the European Union’s ambitious plan to produce 20% of the world’s semiconductors by 2030. The initiative comes in response to the Covid-19 pandemic, which highlighted the vulnerabilities of global supply chains, particularly in the semiconductor sector. The chip shortages caused by the pandemic led to widespread disruptions, including the temporary shutdown of car factories across the globe.

German Chancellor Olaf Scholz emphasized the importance of self-reliance in his remarks at the ceremony. “We are dependent on semiconductors for our sustainable future technologies, but we must not be dependent on other regions of the world for the supply of semiconductors,” Scholz stated. The Dresden plant is a crucial step in reducing Europe’s reliance on Asian imports and ensuring a steady supply of chips for the continent’s industries.

The European Union has backed this project with a €5 billion subsidy, reflecting the bloc’s commitment to bolstering domestic semiconductor production. The German government is also playing a leading role, with plans to invest €20 billion in the semiconductor industry, including €10 billion in aid for an upcoming Intel Corp. plant in Magdeburg. The Dresden facility, set to begin production by the end of 2027, will focus on manufacturing chips for the automotive and industrial sectors, which are vital to Germany’s economy.

Global Implications of the Dresden Plant

The construction of TSMC’s Dresden plant has far-reaching implications beyond Europe. The global semiconductor industry has become a battleground in the ongoing geopolitical tensions between the United States and China. With China being the largest market for semiconductors, the country is striving to increase its domestic production of advanced chips. In response, the U.S. has imposed export controls and tariffs, citing national security concerns, to curb China’s technological advancements.

Also Read: Logically Expands Its AI Operations with the Acquisition of Insikt AI

As the world’s largest contract chipmaker, TSMC plays a critical role in this global power struggle. The Dresden plant, in which TSMC holds a 70% stake, will serve as a cornerstone of Europe’s semiconductor ambitions. The involvement of industry giants like Infineon Technologies AG, NXP Semiconductors NV, and Robert Bosch GmbH, each holding a 10% stake in the venture, underscores the strategic importance of this project.

The new facility not only strengthens Europe’s position in the global semiconductor race but also highlights the increasing localization of chip production as nations seek to secure their technological future in an uncertain geopolitical landscape.

TSMC Sales Rise Ahead of Expectations on AI Infrastructure Boom

TSMC Sales Rise Ahead of Expectations on AI Infrastructure Boom

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The only source of the most cutting-edge processors for Nvidia Corp. as well as Apple Inc., Taiwan Semiconductor Manufacturing Company (TSMC) announced an impressive NT$207.9 billion ($6.4 billion) in revenue for June. With an astounding amount, the June quarter had a 40 percent growth, reaching NT$673.5 billion, over the average estimate of a 35.5 percent increase.

Taking the AI Wave by Storm

TSMC Sales Rise Ahead of Expectations on AI Infrastructure Boom

Image Source: bnnbloomberg.ca

This spike in sales comes after TSMC’s $1 trillion market valuation was momentarily attained due to significant investments in data centres and devices connected to artificial intelligence (AI). Companies all over the world are scrambling to get hardware, such as Nvidia chips, to support their AI infrastructure. Wall Street brokerages have raised their price forecasts for TSMC in response to the increasing demand, presumably because they expect price increases in 2025 that would further boost earnings.

The slow sales of smartphones, which are just now starting to pick up steam, have been offset by the orders for artificial intelligence (AI) chips. The fact that Apple continues to be TSMC’s biggest client shows how important the business is to the tech giant’s entire supply chain.

Effect on the Index Taiex

Despite continuous global conflicts between the United States and China, the outstanding performance of TSMC along with other AI-related firms has greatly lifted Taiwan’s flagship Taiex Index by more than forty percent in the previous year. Broader market concerns have been eclipsed by the exponential growth in AI infrastructure investment, indicating the industry’s strong potential.

Intelligence Insights from Bloomberg

Bloomberg Intelligence reports that the higher-than-expected consumer interest in CoWoS advanced packaging was the reason behind TSMC’s second-quarter revenues exceeding projections. This spike in sales will probably lead to a beat in results because it will somewhat offset the margin dilution from the 3nm ramp-up.

Given the robust demand for its 3nm as well as CoWoS packaging technologies, TSMC’s capability to negotiate pricing hikes will be a major topic of discussion at the next earnings call.

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Concerns about Valuation

Even while TSMC’s future looks promising, Nvidia’s valuation is starting to raise questions. Recently, an analyst at New Street Research downgraded Nvidia’s shares, stating that it is approaching “full value.” Following an almost 240 percent increase in 2023, Nvidia’s stocks have surged 165 percent this year, prompting concerns about the durability of its sharp rise.

In summary

The artificial intelligence infrastructure boom is driving TSMC’s sales spike, which highlights the increasing significance of sophisticated chip technologies in enabling the forthcoming wave of technology breakthroughs.

Vanguard and TSMC Plans $7.8 Billion to Build Joint Chip Plant

Vanguard and TSMC Plans $7.8 Billion to Build Joint Chip Plant

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Vanguard International Semiconductor, partially owned by Taiwan Semiconductor Manufacturing Co. (TSMC), and Dutch firm NXP Semiconductors announced plans to establish a $7.8 billion joint venture to build a semiconductor plant in Singapore. The venture aims to diversify their manufacturing capabilities amidst rising geopolitical tensions and to cater to the automotive, industrial, consumer, and mobile markets.

Vanguard and TSMC Plans $7.8 Billion to Build Joint Chip Plant

Image Source: fortune.com

The new facility marks a significant step for Vanguard, traditionally known for its 8-inch wafer fabs, as it will leverage TSMC’s advanced technologies to construct its first 12-inch fab. This development underscores the strategic shift of Taiwanese chipmakers to expand their geographic footprint. Construction of the plant is expected to commence in the second half of 2024, with production slated to begin in 2027.

Strategic Diversification Amidst Global Rivalries

The move by Vanguard and NXP highlights a broader trend among semiconductor companies to mitigate risks associated with the ongoing U.S.-China technological rivalry. With the potential for supply chain disruptions, Taiwanese firms, in particular, are accelerating their efforts to establish manufacturing bases beyond their home turf. Vanguard’s decision follows similar investments by other Taiwanese chipmakers, such as United Microelectronics Corp. (UMC), which recently announced a $5 billion microchip factory in Singapore.

NXP, a key supplier to the automotive industry, which constitutes more than half of its revenue, will benefit from the enhanced production capacity to meet the growing demand for automotive semiconductors. Vanguard will hold a 60% equity interest in the joint venture with a $2.4 billion investment, while NXP will contribute $1.6 billion for a 40% stake. Both companies have also pledged an additional $1.9 billion to support the facility’s long-term capacity infrastructure, with the remaining funds expected to come from third-party loans.

Global Race for Semiconductor Supremacy

The semiconductor sector, poised to surpass $1 trillion by the end of the decade according to International Business Strategies, is witnessing unprecedented investment levels as countries and companies strive for dominance. Taiwan’s TSMC, the world’s largest contract chip maker, has been at the forefront of this race, with significant investments in new plants in Japan and the U.S. Earlier this year, TSMC secured up to $6.6 billion from the U.S. government to aid its $65 billion investment in factories in Arizona.

Also Read: Turkish Fintech Sipay Raises $15 Million in New Funding Round

This joint venture by Vanguard and NXP underscores the strategic imperatives driving the semiconductor industry, as firms seek to bolster their production capabilities and safeguard against geopolitical uncertainties. As construction begins in late 2024, the new Singapore plant will play a crucial role in shaping the future landscape of global semiconductor manufacturing.

TSMC

Taiwan’s TSMC to recruit 6,000 engineers in 2023

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TSMC is trying to capitalize on the current trend of technical job cuts, which have resulted in the dismissals of several thousand engineers.

“To support the company’s business growth and technology development, TSMC is planning to recruit more than 6,000 new employees in Taiwan including engineers and production line operators in Hsinchu, Taichung, Tainan and Kaohsiung in 2023,” the chip biz told The Register.

Source: theregister.com

tsmc
Image Source: reuters.com

To maintain the wafers running, the corporation states that it intends to hire up to 6,000 engineers, which is about a 10 percent rise in staff numbers. According to Reuters, TSMC is not only searching for pricey skillsets, but also engineers with degrees varying from a two years degree to a doctoral degree in electrical engineering or software development.

Also Read: Germany planning to ban Huawei, ZTE from parts of 5G networks

The catch is that you may be required to emigrate to Taiwan. The provided local wage is substantially lower compared to what you’d anticipate finding in the United States.

According to TSMC, the average wage for a fresh engineer is expected to be approximately NT$2 million, or around $65,500 per annum, but it’s interesting to note that the living expenses in Taiwan are significantly lower. TMSC is also rapidly expanding in the United States, but it will be some time before the new fabs are operational.

“TSMC is recruiting broadly from both experienced professionals and first-time job seekers with backgrounds in electronics, electrical engineering, optoelectronics, mechanical engineering, physics, chemistry, chemical engineering, industrial engineering, financial, accounting, management, human resources, and related fields to come on board. TSMC is also recruiting production line operators. People with senior high school (inclusive) or above including college graduates are welcome to join. The company is open to hiring foreign engineers.”

Source: theregister.com

The hiring spree emanates as the semiconductor industry in its entirety struggles with a slowing global economy and falling chip demand, especially in distribution channels.

Also Read: Twitter Cuts More Engineering, and Product Jobs to Curb Costs

These market factors have had a significant impact on many chipmakers. Samsung which is TSMC’s main competitor in the foundry industry has seen its sales fall to 3.4 billion USD, a 69 percent drop from the previous year in January, whilst also earnings fell 8 percent to 57.3 billion USD.

In contrast, TSMC has carefully eliminated controversy thus far. TSMC confirmed Q4 revenues of 19.93 billion USD which is a 26.7 percent rise compared to the previous year, whereas others reported operational losses and decreasing revenues.

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.