TSMC fab expansion in Taiwan critical for preserving supply chain advantage

Monica Chen, Taipei; Jessie Shen, DIGITIMES Asia 0

Credit: Taiwan Semiconductor Manufacturing Company, Ltd.

The continuous expansion of TSMC's fab in Taiwan, home to the world's largest pure-play foundry, is essential for preserving the country's supply chain advantages, according to industry sources.

The government of Taiwan also intends to further boost the competitiveness of the country's chipmaking industry through the use of incentives and subsidies, which are attracting international semiconductor equipment and materials vendors to beef up their local operations and strengthen their local procurement supply chains in Taiwan, the sources said.

ASML and Applied Materials have expressed interest in expanding their local production and R&D capacities in Taiwan. Entegris, a provider of advanced materials and process solutions for the semiconductor industry, recently inaugurated a US$500 million manufacturing facility in southern Taiwan. To better serve local customers, Fujifilm Electronic Materials will invest NT$3.38 billion (US$110 million) in Taiwan to increase production of chemical mechanical planarization (CMP) slurry and lithography-related materials.

Government incentives and subsidies also include measures to develop and boost the competitiveness of domestic chipmaking equipment and materials makers in Taiwan, the sources indicated. In light of the intensifying geopolitical tensions, these measures are intended to assist the industry in confronting challenges such as the rising competitiveness of IC industry counterparts in Europe, Japan, and the US.

With Europe, Japan, and the US all seeking to boost the competitiveness of their domestic semiconductor manufacturing supply chains, TSMC is already motivated to participate in this trend. Some industry observers regard TSMC as the hub of the newly-formed industry clusters in these countries.

While encouraging foreign vendors to increase their investment in Taiwan, the government remains committed to self-sufficiency in chipmaking equipment and materials given Taiwan's extensive IC sector supply chain. The Taiwanese legislature has concluded all three readings of the country's chip laws, allowing manufacturers of semiconductor materials and equipment to apply for tax breaks.