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Taiwan is latest chip manufacturer to push for U.S. subsidy law

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Taiwan’s largest semiconductor factory has started building a computer-chip factory in Arizona and hired U.S. engineers and sent them to Taiwan for training, but the construction process will depend on the approval of Congress on federal subsidies, a Taiwanese minister said on Tuesday.

The message follows similar calls from U.S. chipmakers Intel and GlobalFoundries, which last week said delays in passing subsidy legislation slowed their investment in new Ohio factories and New York.

A global shortage of semiconductors has prompted a seizure in many countries, including the United States, to build more chip-making facilities. In May 2020, Taiwan Semiconductor Manufacturing Company, the world’s largest chip maker, agreed to build a $ 12 billion facility in Arizona.

Manufacturers have less than a five -day supply of some computer chips, the Commerce Department says

Seeking to encourage that and other construction projects, the Senate last summer passed a bipartisan measure, known as the Chips Act, that would spend $ 52 billion in factory subsidies. But the bill is still held to congressional wrangling.

“TSMC has already started their construction in Arizona, out of trust. They believe the Chips Act will be passed by Congress,” Ming-Hsin Kung, minister at Taiwan’s National Development Council and a TSMC board member, said in an interview. in Washington, DC

But the speed of construction depends on the subsidies that come, added Kung, who is in Washington to attend the annual SelectUSA foreign investment summit.

When completed, the Arizona plant and a surrounding group of suppliers, including a Taiwanese chemical company that has also started investing in the site, will create several thousand jobs, according to Kung.

One hurdle encountered by TSMC: There are not enough trained semiconductor engineers in place to operate the facility, according to Kung. That’s why the company started sending new employees to Taiwan for training, including professionals skilled in other engineering classes, he said.

About 250 have already traveled for training, including hands-on jobs at TSMC’s chip factories. “They’re not just there for lectures. They have to go to the place and participate in the operation, ”he said.

The United States and TSMC “want U.S. facilities to operate as effectively as Taiwan facilities,” Kung said. “If not, that means TSMC [will] lose tons of money from their investment. ”

Taiwan also wants to enhance U.S. cooperation in other areas, including electric vehicles, biotechnology and 5G technology, the minister said, adding that he hopes Taiwan’s work to address the global chip shortages indicate that it is “a reliable partner in the global supply chain.”

Taiwan’s chip factories, run by TSMC and others, are already working at full capacity but have been able to increase output by about 5 percent in recent months to try to alleviate shortfalls, he said.

The shortage of chips has hampered many manufacturing classes around the world, especially automotive production, forcing factories to close for weeks at a time until they can get more chips.

Kung predicts that global supplies of auto chips in particular will remain tight for a year or two, and that overall demand for all types of chips will continue to grow for another 10 to 20 years. years as more and more types of consumer devices and appliances go digital. .

The rise of electric and autonomous vehicles will further burden the chip supply because cars require more chips, he said.

The Arizona factory will produce chips with five nanometer-sized transistors, a high-tech type of semiconductor used in consumer electronics but not in today’s cars. Automotive chips are usually made according to older designs that are larger and less profitable for chip makers, so they are in short supply. For comparison, the average human hair is about 60,000 nanometers thick.

About 75 percent of chip production now takes place in East Asia, and more than 90 percent of the most advanced chips are made in Taiwan, an island that China has repeatedly threatened to take over by force if the government is democratically elected. in Taiwan declared legal independence.

Asked about this threat and how it has influenced Taiwan’s investment decisions, Kung said the island has been facing this risk for 40 years.

“The risk may be there, but we need to improve our own economy and our own industrial supply chain even under that kind of potential risk,” he said.

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