Taiwan’s semiconductor industry, the world’s second-largest by revenue after the US, has also elevated the strategic importance of the self-ruled island of nearly 24 million people that China views as part of its territory. Credit: Handout.

Thanks to soaring demand for its 5 nm chips, the Taiwan Semiconductor Manufacturing Corporation (TSMC) is planning to send more than 1,000 engineers to its facilities in Tainan’s Southern Taiwan Science Park to assist in boosted production, Taiwan News reported.

TSMC has now become the leading semiconductor manufacturing contractor in the world controlling more than 50% of the almost US$70 billion third-party fabrication market as of January 2020, according to SeekingAlpha.

While the Trump’s administration focused mainly on sidelining China for sophisticated chips, a recent problem has cropped up with big automobile companies including Ford and General Motors in dire need of semiconductors, even having to cut production.

Due to orders from Apple, Qualcomm, Advanced Micro Devices (AMD), and MediaTek, the world’s largest contract chipmaker is planning to dispatch the engineers to Tainan in five to six batches, Taiwan News reported.

The company is deploying the extra hands in order to increase its current 5 nm capacity, which stands at around 60,000 to 70,000 wafers per month, up to 120,000 wafers a month, UDN reported.

TSMC’s Tainan facilities are an important manufacturing center for advanced processes. The company produces 16 nm and 10 nm chips at Fab 14, while Fab 18 is responsible for its 5 nm chips, Taiwan News reported.

It is also currently building its 3 nm process fab in Tainan. This is expected to enter risk production sometime this year, with volume production estimated to start in the second half of 2022.

The company, which appears to have offset its loss of Huawei orders, now expects to lift capital spending on the production and development of advanced chips to between US$25 billion-$28 billion this year, as much as 60% higher than the amount it spent in 2020, Reuters reported.

Partly helped by the launch of Apple’s iPhone 12, TSMC’s net profit for the October-December fourth quarter soared 23% to T$142.8 billion (US$5.1 billion), beating a Refinitiv consensus estimate of T$135.39 billion. Revenue jumped 22% to a record US$12.68 billion.

The chipmaker’s share price has jumped more than 70% over the past 12 months, giving it a market value of US$560.7 billion.

Meanwhile, Chun Petrochemical Co. announced in December that it will build a plant in Arizona to supply an advanced semiconductor fab that will be built there by TSMC, Focus Taiwan reported.

Based on the client’s demand, Chang Chun will seek land in Arizona for its new plant, where the company will produce electronic-grade hydrogen peroxide (H2O2), tetramethylammonium hydroxide (TMAH)-based developers, electronic-grade solution, and plating solution, the company said.

It noted the plan to build a factory in the US will not affect its ability to fulfill the demand of its existing clients since the company plans to increase its output to guarantee a sustainable supply to the semiconductor sector, Focus Taiwan reported.

At the same time, the company is planning to build a new plant in either Taichung City or Changhua County in Taiwan to produce high-concentrated H2O2, with the goal of producing 50,000 tons a year, Chang Chun said.

TSMC announced in May its intention to invest in an advanced semiconductor fab in the US. Construction is scheduled to start in 2021, with production targeted to begin in 2024, Focus Taiwan reported.

The current semiconductor boom is so strong that many tech executives and some government officials are calling Taiwan the island that TSMC built.

According to Nikkei Asia, the company is Taiwan’s biggest by market cap and accounted for one-third of local stock market value and about 20% of estimated private sector investment this year, according to an estimate by the Taiwan Institute of Economic Research.

Taiwan’s semiconductor industry, the world’s second-largest by revenue after the US, has also elevated the strategic importance of the self-ruled island of nearly 24 million people that China views as part of its territory.

Total revenue in the sector, led by TSMC, accounts for about 15% of gross domestic product, according to the government. Taiwan-made chips power key electronic devices and are crucial to national security in various countries, Nikkei Asia reported.

The US-China tech spat has highlighted the key role of TSMC and its peers.

TSMC makes chips for iPhones, Google’s data centres, Nintendo and Sony game consoles, automakers such as Ford, Honda and Daimler and US F-35 fighter jets, among others.

It supplied chips for Huawei’s high-end smartphones and telecoms equipment before the US changed its export control rules to cut off the Chinese tech company’s supplies, Nikkei Asia reported.

US, European and Japanese carmakers have all recently approached Taiwan to urge domestic chipmakers to increase production of automobile-related chips to resolve the global crunch.

Sources: Taiwan News, Seeking Alpha, UDN, Reuters, Focus Taiwan, Nikkei Asia