The talented people who dominate the world semiconductor industry will gather in Phoenix, Arizona, USA on the 6th (local time). TSMC founder Maurice Chang, Apple CEO Tim Cook, NVIDIA founder Jensen Huang, and AMD CEO Lisa Su will sit together. US President Joe Biden and Commerce Secretary Gina Lamondo will also attend. What is the reason why tycoons who are hard to get together gather in one place?
Semiconductor giants gather in Phoenix, USA on the 6th
This is because TSMC, the world’s No. 1 foundry (semiconductor consignment production) company, will hold a ‘production facility introduction ceremony’ at a plant under construction in Phoenix, Arizona, USA with the goal of completion in 2024. This event is as important as the groundbreaking and completion ceremonies as it is an event to put key facilities necessary to produce semiconductors into the factory. On January 4, 2021, Samsung Electronics Chairman Lee Jae-yong chose the’Pyeongtaek 2nd Factory Production Facility Delivery Ceremony’ as the first on-site management of the new year.
If you look at the faces of the attendees at the TSMC production facility introduction ceremony, the Taiwanese connection stands out. Maurice Chang is a dual citizen of Taiwan and the United States. Jensen Huang and Lisa Su are Taiwanese-Americans. They maintain a strong relationship. AMD, which develops and sells CPU ‘Ryzen’ and GPU ‘Radeon’, entrusts most of its consignment production to TSMC. Although Samsung Electronics and GPU-related cooperation are being strengthened, the foundry is not bending its preference for TSMC. Nvidia has a closer relationship with TSMC, though less so than AMD.
Apple has a stronger relationship with TSMC than AMD. Apple has entrusted TSMC with core semiconductor production for several years. Samsung Electronics is not even considered. CEO Tim Cook recently said that “TSMC’s Arizona plant will receive chips starting in 2024.” There is no reason Tim Cook should not attend an event at a US plant where Apple chips will be produced.
TSMC plans to build a 4nm (nanometer, 1nm = 1 billionth of a meter) process at its Phoenix plant in Arizona, USA. Initially, the plant was planned to produce 5nm chips. It is also planning to increase production, which was planned to be 20,000 wafers per month. It is known that this was due to requests from customers such as Apple and AMD.
President Biden likely to attend Samsung Electronics Taylor plant groundbreaking ceremony
The movement of competitor Samsung Electronics is also getting busier. Last year, Samsung Electronics decided to build a second US foundry plant in Taylor, Texas. According to the City of Taylor, Samsung Electronics started construction on the new site this month.
Samsung Electronics is also preparing for a grand ground-breaking ceremony. The timing is likely to be the first quarter of next year. The attendance of Samsung Electronics Chairman Lee Jae-yong and key semiconductor executives is close to 100%. In the case of Chairman Lee, the weekly trial schedule is key, but in the case of national events attended by the president, it is relatively easy to adjust the schedule.
For this reason, attention is focused on whether US President Joe Biden and President Yoon Seok-yeol will attend. Both leaders have recently emphasized the importance of the semiconductor industry. Attention is focusing on whether the leaders of South Korea and the U.S. will have another meeting in Taylor, Texas, following the groundbreaking of Samsung Electronics’ US foundry plant. An industry insider explained, “Considering the year-end holidays in the US, the groundbreaking ceremony will be held around the first quarter.
European Union agrees on ’59 trillion won’ support bill for semiconductor companies
Another interest in the semiconductor industry is whether TSMC and Samsung Electronics will build foundry factories in Europe following the US. Last year, the European Union (EU) asked Samsung Electronics and others to “build a semiconductor factory in Europe.” Recently, the president of Germany and the prime minister of Spain visited Samsung Electronics one after another to attract factories.
A plan to promote semiconductors at the EU level is also being prepared. The EU announced on the 1st (local time) that ministers in charge of 27 member states have agreed on the EU Semiconductor Act (Chips Act), which invests 43 billion euros (about 59 trillion won) in expanding semiconductor production. The bill will come into effect if it passes the European Parliament after consultations between the EU and the European Parliament in the future.
The EU Semiconductor Act aims to increase the EU’s global share of semiconductor production to 20% by 2030. Its current market share is estimated to be around 10%. EU member states will support the establishment of traditional processes for industrial semiconductors as well as state-of-the-art semiconductors with a line width of 5 nm or less. However, support through the Semiconductor Act can be received only when the national level investment and private investment are combined.
The love calls from the EU are continuing, but the possibility that Samsung Electronics will immediately take action is close to zero. This is because factories 4 to 6 remain in Pyeongtaek, Gyeonggi Province, where factories 1 to 3 are in operation. Currently, foundation work is underway on the site for the 4th factory. It is predicted that the 5th plant will also start construction in the first quarter of next year. The site prepared in Taylor, Texas, USA is also considerable.
It is also important to consider the fact that the EU region is close to a semiconductor wasteland. In order to build a large-scale foundry plant, cooperation with semiconductor equipment makers is essential. In other words, the ‘accumulation effect’ is essential. It is evaluated that Europe lacks semiconductor-related infrastructure compared to the United States or Korea.
Semiconductor companies such as NXP, STMicroelectronics, and Infineon are headquartered in Europe, but they are not major customers of Samsung Electronics. ASML, a Dutch company famous for extreme ultraviolet (EUV) equipment, has already established infrastructure such as ASML’s research and development (R&D) center and service corporations in Korea, Taiwan, and the United States. It is evaluated that Samsung Electronics is not in a situation where it should rush to the EU. An official from the semiconductor industry said, “Europe is not a region that Samsung Electronics must visit unconditionally.”
Samsung Electronics “Review of EU factories from a mid- to long-term perspective”
From a mid- to long-term perspective, some say that it is worth considering building a new plant in Europe. This is because foundry customers want to diversify production locations. CEO Tim Cook recently said, “There is a need to expand production not only to Asia and the US, but also to Europe.”
It is also worth noting that competitors have reviewed or confirmed entry into Europe. TSMC is known to be considering Dresden, Germany, as a candidate site for its European plant. TSMC did not deny it, saying, “We are looking at various possibilities” when asked about entering Europe at the 3Q earnings briefing. Intel, which announced its re-entry into the foundry business, is also planning to build a factory in Germany. In addition, it is evaluated as a factor that cannot be ignored that the automotive semiconductor market, which is expected to grow rapidly in the future, is concentrated in Europe.
Samsung Electronics is not standing still. The foundry division recruits experienced employees to establish ‘mid- to long-term line and global complex operation strategies’. Preference is given to those from global consulting firms. It is analyzed as a mid- to long-term paving stone to find a ‘third factory’ in addition to the scheduled lines in Pyeongtaek, Gyeonggi-do and Taylor, USA. In a report last July, Samsung Securities suggested that “in the case of a foundry, contact with customers is important, so active localization is necessary” and that “establishing a foundry factory in Europe also needs to be considered.”
Samsung Electronics’ semiconductor executives, who frequently travel to Europe, are also planning to meet with local government officials to hear their suggestions. The Spanish daily El Pais recently reported, citing a government source, that “Samsung Electronics executives are planning to visit Europe in the first quarter of next year with a team.”
Reporter Hwang Jeong-soo [email protected]