TSMC, is accelerating to become "Mesmc"?

Writing / Little Tiger Knife & Sword Laughing

The first batch of TSMC engineers who arrived in the United States soon found themselves reduced to "second-class citizens."

After leaving Taiwan, the American engineers who went to Taiwan for training a year ago were complained by their Taiwanese counterparts that they were "giant babies" of the United States.

At the same time that TSMC founder Zhang Zhongmou first confirmed that TSMC would expand investment and set up a 3nm wafer fab in the United States, two screenshots of the news from PTT, Taiwan's largest social networking site, began to go viral.

Some people on the Internet say that TSMC is accelerating to become "US Semiconductor Power", and complaints on the island about the "selling of Taiwan" by the Tsai Ing-wen authorities are getting higher and higher.

1

TSMC's "de-Taiwanization" process is accelerating.

On November 21, TSMC founder Zhang Zhongmou officially confirmed at a press conference in Taiwan that TSMC's 5nm wafer fab in Arizona will hold the first machine equipment stationing ceremony on December 6, which means that the plant has been partially completed. This will be the most advanced semiconductor process in the United States.

When asked if a 3nm fab might also settle in Arizona, Zhang replied: "After that, it is (after) 5nm (fab)."

According to the report, Zhang Zhongmou's remarks confirmed for the first time that TSMC will expand investment in setting up a 3-nanometer fab in the United States after the 5nm fab.

Zhang Zhongmou said that according to his understanding, US Secretary of Commerce Raimondo has agreed to attend, which is rare, the Secretary of Commerce flew from Washington to Arizona, heard that he would go back on the same day, "also invited President Biden, I don't know if he will come."

As soon as this remark came out, it immediately aroused great attention from the semiconductor industry.

This front authority has repeatedly declared that semiconductor chips on the 3nm process will not be transferred to the United States. Taiwan Island is worried that setting up a 3nm fab in the United States is "advanced process migration", key core outflow, some netizens also used foolishness to move mountains to describe TSMC's investment in the United States, saying that this time the move is "protecting the sacred mountain".

The complaints about the Tsai Ing-wen administration's "selling Taiwan" are so loud that "Minister of Economy" Wang Meihua issued three major statements on the 22nd, reiterating that advanced processes below 3nm will remain in Taiwan.

But netizens didn't buy it.

There are also media reports that as early as the beginning of this month, 300 TSMC employees have boarded a charter flight to the 5nm fab in Arizona, USA, which is just the beginning.

Six more charter flights will be available in the coming months to send more than 1,000 engineers and their families to the United States. In addition to TSMC's own engineering staff, Taiwanese supply chain manufacturers will also go to the United States.

In this regard, some Taiwan media reported that these engineers who went to the United States are not only the main force of TSMC's new wafer fab in Arizona, but also the key talents in the United States to revitalize the chip manufacturing industry.

Taiwan media bluntly said, "TSMC's investment will move the entire industrial cluster to the United States."

Netizens questioned that the advanced process was moved to the United States, and Taiwanese talents were also sent to the United States, bringing their families and even pets, is this love for Taiwan?

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Recently, such a screenshot of the news began to circulate on PTT, Taiwan's largest social network, saying that the first batch of TSMC engineers who arrived in the United States just arrived and found that they had been reduced to "second-class citizens" working in the United States.

Not only are there 7 fewer days of vacation than my American colleagues, but the workload and salary are also much less.

Interestingly, before the Fab in Arizona began operation, a group of American engineers were also sent to Taiwan TSMC for a year of training, and after these American engineers returned to the United States, there was also a large number of Taiwanese complaints on PTT.

The comments on PTT, while complaining that Americans' salaries are higher than Taiwan's, the work is easier than Taiwan's counterparts, and even the education is not as high as Taiwanese counterparts, and when encountering problems, they will only find Taiwanese and say "please come and see", so some Taiwanese call this group of American counterparts "giant babies";

It also said smoking is prohibited inside TSMC, but their U.S. counterparts continue to smoke inside the facility, resulting in "smoke filling the area from the dormitory to the food pantry."

This also confirms Zhang Zhongmou's statement at the press conference on the 21st:

I know that the cost of manufacturing chips in the United States will be at least 55% higher than in Taiwan.

So why does TSMC risk increasing costs to set up factories in the United States?

Zhang Zhongmou immediately said: "But this does not prevent some capacity from being transferred to the United States, and the chip manufacturing process we moved over is the most advanced of all companies in the United States, which is very important for the United States." ”

Oh, because "this is very important for the United States."

The United States is pocketing TSMC step by step.

The intention of the United States to promote the "de-Taiwanization" of chips and serve its own geopolitical interests is obvious.

Foreign media previously disclosed that the United States has carried out various wargames, once the situation in the Taiwan Strait is in the worst case, it will destroy all TSMC facilities, prevent Chinese mainland from obtaining advanced chip manufacturing technology, and assist in the evacuation of Taiwanese semiconductor engineers to reduce the impact of the global supply chain.

This fully shows that the United States only regards Taiwan as a "pawn" to contain China. What the United States has been considering is how to avoid its own losses to the greatest extent, and at the same time maximize its interests, and even "take advantage of the fire".

It is difficult for TSMC to say that it did not see this.

For the construction of a fab in Arizona, the outside world believes that TSMC responded to the requirements of the US government and the United States has just passed the $52 billion chip bill, but such a subsidy is far from enough in Zhang Zhongmou's view. "Although chip production in the United States will increase, the relative unit cost will also increase, which makes it difficult for the United States to compete in the international market."

Although it expected an increase in costs and a decrease in profits, TSMC did so anyway. Expert analysis believes that there are two factors:

One is to serve TSMC's customers in the United States. After all, US customers account for eight of TSMC's top ten customers in terms of revenue, of which Apple accounts for more than 1/4 of the revenue; Coupled with recent news that Tesla, a major electric vehicle manufacturer, is ready to transfer a new generation of FSD chips from Samsung to TSMC, Tesla has the opportunity to become one of TSMC's top seven customers in 2023.

The second is to respond to the supply chain security needs of US customers who want to supply diversified sources. At present, many chip designers hope to diversify the supply sources of chip manufacturing to avoid supply chain risks. For example, Apple plans to put some of its chip production in the United States, and will also purchase chips from European fabs later.

Cook has publicly stated that 60% of Apple's global processor supply comes from Taiwan, and 60% from anywhere may not be a good strategy.

TSMC key customer MediaTek CEO Cai Lixing also said before that in the context of some large equipment manufacturers requiring chip suppliers to diversify sources, if business needs, MediaTek will have to find multiple sources for the same chip. This statement also echoes MediaTek's previous decision to reach a cooperation agreement with Intel and plan to hand over some chips to Intel foundries.

Therefore, it is clear that after the United States stirred up the semiconductor industry with the stick of sanctions, TSMC had to face the trend of "de-Taiwanization" of the industry. Going to the United States to build a factory is not only a "letter of submission", but also a "reassuring pill" for suppliers.

But can this "reassuring pill" be reassuring?

In fact, not long ago, Huang Chongren, chairman of the wafer foundry PSMC, made it clear in an interview with the media that the reason why Taiwan's semiconductor industry can lead the world is mainly due to the good quality of engineers, relatively low costs, and cheaper prices than the United States. Also because chip trading is an international price, this allows TSMC to always make money, and continue to invest the money in the development of advanced processes.

Therefore, without these conditions, even if TSMC moves to the United States, the advantages may not continue to exist.

3

It is true that TSMC is facing increasing pressure from the United States.

An article by the New York Times on the 17th summarized Washington's attitude towards Taiwan's chip industry:

Taiwan faces growing unease in Washington. U.S. Commerce Secretary Gina Raimondo and others have repeatedly said that the United States needs to reduce its dependence on Taiwan in terms of chips needed for advanced weapons.

It is not enough to beware, the United States simply put direct pressure on TSMC to set up a factory in Arizona to "help the United States diversify its chip sources."

While putting pressure and luring TSMC to reduce its association with Chinese mainland, the United States has also made a move in terms of talent.

In particular, last month, the United States further upgraded its chip ban on China, expanding the scope from hardware to software. According to a reporter from the New York Times, this will push TSMC, Taiwan's main chip manufacturer, "to the forefront of possible global supply chain disruptions."

The ban also requires that people with U.S. citizenship or green cards must not work in Chinese mainland factories. Some American scholars say that this will force about 200 engineers currently working in the Chinese mainland chip industry to face choices:

Either give up the job opportunities and prospects that are currently in full swing, or give up U.S. citizenship.

So what impact will these movements of TSMC becoming "Misun" and the United States' ruthless moves in the field of chip talents in a larger range of chip talents have on the Chinese mainland chip industry?

An expert in the field of semiconductors said to Supplement One Dao that TSMC, as an enterprise, does not have a lot of room for strategic choices under the current situation of Sino-US relations.

For the mainland, it should be said that TSMC has always clearly seen the close connection between the mainland and the global semiconductor industry chain and supply chain. Chinese mainland position in the global electronics industry determines that no company in the semiconductor industry can ignore the mainland, and TSMC certainly knows it.

However, judging from the past development trajectory, TSMC's attempt to transfer advanced production capacity to the United States is not a temporary choice made under increasing pressure from the island's politics and the United States, but more as an established strategy, which has been done in recent years.

Because TSMC is an enterprise that has developed and grown from Taiwan, although the United States has increased its business risks in increasing its suppression of China, TSMC and even the entire Taiwan chip industry are more worried about the intensification of turmoil and even conflict in the Taiwan Strait, so it has always considered the transfer of some advanced production capacity to the United States and even Japan.

The United States will further securitize the chip field, and the current situation of companies like TSMC will inevitably put pressure on the Chinese mainland chip industry.

But to be honest, this pressure is not a day or two, and the entire mainland chip industry has been psychologically and actionally prepared for this.

No matter how the external environment changes, the main focus of the Chinese mainland chip industry is to ensure and further optimize the existing technology and investment route. This is the key for us to overcome challenges and become stronger.

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