Global and local firms are making new investments in semiconductor fabs in Taiwan.
Taiwan is holding its own as a hub for semiconductor manufacturing, attracting steady new investment from chipmakers and other firms in the industry’s supply chain. The island manufactures about 25-30% of integrated circuits (ICs) globally and is home to Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker.
In 2017 for the eighth consecutive year, Taiwan was the top market for materials used in semiconductor production, with sales reaching US$10.3 billion, according to SEMI, the global IC industry association. Taiwan has maintained that position on the back of its strength in IC manufacturing and packaging, SEMI said.
Arizona-based Versum Materials, a maker of materials primarily for the semiconductor industry (the sector accounts for 95% of its business), maintains its Asia headquarters in Taipei. The office opened two years ago when Versum was spun off from Air Products & Chemicals, and Taiwan accounts for about 20% of the company’s US$1.3 billion annual revenue, says Taiwan General Manager Al Chuang.
Semiconductor materials are generally broken down into gases, chemicals and wafers, which are used in different steps of the production process.
Taiwan is an ideal place for Versum’s Asia-Pacific headquarters, says Chuang. “Taiwan is very strong in semiconductor manufacturing and it makes sense to be here from a location standpoint as you can also cover the China market,” he says. “If you win business from TSMC, you also win it in Nanjing,” he says, referring to the massive US$3 billion fab that the Taiwanese chipmaker built in the Jiangsu provincial capital. “If you win business from UMC [United Microelectronics Corp.], you get business too in Xiamen,” where UMC has a manufacturing facility.
Versum manufactures semiconductor materials in the United States, South Korea, Japan, and Taiwan. While China’s IC market has grown exponentially in recent years, Versum currently does not manufacture any of its products there. To do so would be challenging, given logistics costs and complex regulations, Chuang observes. “It’s a big decision. It’s something that’s being investigated,” he says.
Semiconductor production uses large quantities of specialty chemicals for a raft of processes including doping (introducing impurities into the wafer to change the electrical properties), cleaning, polishing, and etching. In addition to Versum, other major suppliers include Air Liquide, DowDupont, Merck, Cabot, Entegris, and Fujifilm.
Air Products, Air Liquide, and others supply atmospheric gases used within the semiconductor fabs.
Meanwhile, Taiwan continues to attract new investment in semiconductor manufacturing facilities. In September 2017, Boise-based Micron announced it would invest US$2 billion in Taiwan annually over the following 3-5 years to upgrade processes and develop a backend site for DRAM production. The firm said it would recruit 1,500 employees as part of the expansion effort.
“Micron has a long-term collaboration with Taiwan,” said Stephen Drake, chairman of Micron Semiconductor Taiwan in a December press release. “Micron is dedicated to continuing the development of innovative technologies for the memory industry and optimizing our plans for the DRAM Center of Excellence in Taiwan.”
In addition, Idaho-based American Semiconductor, the world’s top producer of flexible silicon content, is considering investing in Taiwan, according to a statement on SEMI’s website. “American Semiconductor has developed a new wafer level chip scale package (CSP) technology that enables packaged ICs to continue scaling for reduced thickness,” the statement says. “SP is currently being demonstrated for Cypress, NXP, EM Microelectronic and other major IC companies.”
With that in mind, “American Semiconductor is currently looking for partners and investors in Taiwan,” according to the statement.
Other new projects include plans by local IC firms for investments in fabs in Taiwan. In April, TSMC announced it would spend NT$400 billion (about US$13 billion) to upgrade its Hsinchu plant. In June, Winbond, the world’s third largest supplier of NOR flash memory, announced it would build a new NT$355 billion production facility in Kaohsiung. That plant will be Winbond’s first new production facility since 2004.
In August, contract chipmaker Powerchip announced it would spend NT$278 billion to build two fabs in Miaoli County’s Tongluo Industrial Park, which will together have a capacity of 100,000 12-inch wafers a month. The new plants will be dedicated to next-generation technologies. “We want to keep our most advanced technologies in Taiwan,” Powerchip founder and CEO Frank Huang was quoted as saying in the English-language Taipei Times.