TSMC Looks to Build Multibillion-Dollar Chip Plant in Singapore

Taiwan Semiconductor Manufacturing Co.

TSM -2.99%

, the world’s largest contract chip maker, is considering building a semiconductor factory in Singapore to help address a global supply shortage, according to people familiar with the matter.

A final decision hasn’t been made yet and details of the plan are still under discussion, but preliminary talks involve a major plant whose cost would run into the billions of dollars, one of the people said. The government in Singapore, a major chip-making hub, might help fund the plant and negotiations are under way with the government’s Economic Development Board, some of the people said.

A shortage of semiconductors has roiled many industries including car manufacturing since the beginning of last year, and several governments including the U.S. and Japan have sought to attract chip-production sites. Reducing the concentration of production in Taiwan and keeping leading-edge technology out of China’s hands are also priorities for the U.S. and its allies.

“Securing supply chains for essential components is a key issue for the Singapore government, and it is following in the footsteps of the U.S. and Japan,” said one of the people familiar with the project.

For the Singapore project, TSMC is studying the feasibility of production lines that would make seven- to 28-nanometer chips, another person familiar with the plans said. These chips are based on older production technologies and are widely used in cars, smartphones and other devices.

TSMC is ramping up investment in these chips, which have caused some of the worst supply-chain bottlenecks, including for

Apple Inc.

Having production sites in more countries brings the company closer to its customers in major markets and is a hedge against pandemic-era travel restrictions and other disruptions, TSMC executives have said.

TSMC has set a capital expenditure budget of $40 billion to $44 billion this year.

TSMC is building a $12 billion chip factory in Arizona and expects to receive support from a $50 billion chip-manufacturing incentive plan that Congress is weighing. The company is also building a new plant in Japan with financial help from the Japanese government and investment by

Sony Group Corp.

A global chip shortage is affecting how quickly we can drive a car off the lot or buy a new laptop. WSJ visits a fabrication plant in Singapore to see the complex process of chip making and how one manufacturer is trying to overcome the shortage. Photo: Edwin Cheng for The Wall Street Journal

Singapore is home to many major chip manufacturers and has been favored by semiconductor companies for its pool of skilled talent and well-established ecosystem of suppliers. Major chip makers like

GlobalFoundries Inc.

and

Micron Technology Inc.

of the U.S. as well as Germany’s

Infineon Technologies AG

have a large presence in the Southeast Asian city-state.

Last year, GlobalFoundries said it would build a $4 billion chip plant in Singapore slated to open in 2023. In February, Taiwan’s United Microelectronics Corp., the world’s fourth-largest contract chip maker, disclosed plans to spend $5 billion to expand its production in Singapore.

Singapore accounts for about 5% of global wafer fabrication capacity, trade and industry minister

Alvin Tan

said in January. Semiconductors are “the fastest-growing segment of the electronics industry,” he said.

Write to Yang Jie at [email protected] and Keith Zhai at [email protected]

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