TSMC Singapore plant could alleviate chip shortage, say Apple chipmaker sources

A new TSMC Singapore plant is being discussed, as a way to help tackle the global chip shortage. The company is said to be in discussion with the government over the potential move.

A Singapore plant would help Taiwan Semiconductor Manufacturing Company achieve another key objective, says the report …

Background

TSMC may be best known for making the A-series and M-series chips, which power Apple devices, but the company also produces many less exciting but still critical chips for things like display drivers and power management.

It is these so-called legacy chips that have been in especially short supply, and on which Apple relies as much as any other tech company. Indeed, it is mostly these shortages that led to the iPhone maker seeing greatly reduced revenue lately. CEO Tim Cook revealed that supply constraints cost Apple $6B in two quarters, and warned that the hit could be as high as $8B this quarter.

A recent report says that there have been shortages across seven chip categories, and that four of them will continue to be affected throughout 2022.

Potential TSMC Singapore plant

The WSJ reports that a TSMC Singapore plant would be geared to the older processes used to make these types of legacy chips.

For the Singapore project, TSMC is studying the feasibility of production lines that would make seven- to 28-nanometer chips, a 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.

The report says that a final decision hasn’t yet been made, as ‘negotiations’ are still underway – code for the chipmaker seeking government incentives in order to build the plant.

Would meet a second objective

In addition to increasing manufacturing capacity for legacy chips, a Singapore base would help TSMC reduce its concentration of production in its home country. The pandemic has starkly demonstrated the risks involved in too much manufacturing capacity in a single country, and Taiwan is potentially at risk from a newly emboldened China.

This is likely the reason for TSMC to look toward Singapore rather than China.

TSMC has so far managed to work around lockdowns, but has still been caught up in the catch-22 of chips for chipmaking machines being one of the items in short supply.

Is in addition to Arizona plans

Another element of TSMC’s global diversification process is plans to build as many as six plants in the USA. The company first announced these plans a year ago, later saying that mass production was likely to begin in 2024.

However, it was reported earlier this year that the company had hit a number of snags, which may delay the planned start date.

A report indicates that the company is three to six months behind schedule. Nikkei Asia suggests that the company is having trouble building its plant. Labor shortage, COVID-19 infections in the US, and different types of licenses needed for construction are some of the factors making TSMC fall behind schedule.

Photo: Jiahao Li/Cambridge University