Munich, Berlin Away from your own works, towards TSMC, the world’s largest contract manufacturer. Investors took this step last week from the designated Intel-Chef Pat Gelsinger expected. But the manager refused. After he announced his decision in a conference call, the share price of the US group collapsed by almost ten percent. Intel had previously presented excellent quarterly figures.
The reaction of the stock exchange shows: TSMC is the measure of all things in the semiconductor industry. The Taiwanese are not only the largest contract manufacturer in the world. Above all, they are technologically ahead and have even outperformed industry leader Intel.
Until recently, the company was only known to insiders. Because TSMC itself does not sell chips, but only produces on behalf of other semiconductor manufacturers. Experts speak of a foundry. Customers also include the most important manufacturers of automotive chips, Infineon and NXP.
In the past few weeks, however, the company has achieved a certain fame, at least at Daimler, Ford or VW. Not only in Germany are the lines in the car factories at a standstill because TSMC could not deliver as much in the fourth quarter as the customers wanted.
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A bottleneck that now even drives politics. Taiwan’s Minister of Economic Affairs, Wang Mei-hua, spoke to TSMC officials at the weekend, reports the Reuters news agency. Management has promised to optimize production and give preference to car chips if production can be expanded.
Wang Mei-hua responded to a letter from Federal Economics Minister Peter Altmaier (CDU). He had asked his colleague to contact TSMC and campaign for car chips from German brands.
On Monday, the Federal Ministry of Economics said on request that the situation was being observed “very closely” and that there was an exchange with the auto industry. At the same time, the government is trying to strengthen European chip production. However, this is not a means of alleviating the bottleneck in the short term.
TSMC has replaced Intel as the technology leader
It is not a given that TSMC has such a prominent role in the chip industry. For decades, Intel stood for what is known as Moore’s Law, formulated by co-founder Gordon Moore. According to this, the number of transistors on a chip regularly doubles, which means that performance also increases exponentially. For some years now, it has not been Intel that has been driving this development, but TSMC.
TSMC is now bigger than most of its clients. For the current quarter, the Asians expect sales of around 13 billion dollars (10.7 billion euros). That is about as much as the largest German chip manufacturer, Infineon, forecasts for the entire year.
But that shouldn’t be it for a long time. TSMC is gearing up for tremendous growth. CEO CC Wei plans to invest up to 28 billion dollars (23 billion euros) in new machines and the expansion of his factories this year.
For comparison: Infineon, after all a Dax group, will invest around 1.5 billion euros according to its own information. “In the past, high investments by TSMC always resulted in great growth,” said Bernstein analyst Mark Li.
TSMC wafers: The flood of orders recently overwhelmed the Taiwanese company.
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(Foto: Bloomberg)
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There’s another reason TSMC spends so much money: The electronics company Samsung pushes into the business of foundries. After the US company Intel, Samsung is number two in the semiconductor industry and the leading memory chip manufacturer.
The Koreans are now fighting more and more for orders from other chip suppliers and thus became TSMC’s biggest competitor. Overall, Samsung plans to invest 116 billion dollars in contract manufacturing and chip design in the current decade.
The semiconductor industry can use new capacities, the industry is doing brilliantly despite the pandemic. Last year sales climbed by a good seven percent to almost 450 billion dollars.
Apple buys the very latest chips
TSMC is in great demand not least because the company can manufacture the most advanced semiconductors with so-called five-nanometer technology. Most of this capacity is taken by Apple. TSMC earns a lot of money from these most modern semiconductors, in contrast to the car chips.
“Older chips are often installed in cars due to their comparatively long life cycle. For semiconductor manufacturers, this is not as attractive as the latest chip generations that they supply to consumer goods manufacturers, ”says Thibault Pucken, managing director of the consulting firm Inverto.
The federal government is meanwhile endeavoring to strengthen European chip production with state subsidies. However, this only helps in the medium to long term. The Ministry of Economic Affairs “is committed to strengthening digital sovereignty and maintaining the competitiveness of the European economy,” said a spokeswoman.
Together with its European partners, Berlin helps itself with the industrial policy instrument of the “Important Project of Common European Interest” (IPCEI). This allows EU members to circumvent the strict state aid rules of the community.
There are currently two IPCEI projects in the chip area. On the one hand, the IPCEI microelectronics, for which the Ministry of Economic Affairs is making available one billion euros for investments and innovations until 2023, especially with a view to special chips for cars.
“Specifically, the Federal Ministry of Economics is supporting 18 German companies in setting up modern chip factories, developing high-performance and energy-efficient microelectronic components up to the start of mass production and thus creating sustainable jobs,” emphasized the spokeswoman.
One example are the newly established or significantly expanded chip factories of Bosch, Infineon and Globalfoundries in Dresden. The second IPCEI should focus more on communication technologies, but is still in the planning phase.
Still, TSMC shows goodwill. The company works closely with customers in the auto industry to solve delivery problems. This has “top priority”, announced the group.
More: Chip shortage: US auto companies appeal to Joe Biden
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