Apple Supplier TSMC Seeks New Chip Factory in Singapore to Address Global Shortage

Taiwan Semiconductor Manufacturing Co. (TSMC), the leading contract manufacturer of microprocessors in the world, is currently in talks to build a new semiconductor fabrication plant in Singapore — reports The Wall Street Journal.

According to the publication’s sources, the factory would be a multibillion-dollar project and TSMC has approached the government’s Economic Development Board to help fund it.

TSMC is trying to install more production capacity to alleviate the global chip shortage that started in early 2021 and has knocked many industries to their knees since, as are all other players in the global chipmaking scene.

The Taiwanese semiconductor giant is building another plant in Arizona, as well as one in Japan that is subsidized by the Japanese government and is part of a joint venture with Sony.

TSMC’s rivals are similarly making big investments in fabrication capacity, with Samsung set to build a $17 billion USD chip factory in Texas. Samsung and TSMC together comprise more than two-thirds of the world’s production capacity for outsourced chips.

The planned Singapore factory will house production lines for TSMC’s older, 7-28nm process nodes instead of cutting-edge offerings like the company’s 4-5nm chips or the upcoming 3nm process. That is because it’s the older chips, which are used in a wider range of products and devices, that are in cripplingly short supply right now.

Even though TSMC and other big chipmakers are putting tens of billions into boosting output, it will be a couple of years at least before the additional fabrication capacity comes online and helps improve chip supply. Pat Gelsinger, CEO of U.S.-based TSMC rival Intel, expects the global semiconductor shortage to drag into 2024.

Chipmakers are also seeing mounting inflationary pressure on the costs of raw material and logistics, The South Korean electronics giant is following in the footsteps of Apple supplier Taiwan Semiconductor Manufacturing Co. (TSMC), which hiked chipmaking prices by as much as 20% in January 2022 an

TSMC isn’t the only chipmaker looking to set up shop in Singapore. The country, with its wealth of skilled talent and well-established ecosystem of suppliers, has become a major hub for chip manufacturers like GlobalFoundries Inc., Micron Technology Inc., and Infineon Technologies AG.

United Microelectronics Corp., the fourth-largest contract chip manufacturer in the world, has also revealed plans to invest $5 billion in its production in Singapore.

Singapore accounts for about 5% of global wafer fabrication capacity, the country’s Minister of Trade and Industry, Alvin Tan, said in January. Semiconductors are “the fastest-growing segment of the electronics industry,” he said.