Taiwan Semiconductor Manufacturing Company, the largest contract chipmaker in the world, is building a plant to make 3 nanometre chips, semiconductors expected to be up to 70 per cent faster and more power-efficient than the most advanced in production now and which will be used in devices from smartphones to supercomputers.
TSMC is building manufacturing facilities outside Taiwan to be closer to customers and to diversify geopolitical risks. But it does so in a very selective manner as the company does not want to disperse it manufacturing operations across the globe. So only two countries: USA and Japan. Last year, TSMC committed under political pressure from the administration of Donald Trump to build a $12bn plant in Arizona. Last month, TSMC announced it would set up a subsidiary in Japan to conduct research in new semiconductor materials.
What about Europe? It is also about costs and strategy: in the US, the Government would subsidise the cost gap (Taiwan remains cheaper than US), while the investment in Japan is in a key future technology. But in Europe the situation is more difficult because Europe does not yet have a clear strategy on chip manufacturing. It is good at chip design, but weak at chip manufacturing.
And manufacturing, especially as we get even closer to 1nm, is the key competitive advantage. Winner takes it all.
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