U.S., Japan Pushing for Semiconductor Self-sufficiency
As the U.S. and Japanese governments are pushing for “semiconductor self-sufficiency” in the wake of the spread of COVID-19, attention is being paid to its impact on South Korean semiconductor companies such as Samsung Electronics and SK Hynix. In particular, as both the U.S. and Japan are seeking to attract Taiwan's TSMC plant, which is the world's largest foundry company, Samsung Electronics’ response is drawing attention as the company is in hot pursuit of TSMC in the foundry sector.
According to foreign media reports, the Trump administration is trying to stabilize the supply chain of semiconductors by attracting TSMC plants, as the key customers of the Taiwanese foundry are U.S. semiconductor companies such as Apple, Qualcomm, AMD, and NVIDIA.
The global spread of the novel coronavirus is fueling concerns about the collapse of the semiconductor supply chain, so the United States wants to reduce its dependence on Korea and Taiwan by attracting TSMC and Samsung Electronics' factories. The United States also intends to keep in check China, which is also keen to promote its semiconductor industry. In particular, Huawei, the world's largest telecommunications equipment maker and the world's second-largest smartphone maker, is outsourcing production of semiconductors designed by its subsidiary HiSilicon to TSMC.
Japan is also seeking to attract TSMC and Intel factories as it wants to further beef up its semiconductor ecosystem. Currently, Japan has the world's best semiconductor equipment and materials companies.
Samsung Electronics seems to have a lot to ponder as the U.S. is interested in attracting TSMC's plant in the U.S. while at the same time expecting Samsung Electronics to expand its plant in the U.S. The Korean semiconductor giant could be in trouble if the Donald Trump administration pushes ahead with its move to attract a TSMC plant and U.S. semiconductor companies such as Intel, Qualcomm, and NVIDIA, which are Samsung’s major customers, support it.
Yet Samsung cannot easily decide to expand its factory in Austin as expanding a foundry production line is a risky business. A new line requires investments worth trillions of trillion won, and furthermore, demand for semiconductors may shrink due to the Corona 19 incident.
Samsung's plant in Austin provides foundry services for semiconductor designers. It is its only overseas foundry plant. While Samsung Electronics' extreme ultraviolet (EUV) line at its Hwaseong plant in South Korea makes ultra-fine process semiconductors with less than 10 nanometers (nm), such as 6-nm and 7-nm devices, its Austin plant mainly produces 14-nm products.
Industry watchers say Samsung Electronics is likely to expand its Austin plant if TSMC sets up a new plant in the U.S. If TSMC builds a foundry plant in the U.S. and takes more orders from U.S. companies such as Apple and Qualcomm, Samsung Electronics will lose its customers, which will make it impossible for the company to achieve its Semiconductor Vision 2030, a bid to surpass TSMC by 2030.
Recently, U.S. semiconductor companies such as Qualcomm and NVIDIA have placed foundry orders on Samsung Electronics to reduce their dependence on TSMC. Yet if TSMC builds a foundry plant in the U.S., they are likely to place such orders on TSMC.
Industry watchers have previously speculated that Samsung Electronics could introduce a new EUV line to its Austin plant. Samsung Electronics is known to have recently purchased additional land near the Austin plant with plant expansion in mind.