A Lesson for Samsung Electronics

TSMC's plant in Nanjing, China (TSMC Fab 16)

TSMC, the world's No. 1 foundry company, has announced a plan to expand its semiconductor plant in Nanjing, China. Yet the company’s investment plan has caused a war of nerves between China and Taiwan. Industry insiders say that Samsung Electronics could fall into a similar situation in the future.

TSMC plans to invest an additional US$2,887 million in its Nanjing plant to expand its 28-nm semiconductor production lines and increase the supply of automotive semiconductors.

However, neither China nor Taiwan is welcoming the move. Hong Kong's South China Morning Post (SCMP) reported that TSMC's investment plan is ratcheting up tension between the two sides.

"TSMC is going to dump 28-nm process semiconductor products in China," a Chinese IT expert said. "This will pose a threat to Chinese semiconductor companies."

Taiwanese politicians also voiced their dissatisfaction. "TSMC's industrial secrets could be transferred to China through the expansion of the production lines," some anti-Chinese politicians said. "Concerns are growing that China is stealing Taiwan's semiconductor technology and talents," the Taiwanese Central News Agency (CNA) reported. "For this reason, Taiwan's Ministry of Labor ordered job opportunity websites not to receive job advertisement orders from Chinese companies."

Intensifying competition for hegemony between the United States and China is fueling the conflict. China is unhappy with TSMC as the Taiwanese company has been actively participating in the U.S. sanctions against China. Last month, TSMC immediately stopped supplying products to Phytium when the U.S. government put the Chinese CPU design company on the sanction list.

Industry watchers say Samsung Electronics may face a similar situation in the future. If the United States steps up efforts to hold China in check, the Korean chipmaker is likely to be pressured to limit its semiconductor supply to Chinese companies.

Currently, Samsung Electronics is operating NAND flash and semiconductor packaging plants in Xian and Suzhou, China, respectively. If its second Xian plant is completed as scheduled, the company will be able to produce 130,000 NAND flashes per month starting in the middle of 2021.

The Chinese government is continuously asking the Korean government to cooperate in the semiconductor and 5th-generation telecommunication fields. China accounted for 40 percent of Korea's total chip exports in 2020.

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