投資臺灣入口網 Invest Taiwan_產業消息[英文]_Countries Worldwide Strengthen Semiconductor Supply Chain Resilience Major Equipment Manufacturers Continue to Expand in Taiwan

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Countries Worldwide Strengthen Semiconductor Supply Chain Resilience Major Equipment Manufacturers Continue to Expand in Taiwan

2023-08-30

The COVID-19 pandemic has created a high demand for semiconductors since 2020. However, as East Asia produces the majority of semiconductors, and the flow of people and goods were hindered during the pandemic, the world was hit with a semiconductor shortage. In response, the term 'chip shortage' was created to describe the insufficient supply of semiconductors during the pandemic. Countries around the world began to recognize the importance of semiconductors. Currently, major global semiconductor manufacturers are actively expanding production and ramping up investments in countries with robust manufacturing capacities, such as Taiwan, South Korea, Singapore, and Malaysia to increase nearby supply production and strengthen the resilience of semiconductor supply chains. The pandemic has subsided, but trade tensions between China and the US have risen. In the past three years, China has become the world's largest market for semiconductor equipment. As such, manufacturers are swiftly adjusting supply chain strategies to mitigate the impact on revenues.

In recent years, emerging terminal applications (e.g., high-performance computing (HPC), 5G, and automotive electronics) and remote learning during the pandemic has driven major semiconductor manufacturers to expand production. As such, the global market for semiconductor equipment has experienced positive growth for three consecutive years, reaching US$107.65 billion in 2022—a new record.

Major semiconductor suppliers are concentrated in the United States, the Netherlands, and Japan, while 80% of the equipment market is located in East Asia. An examination of global semiconductor equipment market share in 2022 reveals that China accounted for 26.3%, Taiwan for 24.9%, South Korea for 20%, and Japan for 7.8%. For greater geographical proximity to customers, major players like Applied Materials, Lam Research, and ASML have established production bases in Asia. The production bases in Asia however are mainly focused on assembly, with fewer bases engaged in manufacturing, as the purpose is to quickly replace components and reduce logistics costs.

Following the pandemic, countries worldwide are beginning to recognize semiconductors as a strategic resource and actively strengthening semiconductor self-sufficiency. In particular, the U.S. recently announced an amendment to widen the scope of subsidies for the CHIPS and Science Act (CHIPS Act) to include semiconductor equipment and chemical materials in the upstream supply chain. The aim is to incentivize semiconductor manufacturers to invest in the U.S. and promote development of the local semiconductor industry. The symbolic move by the U.S. government positions semiconductors as a strategic resource, highlighting how it has become the lifeblood of global economy and security.

Equipment manufacturers have subsequently readjusted their strategies in response to the global trend of shortening supply chains. Because the semiconductor industry has higher technological and funding thresholds, the market has been dominated by a small number of industry-leading enterprises for a long time, including ASML, Lam Research, and Tokyo Electron. A summary of their strategies adopted in different scenarios is as follows:

ASML: In recent years, ASML has been actively expanding operations in Asia, investing approximately US$180 million to establish technology bases and training centers in Hwaseong, Korea. Additionally, observations have also been conducted in Vietnam, Singapore, and Malaysia. In 2023, ASML invested approximately NT$30 billion in Taiwan for R&D and manufacturing of 2-nanometer wafer optical measurement equipment. An estimated 2,000 employees will be stationed in Zone 1, Linkou Industrial Zone, New Taipei City, further strengthening Taiwan’s high-end semiconductor processing supply chain.

Lam Research: Lam Research has established an 800,000 square feet manufacturing base in Malaysia – its main operation center in Asia. Furthermore, Lam’s equipment and components supply chains established in Taiwan is deepening collaboration with Taiwanese manufacturers. Lam Research has also established an R&D center and continually increased R&D investments to strengthen advanced processing technology services for customers, enhance the scale of its supply chain in Taiwan, achieve mass production of 2-nanometer processes, and promote local development of key processing technologies.

Tokyo Electron: Tokyo Electron (TEL) maintains a primary production base in Japan and continues to expand factory capacities to meet market demand. Additional manufacturing centers have been established in Asia, including Taiwan and Malaysia, and TEL is planning to continue expansion. In 2022, TEL invested NT$1.8 billion in Tainan to establish a manufacturing and maintenance hub for critical components of semiconductor equipment; furthermore, the company has bolstered the development of semiconductor clusters in southern Taiwan by collaborating with local supply chains.

Taiwan has excellent professional knowledge in semiconductors, advanced manufacturing capabilities, and comprehensive industry clusters. As such, Taiwan has positioned as the developmental linchpin in the global semiconductor industry. Despite the challenges, major semiconductor equipment manufacturers are still coming to Taiwan and establishing manufacturing and R&D capabilities. This will in turn, continue to strengthen Taiwan’s semiconductor ecosystem by integrating local manufacturing power.

Source： Metal Industries Research & Development Centre　Metal Industry Intelligence