The concentration of global semiconductor production in Taiwan has led MediaTek Chief Executive Office Rick Tsai to predict that major manufacturers will seek to expand their semiconductor supply chains beyond the country’s borders.
Given the growing tension between China and the United States, some manufacturing companies are starting to discuss how they can expand their semiconductor supply chains beyond Taiwan to mitigate the risks. This is in response to growing concerns about how manufacturers would cope if relations between China and the US were to worsen.
A tug of war between the East and West
At a recent media event hosted by MediaTek, which is Taiwan’s most important smartphone chip design firm, CEO Risk Tsai explained that although it’s “incremental”, manufacturers are already looking for ways to diversify their semiconductor supply away from the country.
Taiwan is currently responsible for close to 65% of the world’s semiconductor supply and nearly 90% of the smallest and most sophisticated chips. To overcome this overreliance, Tsai explained how the largest equipment manufacturers want to be able to acquire chips from multiple sources in different regions, “like from Taiwan and the US, or from Germany and elsewhere in Europe”.
MediaTek creates semiconductor ‘fabs’ around the world
In anticipation of the derisking of the supply chain, MediaTek has been expanding its operations around the world and pushing to grow its US business with the aim of “tripling or quadrupling sales”. Although its most advanced smartphone chips are still made in Taiwan, some of its older smartphone chips are made by GlobalFoundaries Inc in fabrication plants, so-called ‘fabs’, in the US and Singapore.
MediaTek has also committed to making its chips in Intel Corp’s fabrication facilities, with the manufacturing technology used to produce the ‘Intel 16’ chip well suited to MediaTek’s Wi-Fi and smart TV chips. These chips will be made in Intel’s fabrication facility in Ireland from 2024.
Taiwan will remain an important centre for semiconductors
Analysts suggest that if the world were to lose access to Taiwan’s chip plants, the production of everything from cars to computers would be severely disrupted. However, despite the risks, Rick Tsai has cautioned manufacturers against moving away from Taiwan entirely.
Even with some supply chain diversification, he believes that Taiwan will continue to be the world’s most important region for advanced chip making. He says that it’s unrealistic for the chip industry to completely move away from Taiwan, although efforts such as the CHIPS and Science Act, introduced by the Biden Administration in the US, should help to accelerate the globalisation of semiconductor production.
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