EU, the next Taiwan? Suppliers to semicon factories now target Europe, bet big on new-age factories

EU, the next Taiwan? Suppliers to semicon factories now target Europe, bet big on new-age factories

Chipmakers in Asia are betting big on Europe, and are setting up massive factories across the continent. As a result, suppliers to suppliers to Taiwanese manufacturers are rethinking their strategies and drawing up a new plan focussing on Europe

It looks like the suppliers of Taiwan’s major semiconductor companies are lining up for the EU and are betting big on upcoming industries and next-gen factories in the continent.

Suppliers to Taiwan’s leading semiconductor manufacturing industry are coming up with strategies to expand their presence into Europe, capitalizing on the construction of advanced chip factories on the continent, marking a significant shift in its supply chain dynamics, as per a Financial Times report.

Vincent Liu, the President and CEO of LCY Group, a provider of cleaning agents and solvents to Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chip manufacturer, stated, “We are currently planning investments in Germany, and we aim to establish a significant presence in the European market.” Three other Taiwanese chemical suppliers to TSMC also expressed their intentions to explore opportunities for investment in Europe.

Related Articles


China slams European Union over EV subsidy probe launch


European Union launches infringement against Belgium, Bulgaria, Croatia over fair trial rights

These plans underscore the substantial structural changes triggered by global governmental initiatives aimed at reshoring chip manufacturing, and safeguarding critical technology supply chains from geopolitical tensions and other potential disruptions.

Liu highlighted that European chip manufacturers have faced inefficiencies in their manufacturing processes and dwindling supply chains due to their prolonged reliance on mature technology. He explained, “Companies like Infineon have not utilized high-quality chemicals because their suppliers’ capabilities are decades old. They lack awareness of how state-of-the-art chemicals could significantly enhance their yield rates.”

In response to these transformations, global chip manufacturers are actively increasing their production capacity in Europe, benefiting from incentives provided under the European Chips Act. This act seeks to mobilize 43 billion Euros in investments for the industry and aligns with similar state support initiatives in the US and China.

TSMC, for instance, plans to construct a fabrication plant valued at over 10 billion Euros in Dresden, Germany, in collaboration with European chipmakers Infineon and NXP, as well as auto supplier Bosch. The facility is scheduled to commence production in 2027. Intel has also committed to investing 30 Euros billion in two cutting-edge semiconductor fabrication plants in Magdeburg, northwest of Dresden. Additionally, multinational contract chipmaker GlobalFoundries and European chip company STMicroelectronics are planning a 5.7 billion Euros fabrication facility in France.

Nevertheless, experts in the industry have raised concerns about Europe’s capacity to support such substantial increases in production. An executive at a European petrochemical company explained, “Europe has not experienced significant capacity growth for over a decade. All chip manufacturers in the region still employ mature technology with transistor gates measuring 28 nanometres wide or older, while the most advanced chips in production measure 10nm or smaller.”

The executive emphasized that the existing ecosystem and quality of electronic-grade chemical manufacturing assets in Europe are ill-equipped to supply advanced technology nodes, such as those targeted by TSMC in Dresden or Intel in Magdeburg.

TSMC’s CEO, Mark Liu, acknowledged the gaps in Europe’s chip supply ecosystem as a pressing concern. However, he noted that the German government had promised assistance in addressing the issue. GlobalFoundries also voiced concerns from chip companies in Europe regarding the availability of essential supplies for manufacturing, emphasizing the need for more readily available bulk materials.

For instance, sulphuric acid, used in significant quantities for cleaning and etching in chip production, must be sourced from Asia because Europe lacks an adequate supply of the required quality. Similarly, isopropyl alcohol, essential for wafer cleaning during chip manufacturing, often faces shortages. European fabs currently operate with relatively low-grade IPA, and the most significant supplier, Ineos, has factories in Germany constructed in 1959 and 1936.

After decades of concentrated cutting-edge chip production in East Asia, only LCY and Japan’s Tokuyama are currently manufacturing the necessary chemicals for the most advanced semiconductors. Tokuyama indicated that it might consider entering the European market in 10 to 20 years, with its current focus solely on Asia.

Liu from LCY recently visited Germany to seek government support for chip supply chain companies. He pointed out that European chipmakers had lacked incentives to modernize their manufacturing processes in the past, primarily generating profits from chip design. In contrast, TSMC specializes in chip production and has a keen focus on reducing defect rates to enhance profitability.

The European chemicals executive added that the deficiency in advanced supply capabilities extends to nearly all materials and chemicals in the semiconductor value chain for Europe. Addressing this issue and becoming competitive will require substantial capital expenditure over the long term.

Infineon did not respond to inquiries regarding the impact of TSMC’s Dresden fab on its manufacturing efficiency or supply chain. Ineos indicated that it is actively involved in the development of ultra-high-purity chemicals and continues to reinvest in its production facilities to meet the demands of the semiconductor industry both domestically and globally.

For all the latest Technology News Click Here 

Read original article here

Denial of responsibility! TechAI is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.