According to The Wall Street Journal, TSMC, the world’s largest independent foundry, plans to spend billions of dollars to build a new manufacturing plant in Singapore. With the current chip shortage, TSMC needs to increase its production capacity to ensure it can supply enough cutting-edge chipsets to meet the demand of its major customers, including Apple, Qualcomm and Mediatek.

TSMC negotiates to build new factory in Singapore to ease global chip shortage

The report of The newspaper says that TSMC has not yet made a final decision on the creation of a new factory and that the factory under construction in the United States (in the state of Arizona) is currently delayed. A new factory in Singapore would cost billions of dollars and some of the money to build the facility could come from the Singapore government. Those in the know say that TSMC is currently in negotiations with the country’s Economic Development Council.

A TSMC spokesperson said, “TSMC is not ruling out any possibilities but has no concrete plans at this time.” TSMC and Samsung Foundry are the world’s top two independent foundries, meaning manufacturers send their chip designs to them to be built. For example, Apple designs its A- and M-series SoCs and outsources component manufacturing to TSMC. Apple, in fact, is this foundry’s biggest customer.
TSMC and Samsung will start shipping chips made using their 3nm process nodes in time to include them in consumer products next year. The smaller the process node number, the greater the number of transistors that can be found inside a chip. This is important because the greater the number of transistors in a chip, the more powerful and energy efficient it is.

For example, the A13 Bionic chip powered by the iPhone 11 series was built by TSMC using its 7nm process node. The chip contained 8.5 billion transistors. Compare that with the A15 Bionic chip built by TSMC using its 5nm process node. This chip, used on the iPhone 13 line, contains 15 billion transistors, which allows it to be more powerful and energy efficient than older chips.

The now-delayed factory being built in Arizona aimed to produce 5nm chips by 2024. This factory would not ship edge chipsets since by 2024 TSMC’s Taiwan-based factories are expected to produce chipsets. 3nm chips. The proposed factory in Singapore would manufacture chips from 7nm to 28nm and these older production technologies produce chips used for smartphones, automobiles and other devices.

Ironically, during the current global chip shortage, it is these old legacy nodes that have been in short supply and have risen in price the most. But building factories in other countries could help TSMC stay close to key customers and is a way to circumvent some of the travel restrictions imposed by the companies due to COVID. Last year, Global Foundries announced it would spend $4 billion to build a factory in Singapore that would open in 2023.

Singapore is responsible for 5% of the world’s wafer manufacturing

Singapore is already home to several chip vendors, as it has a large pool of talent for these companies to choose from, and its supply chain is strong. US chipmaker Micron Technology, Germany’s Infineon Technologies and Global Foundries have facilities in the country. The country’s trade and industry minister, Alvin Tan, said in January that semiconductors are “the fastest growing segment of the electronics industry.”

Earlier this year, in February, the world’s fourth-largest contract chipmaker, United Microelectronics Corp. of Taiwan, announced that it would spend $5 billion to expand production in Singapore. The latter country is home to 5% of the world’s wafer manufacturing capacity. The wafers are made of silicon and through various techniques they are transformed into an ingot. The ingots are then cut into thin slices called wafers onto which extremely fine circuit patterns are etched in a process known as lithography.

After being polished to a mirror finish, the wafers go through several stages and are cut into dies. They are then tested, packaged and shipped.

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