Taiwan Wafer Manufacturer Announces Conditional for Plant in US
Some relief may be in sight for the semiconductor industry — but the relief comes with conditions, and there is no indication that those conditions will be met. Recently, GlobalWafers, the Taiwan-based wafer manufacturer and the third largest wafer manufacturer in the world, has announced new plans to build a $5 billion factory in on U.S. soil.
The condition? GlobalWafers is requesting the U.S. fund its construction through the CHIPS Act.
Passed In January 2021, the CHIPS Act was part of the National Defense Authorization Act and proposed $52 billion in funding for U.S. based manufacturers to invest in domestic chip production. On the surface, this would disqualify The Taiwan manufacturer. However, as of July 2022, Congress has yet to allocate any budget to finance the bill. Knowing this and the U.S. desperation to boost domestic semiconductor production, GlobalWafers senses a generational business opportunity
“It has to be done before [Congress goes] to August recess. I don’t know how to say it any more plainly. [The GlobalWafers] deal…will go away, I think, if Congress doesn’t act,” said U.S. Commerce Secretary Gina Raimondo in an interview with CNBC. The tone of her comments emphasize the need for this kind of investment.
As the U.S. is struggling in this space, China has only accelerated its own semiconductor development capabilities. While the vast majority of the world’s semiconductor manufacturers are consolidated in Taiwan, the Chinese semiconductor industry logged an annual growth rate of 30.6% in 2020 and now accounts for 3.8% of the world’s global chip sales. Should tensions between Taiwan and China escalate and result in China taking over the Taiwanese semiconductor footprint, it would account for over 70% of the world’s semiconductors. Provided the trade dispute between China and the U.S. continues, this would put the U.S. in a very difficult position.
At this stage, it is difficult to view this news as little more than a development. Whether optimism or disappointment awaits beyond Congress’ decision remains to be seen. On one hand, the fact that there is indeed interest in expanding domestic semiconductor production is a positive step within itself, but expectations must be tempered due to historic inflation, the war in Ukraine, and a current $1 trillion dollar federal deficit that is expected to soar in 2024. For the time being being, inventory ownership solutions for critical electronic inventory, as well as long-term storage solutions for bulk-acquired raw die and wafer, will be critical for maintaining manufacturer business continuity