Japan and the world’s largest foundry company TSMC join hands?

The news that TSMC, the world’s No. 1 foundry company, will establish a factory in Japan, has been reported. TSMC has been reluctant to expand overseas due to technology leaks. It is not yet known whether it is true, but if it becomes a reality, it is likely to affect Samsung Electronics, which has established a non-memory semiconductor strategy.

According to a report from Taiwan Focus on the 5th (local time), TSMC plans to set up a high-tech IC packaging and test plant in Tokyo, Japan. Several interpretations are being followed, such as a move to counter the advancement of Chinese semiconductors.

Taiwan Focus quoted a source and reported that “Sooner or later, TSMC and Japan’s Ministry of Economy, Trade and Industry will sign a memorandum of understanding for joint investment, and will each hold 50% of the stake in the production line.” Regarding, TSMC said, “We cannot answer until the conference call in the fourth quarter of 2020.”

Japan’s fallen memory industry, “Let’s catch non-memory”

From the Japanese standpoint, it is an atmosphere that welcomes the attraction of the TSMC plant. Japanese media said, “If the TSMC plant is established in Tokyo, it is thanks to the active efforts of the Japanese Ministry of Economy, Trade and Industry.” This is because there is a history of the collapse of the Japanese semiconductor industry.

In the 1980s, the semiconductor market was dominated by Japan. However, with the spread of personal PCs, the atmosphere reversed. Although Japanese semiconductors are excellent in durability and performance, there is a limit of high cost. On the other hand, Korean semiconductors focused on equipping price competitiveness with reasonable quality. They thought that in order to supply electronic devices to individuals, the cost should be lowered. As a result, many manufacturers chose Korean semiconductors because of their price competitiveness. Japan has given up the leading position in the memory market to Korea.

Japan decided to turn to non-memory, deciding that it could not see the odds in memory. It is efficient to produce non-memory semiconductors by dividing them into fabless and foundries. It can be interpreted that Japan’s active efforts to build the TSMC plant are to save Japanese fabless small and medium-sized companies and establish themselves in the non-memory market.

Why Japan wants TSMC

It is still rumored, but there is an evaluation that TSMC’s move is unusual in the industry. In the meantime, TSMC has been reluctant to expand overseas due to technology leakage. In fact, most of TSMC’s production lines are in Taiwan.

If TSMC establishes a factory in Japan, both countries are advantageous. First, TSMC lost Huawei, which was a big hand due to the US-China economic dispute and sanctions. Of course, TSMC recorded record-high sales in August even without Huawei, but losing a highly dependent company is a long-term loss. In this situation, Japan becoming a customer is one of the ways to prevent losses.

In Japan, it is possible to enter the market using the characteristics of the foundry market. One of the foundry’s competitiveness is its extreme ultraviolet (EUV) exposure equipment. With this equipment, micro-processing is possible, and whether micro-processing is possible is directly related to cost competitiveness and product performance.

The extreme ultraviolet exposure equipment is produced by ASML, whose headquarters is in the Netherlands. However, most of the parts and materials necessary for ASML’s equipment are supplied by Tokyo Elek (TEL) or TOK in Japan. It is predicted that Japan can enhance its technology and expand the market through technology alliances between its materials, parts and equipment companies and TSMC. At the same time, Japan helps to grow fabless companies in Jiangsu.

What about the Korean market

If this rumor becomes a reality, it is likely to affect Korea as well. Samsung Electronics has declared’Semiconductor Vision 2030′ in 2019. The goal is to achieve global No. 1 in the field of system semiconductors (non-memory) as well as memory semiconductors by 2030. However, we cannot rest assured that its rival TSMC will be advantageous in acquiring new customers and introducing advanced equipment.

Market research firm Trend Force predicted that Samsung Electronics’ share in the global foundry market in 2021 will increase by 1% from this year’s estimate to 18%. However, if TSMC is confirmed to enter Japan, Samsung Electronics needs to prepare a response strategy, such as focusing on securing equipment and customers.

On the other hand, TSMC plans to announce whether or not to establish a factory in Japan through a conference call for the fourth quarter of 2020 on January 14th.

Written. Byline Network

<배유미 인턴기자> [email protected]