Chip giant Taiwan Semiconductor Manufacturing Company (TSMC) recently announced its plan to add new production lines in its existing plant in Nanjing, China. However, an expert in China’s telecom industry penned an article to express his opposition, claiming that China may not obtain the technology it desires from TSMC, and Chinese companies will face more competition.
On April 22, TSMC convened an ad hoc board of directors meeting and approved an investment of $2.887 billion to install new production lines for 28-nanometer (nm) chips at its Nanjing plant in China, expecting mass production at a monthly output of 40,000 units by 2023, according to Taiwan’s Liberty Times.
China’s Chip Industry Hampered by US Sanctions
The United States has blacklisted leading Chinese semiconductor companies over security concerns–Huawei, SMIC, (Semiconductor Manufacturing International Corporation) and Feiteng, are restricted from exporting chips that are 10 nm and below. On April 16, two U.S. lawmakers sent a letter to the Secretary of Commerce, requesting chip manufacturers that use American tools should be prevented from selling 14 nm or better chips to Chinese companies.Xiang pointed out in his article that TSMC is keeping the most advanced technology, such as 7 nm and below, as well as 90 percent of its production capacity in Taiwan. The 5 nm chip manufacturing project in Arizona, a $12 billion investment, is the only cutting-edge project of TSMC outside Taiwan.
In addition, TSMC complied with the sanction of the United States to ban export control of chip supplies to Chinese companies such as Huawei, SMIC, and Feiteng, Xiang said.
‘China Won’t Be Able to Obtain Advanced Process Technology’
It is well-known that the Chinese Communist Party (CCP) obtains coveted key technologies from foreign countries, either by coercive technology transfer, stealing, or poaching talents.In the past several years, China has poached hundreds of TSMC engineers, who brought trade secrets to state-owned companies. State-owned SMIC’s current vice chairman, Chiang Shangyi, and CEO, Liang Mong Song, are both former TSMC’s veteran and top experts.
However, Xiang is concerned that China won’t be able to obtain key technology from TSMC at this time.
“If we support TSMC’s production expansion in Nanjing, China won’t be able to obtain advanced process technology in chip manufacturing, and Chinese companies won’t obtain advanced chip products. Our chip industry will still be held back [by the U.S. sanctions],” Xiang wrote.
SMIC Gets Huge Sum of State Funds
TSMC began mass production of 28 nm chips as early as 2011, and the current yield is as high as 90 to 95 percent. SMIC, China’s major chip processing company, produces a significantly lower amount of 28 nm chips compared to TSMC, according to Chinese state media. But no specific figures have ever been provided.However, during SMIC’s publicity campaign in March, Chinese state media touted that in the manufacturing of 14 nm chips, SMIC’s yield has caught up with that of TSMC, which has achieved a 90 to 95 percent yield.
Xiang does not believe this claim, as he said TSMC could easily defeat Chinese chip companies.
The two recent large-scale production projects of SMIC are both backed by government funds. SMIC announced last month that the company and Shenzhen government would jointly invest in a $2.35 billion project for wafer production of 12-inch 28 nm and above, with a monthly output of 40,000 units, starting in 2022, according to Chinese news portal Sina. SMIC’s capacity is similar to TSMC’s projected production in its Nanjing plant and is one year earlier than TSMC.
In December last year, with the support of China’s ‘Big Fund’ phase II, SMIC invested a total of $5 billion to build a 12-inch chip manufacturing and packaging project in its Beijing plant. This project is expected to be completed in 2024, with a monthly output of approximately 100,000 wafers, Sina reported.