Intel lags behind TSMC in walking a tightrope between the U.S. and China

Intel lags behind TSMC in walking a tightrope between the U.S. and China

Only three companies can produce ultra-advanced chips Global: Taiwan’s Taiwan Semiconductor Manufacturing Company (TSMC), California’s Intel and South Korea’s Samsung. The most advanced chip manufacturing technologies are few and specialized because it is very expensive to maintain the highest level of competition.

this week, TSMC (TSM) The stock price soars to new heights Later in Taiwan Intel (International Trade Centre) The company warned that the progress of manufacturing 7-nanometer chips is behind schedule and may outsource its production. Advanced chips can store and process more information. The smaller the nano size, the more advanced the chip.
TSMC Yes Most likely to be a candidate for a U.S. company Can ask for help. Samsung (SNLF) The company produces 7-nanometer chips, but its manufacturing business is relatively small compared to TSMC. It also mainly produces memory chips, and Intel needs help to make advanced processing chips.

Intel’s frustration may not solve its doom. Bret Swanson, a researcher at the American Enterprise Institute, a Washington-based think tank, said the company has led the semiconductor industry for many years and is expected to manufacture 7 nanometers at a commercial level “in a fairly short period of time.”

However, TSMC’s current success-and its position as the world’s leading chip supplier-makes it an extremely important company at a critical moment. The United States and China are in a battle over who can develop future technologies faster. Both countries have established a partnership with TSMC to provide them with the chips needed to support advanced technologies such as artificial intelligence, 5G and cloud computing. . .

TSMC hedges tensions with the United States, but may anger China

The company also spent a lot of money to maintain this relationship. TSMC announced earlier this year Established a US$12 billion manufacturing plant in Arizona The company will be able to produce 5-nanometer chips by 2024. This is a victory for the Trump administration. The Trump administration hopes to have more advanced chip manufacturing capabilities in the United States to ensure chip supply chains for military or sensitive civilian applications.

But the fact that TSMC is helping the United States increase its chip manufacturing capabilities may make China unhappy. TSMC has invested billions of dollars in manufacturing plants in mainland China. should Beijing retaliated against TSMC and Taiwan, At least this will plunge the market into turmoil.

“Taiwan has been worried about the possibility of Beijing nationalizing TSMC’s fabs. [plants that fabricate chips] In Nanjing and Shanghai. “Paul Triolo, head of global technology policy at Eurasia Group, said.

Although China has never controlled Taiwan, the Communist government regards the autonomous island as an integral part of its territory. Whenever the United States, China will brush Have diplomatic relations And Taiwan. Officially, Washington only establishes diplomatic relations with Beijing.

Triolo said that it is completely impossible to take over TSMC’s factory in mainland China, which is a wholly-owned subsidiary. He added: “This will be a large-scale escalation and will cause a huge blow to the business community. Apart from the main disadvantages, it is not yet clear what benefits this will bring to Beijing.”

What China can do is try to persuade TSMC to build a high-end factory on the mainland. TSMC currently operates fewer advanced technologies in its factories in Nanjing and Shanghai. The company’s most advanced wafer fab is located in Taiwan, and Arizona will be the first large-scale overseas factory. according to Confrontation research.

“Beijing can argue that if TSMC is willing [build] The advanced wafer fab in Arizona should be willing to do the same in China. ”

Washington’s long-term pressure campaign against Huawei highlights the urgency of China’s need to reduce its independence from foreign chip manufacturers.

The latest sanctions announced by the United States in May cut China The telecommunications manufacturer broke away from TSMC. Even if TSMC is a Taiwanese company, it relies on American technology to make chips. The US Department of Commerce said that TSMC and other chip makers that use US technology must now apply for a license to export products to Huawei and its chip subsidiary HiSilicon. Given that Washington wants to exclude Huawei from the global 5G network, these applications are likely to be rejected.

In addition to geopolitics, there is also geography. Taiwan is the world’s largest exporter of semiconductors, and the global supply chain needs more chip manufacturing capabilities scattered around the world.

TSMC is the world’s largest chip contract manufacturer. Company like this apple (AAPL), Amazon (Amazon), Qualcomm (Qualcomm)with Nvidia (NVDA)Advanced chips can be designed, but they do not have the expensive manufacturing capacity of TSMC to build them. They are “fabless” chip manufacturers.

Although Intel can design and manufacture its own semiconductors, it can only turn to TSMC if it lags behind advanced chips.

Swanson of the American Enterprise Institute believes that the concentration of so many advanced semiconductor manufacturing capabilities on a small island off the coast of mainland China has always been a supply chain issue. “What if there is a tsunami in Taiwan?” he said.

This once again puts TSMC in a very advantageous position. Swanson said: “The West may not only want to protect Taiwan from a geopolitical perspective, but because of its technological strength and technological capabilities, it may help Taiwan.”

China is far behind in chip manufacturing

Taiwan has shared its technical knowledge with China. Over the years, thousands of Taiwanese engineers have traveled to the mainland to help develop China’s domestic semiconductor industry. Swanson pointed out that “a lot of progress has been made in the past two decades.”

Despite the strong domestic support, semiconductors are still a key technological bottleneck in China.

Triolo of Eurasia Group said that the largest chip manufacturer in the United States, Semiconductor Manufacturing International (SMIC), is still three to five years behind industry leaders Intel, Samsung and TSMC.

China is investing billions of dollars in chip manufacturing to close the gap with global competitors

SMIC is currently producing 10-nanometer chips, while top manufacturers are already producing 7-nanometer chips and are competing to transition to 5-nanometer chips and finally to 3-nanometer chips.

However, to manufacture 7-nanometer chips, the company needs to use extreme ultraviolet (EUV) lithography machines. Such machines can produce complex patterns on the cutting edge. They are also very difficult to operate, which is why Intel encountered problems when manufacturing 7nm chips for commercial production.

Triolo said that the problem facing SMIC is that the United States pressures the Netherlands to prevent the Dutch company ASML from selling EUV equipment to SMIC. The technology is designed by ASML, but contains a large amount of US intellectual property.

The geopolitical situation may change. But Triolo said that given the time required to master EUV, any major delays will allow SMIC’s business to enter today’s most advanced chips after 2023. By then, industry leaders will be far ahead.

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