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Suppliers of Taiwan’s world-leading semiconductor manufacturing are planning to enter Europe as construction of the continent’s first advanced chip factory in decades reshapes its supply chain.
“We are planning to invest in Germany, and the European market will be ours,” said Vincent Liu, president and CEO of Li Changrong Group. Li Changrong Group is a supplier of cleaning agents and solvents to TSMC, the world’s largest contract chip manufacturer.
Three other Taiwanese chemicals suppliers to TSMC have also said they are considering investing in Europe.
Their plans illustrate the structural changes triggered by efforts by governments around the world to reshor chip manufacturing and protect critical technology supply chains from geopolitical tensions and other disruptions.
Liu said that because European chipmakers have relied on mature technologies for years, their manufacturing processes have been inefficient and their supply chains have shrunk.
“Companies like Infineon are not using high-quality chemicals because their suppliers’ capabilities are decades old,” he said. “They have no idea how many state-of-the-art chemicals are available to help them increase their yields.”
Global chipmakers are scrambling to take advantage of subsidies under the European Chip Act to build production capacity in Europe. The bill aims to raise 43 billion euros in investment for the industry and responds to similar state support from the United States and China.
TSMC plans to build a manufacturing plant worth more than 10 billion euros in Dresden, Germany, in partnership with European chipmakers Infineon and NXP and automotive supplier Bosch. Production is scheduled to begin in 2027.
Intel has committed to investing 30 billion euros to build two cutting-edge semiconductor factories in Magdeburg, northwest of Dresden, and multinational contract chip manufacturer GlobalFoundries and European chip company STMicroelectronics are planning to build a 5.7 billion euro factory in France. .
But industry experts say Europe lacks the supply chain to support such a significant increase in production capacity.
“Europe’s production capacity has not grown for more than a decade,” said a senior executive at a European petrochemical company. He added that all chipmakers on the continent use mature technology with transistor gate widths of 28 nanometers or earlier. The most advanced wafer sizes in production are 10 nanometers or less.
“The ecosystem and quality output of electronics-grade chemicals manufacturing assets are simply not suitable for delivering advanced technology nodes such as those targeted by TSMC in Dresden or Intel in Magdeburg,” the person added.
TSMC Chief Executive Mark Liu said in June that a gap in Europe’s chip supply ecosystem was one of “our biggest concerns,” but added that the German government had pledged to help solve the problem.
GlobalFoundries said European chip companies are concerned about securing supplies for manufacturing. “We are making a big push to make more bulk materials available,” the company said.
The person added that wafer manufacturers need large amounts of sulfuric acid for cleaning and etching that must be purchased from Asia because Europe does not have enough sulfuric acid of qualified quality, while the isopropyl alcohol needed for wafer cleaning during wafer production comes from Asia. Often in short supply.
European fab technology is suitable for relatively low-end IPA. Europe’s leading supplier INEOS has two IPA plants in the German towns of Herne and Morse, built in 1959 and 1936 respectively.
After decades of focusing on cutting-edge chip manufacturing in East Asia, Li Changrong and Japan’s Tokuyama are the only companies producing chemicals for the most advanced semiconductors. Tokuyama said that Europe may be considered a potential market within 10 to 20 years, but Asia is its only focus in the near future.
Li Changrong’s Liu visited Germany two weeks ago to lobby for government support for chip supply chain companies. Infineon and other European chipmakers have lacked the incentive to modernize their manufacturing processes in the past because they make most of their profits from designing chips, he said.
TSMC, on the other hand, specializes in producing wafers based on other companies’ designs, so it puts a special emphasis on reducing defect rates to improve profitability.
“Once TSMC gets involved and they show it to them, they’ll start to understand how much of a difference this is going to make,” Liu said.
The European chemicals executive said the loss of advanced supply capabilities applies to almost all materials and chemicals in the European semiconductor value chain.
“Europe today is a net importer of critical electronic-grade chemicals. Changing this to make it competitive is a long-term and expensive challenge that will require significant capital expenditure from Europe.”
Infineon did not respond to questions about the impact of TSMC’s Dresden plant on its manufacturing efficiency or supply chain. Ineos said it actively develops ultra-high purity chemicals and “continues to reinvest in its production facilities in Herne and Morse to meet the current and future customer needs of the domestic and global semiconductor industry”.
additional Reporting by Guy Chazan in Berlin and Kana Inagaki in Tokyo
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