European and Taiwanese Semiconductor Companies Strengthening Cooperation

Taiwan and the European Union plan to strengthen economic and diplomatic relationships in a bid to deepen collaboration in making the semiconductors supply chain more resilient than it is today.

FREMONT, CA: Taiwan and the European Union are likely to expand economic and diplomatic ties to deepen collaboration to make the semiconductor supply chain more resilient than it is now. A possible fab in Europe is currently being evaluated by TSMC, although no final decision has been made. Improved diplomatic connections would make an impact on business relationships, as well as TSMC's plans to establish a fab in Europe. The European Union is Taiwan's most important source of foreign investment. The EU seeks to upgrade diplomatic connections to ministerial and director-general levels due to rising geopolitical tensions and continued global chip shortages. As a result, EU Trade Commissioner Valdis Dombrovskis and Taiwanese Economy Minister Wang Mei-Hua will hold their first official talks.

The EU and Taiwan will be able to interact more easily on political and economic levels as a result of their improved diplomatic relations. Under the European Chips Act, it is likely to be easier for the bloc to provide incentives and/or co-fund new fabs in Europe developed by corporations like Taiwan Semiconductor Manufacturing Co.  The automotive, IT, and telecom industries, which are critical for the European economy and security, use chips designed by Bosch, Ericsson, Infineon Technologies, Nokia, NXP Semiconductors, and ST Microelectronics. Unfortunately, there are few European chipmakers (the largest of which are GlobalFoundries, Infineon, NXP, and STMicro), and none of them has advanced manufacturing capabilities, therefore European firms require advanced nodes (sub-14/16nm) and must outsource production to TSMC or Samsung Foundry.

Outsourcing semiconductor production to Taiwan and South Korea, on the other hand, involves extended freight times, which is why they want it done in Europe. As a result of the pandemic's challenges, there is a fervour among European governments to set up innovative chip manufacturing facilities. Intel's fab near Magdeburg will receive a USD 5.5 billion state aid package from German authorities. European lawmakers do not want Intel to be the only business producing advanced and cutting-edge technologies, which is why TSMC and/or Samsung Foundry are being courted. Meanwhile, fabs aren't adequate to build a vertically integrated semiconductor supply chain locally. Chip testing and assembly facilities are also required, and Taiwan has a plethora of such businesses. Deals with Taiwan, despite geopolitical problems, are undoubtedly a good place to start if the EU wishes to establish a local chip sector.