(Washington Post) -- Taiwan semiconductor giants Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) are building up their production bases abroad. The Taiwan authorities, who previously encouraged domestic production, have begun allowing overseas expansion as governments and companies in Japan, the US, and Europe seek to shore up their supply of chips.
TSMC is erecting a production base in Kumamoto Prefecture, working with Sony Group Corporation and investing over 1 trillion yen. It decided in August to also set up a factory in Dresden, Germany.
CEO C.C. Wei, who anticipates an investment of over 10 billion euros (about 1.6 trillion yen), said that Europe is promising because of its automotive and industrial sectors.
TSMC will provide 70% of funding, with Bosch, a major German automotive parts manufacturer, and two other companies contributing the remaining 30%. TSMC is also spending 40 billion dollars (about 5.9 trillion yen) to construct a new facility in the US state of Arizona, its third large-scale investment in a foreign country.
UMC is investing 5 billion dollars in a new factory in Singapore that is expected to open in the second half of 2024.
According to Taiwan research firm TrendForce, TSMC commands 56.4% of the global market share in contracted semiconductor manufacturing. Including UMC, which ranks fourth with 6.6%, Taiwan companies hold a 64% market share, making semiconductors a core industry accounting for about 40% of Taiwan's total exports.
Concerned about security, Taiwan authorities had stressed local semiconductor production that could double as a deterrent to China, dubbed the "silicon shield." The "shield" is meant to force China and the international community to consider how the semiconductor supply chain could be disrupted by a Taiwan crisis.
While the authorities have shifted their stance on overseas expansion due in part to US-China tension and moves by Japan, the US, and Europe to restructure supply chains, the policy switch has also been triggered by a lack of human resources on the island.
The authorities believe that international collaboration is essential to address the shortage.
The Semiconductor School at Taiwan's Minghsin University of Science and Technology plans to launch a program for Japanese students by February 2024. The school, which receives subsidies for facility development from the authorities, also plans to host technicians from Japanese companies.
"The semiconductor industries of Taiwan and Japan share a close relationship," said university President Liu Kuo-Wei. "Training Japanese personnel also offers significant benefits for Taiwan."