'Higher-than-expected' TSMC investment likely to satisfy Trump: Expert

Taipei, March 4 (CNA) A semiconductor industry researcher said Tuesday that Taiwan Semiconductor Manufacturing Co.'s (TSMC) "higher-than-expected" U.S. investment vow will likely satisfy U.S. President Donald Trump.

On Monday in Washington, U.S. President Donald Trump announced that TSMC would invest an additional US$100 billion over the next four years to expand its manufacturing operations in the United States.

The investment will fund the construction of three new chip fabs, two advanced packaging plants and a research and development center, according to the announcement.

Liu Pei-chen (劉佩真), a researcher at the Taiwan Industry Economics Database of the Taiwan Institute of Economic Research (TIER), said that the investment is higher than expected and will likely satisfy Trump's demands.

A favorable aspect of the plan is that TSMC will not be helping out U.S. rival Intel but investing on its own, which ensures operation independence and dispels concerns about intelligence leakage, she said.

TSMC can also gain an advantage over Intel and Samsung by maintaining partnership relations with its U.S. clients and leveraging resources from the U.S., such as water, power and land, she added.

However, expanded investment in the U.S. will inevitably affect chip manufacturing in Taiwan, especially in advanced processes, Liu said.

TSMC's expansion plans in Japan may also be affected as resources are spread out, Liu said.

Liu said that the proportion of chips manufactured in Taiwan may decrease to 75-80 percent as the fabs in Arizona enter the mass production stage.

Moreover, TSMC will face challenges in cost management, work culture adaptation and semiconductor talent supply in the U.S., while it remains to be seen whether the TSMC Grand Alliance will also pursue further investment in the U.S., Liu said.

According to Liu, Taiwan has a complete supply chain for semiconductors, including industrial clusters, low costs and engineers on call 24 hours a day.

These advantages mean Taiwan will still be the stronghold for TSMC's advanced processes and packaging, Liu added.

Regarding the advanced packaging plants, a semiconductor industry executive told CNA in a phone interview that it is likely that TSMC will first construct production lines on Chip on Wafer on Substrate (CoWoS) and Integrated Fan-Out (InFO).

From the manufacturing process, the complete construction of the packaging plants would take no less than four years, the executive added.

In order to establish a complete packaging and testing procedure, collaboration with testing plants is also required, which will influence the current Outsourced Semiconductor Assembly and Test (OSAT) supply chains in Taiwan, the executive said.