Chip manufacturer TSMC plans to open Singapore plant to tackle chip shortage

The Taiwan Semiconductor Manufacturing Company (TSMC) is reportedly discussing plans with the Singaporean government to open a plant in that country. 

TSMC is well-known for manufacturing Apple’s A-series and M-series chips, as well as AMD processors, but the tech giant also produces chips for display drivers and power management, which are in short supply thanks to supply constraints due to COVID-19-related lockdowns. These supply constraints have already cost Apple $6 billion in the last two quarters, and that amount could go up to $8 billion.

According to the Wall Street Journal report, the Singapore plant would theoretically help tackle this shortage by manufacturing more of these critical chips. TSMC is studying how feasible production lines that make seven to 28 nanometer chips would be, according to reported sources. This would be based on older production tech already in use by cars, smartphones, and other devices.

The new plant is still under negotiation and has not been finalized as of now.

Analysis: Why the move?

TSMC has other reasons for wanting a new factory in another country. The first is that it would be easier to work around China, which has a complicated relationship with China to say the least, and prevents having too much chip production in a single country.

The company is also interested in building six plants in the US, but has hit several snags in the year since plans were first announced. Opening a plant in Singapore would further help with global diversification, while potentially avoiding what TSMC founder Morris Chang stated as a dearth of manufacturing talent in the US as well as the high cost of chip production.

Quanta Computer, the sole supplier of high-end MacBook Pro models, has also been looking into moving production from Shanghai to the Chongqing factory in order to help relieve supply constraints as well, so TSMC is not the only Apple supplier looking to diversify its production in response to the supply chain crisis.

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