As the world’s third-largest supplier of silicon wafers, Taiwan-based GlobalWafers has been building factories outside Asia lately as it expects individual countries’ customs policies to further isolate regional semiconductor markets.
Image Source: GlobalWafers
The history of China’s relations with its closest neighbors and major foreign trade partners shows that in the event of aggravation of the geopolitical situation, the country’s authorities resort to limiting the export of materials supplied to the world market mainly from the Middle Kingdom. Under Donald Trump, the United States actively increased customs duties on raw materials and goods made in China. All these examples prove that localization of silicon wafer production is important for the economy of every major region.
As Bloomberg notes, GlobalWafers is expanding its silicon wafer production in six of the nine countries in which it operates. This number includes two facilities in the United States, one in Italy and one in Denmark. In an interview with the resource, the head of GlobalWafers, Doris Hsu, admitted: “I believe that special tariffs will be introduced not only in the USA, but also in some other countries.” The impact of increased duties can be avoided by localizing the production of products, according to her. She added that geopolitics is now a dominant factor when companies choose a business development strategy.
In 2022, GlobalWafers tried to buy German rival Siltronic AG for $5 billion, but regulatory resistance contributed to the deal falling apart. Up to that point, 80% of GlobalWafers’ expansion had come through mergers and acquisitions. As Doris Xu admits, after the collapse of the deal with Siltronic, her company changed its development strategy because it realized that it was becoming increasingly difficult to carry out acquisitions in the international market. From 2022, GlobalWafers simultaneously began expanding its existing operations in six countries.
The advantages of such a policy include GlobalWafers’ ability to qualify for subsidies from local governments in countries where the company is building new enterprises. In Italy, for example, it received a grant worth 103 million euros, and in the United States the company will receive support from the authorities in the amount of $400 million for the construction of enterprises in Texas and Missouri, which will create a total of 2,500 jobs.