Plans to expand chip production outside Taiwan are being hatched not only by TSMC, which is the flagship of the Taiwanese industry, but also by its smaller competitors. Last August, PSMC agreed with the Japanese SBI to build a plant for the contract production of chips, but now data has emerged that the first of the companies exchanged this project for an Indian one.
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Formally, PSMC’s intentions to take part in the construction of a joint venture with the Indian conglomerate Tata in the state of Gujarat were announced back in March of this year, but the partners made an official statement about reaching agreements only last week. The Indian company Tata Electronics intends, with the participation of PSMC, to build the country’s first enterprise for the contract production of chips in the state of Gujarat. PSMC assistance will primarily be expressed in methodological and technological assistance. A facility capable of processing 50,000 silicon wafers per month will be highly automated. Allegedly, it will be able to supply chips to developers of artificial intelligence systems, automotive electronics, as well as a wide range of simpler components that do not require advanced technical processes.
At least $11 billion will be allocated for the construction of the enterprise; more than 20,000 jobs will be created during the construction process and during the further operation of this factory. Taking into account the site’s need for related supplier enterprises, the total number of jobs created may exceed 100,000. When the possibility of building this factory was initially discussed, it was about using technological processes in the range from 28 to 110 nm, which is quite bold by the standards of India, which does not have such experience. There is no talk of starting construction this year; it is difficult to name the final date for the project.
It is noteworthy that the Japanese SBI Group last week announced its refusal to cooperate with PSMC in the construction of a chip production plant in Japan, and the initiative allegedly came from the Taiwanese manufacturer. As possible reasons for this decision, third-party sources mentioned both the lack of subsidies from the Japanese authorities and the limitations of PSMC’s own financial resources. However, the Chinese resource CNA reported that the real reasons for PSMC’s refusal to participate in the Japanese project have nothing to do with finances. According to some reports, PSMC considered building a plant in Japan to be economically risky. SBI expressed its readiness to find new partners for the construction of a plant in Japan.
However, PSMC is now facing growing competition from Chinese manufacturers, as the latter are rapidly increasing their capacity to produce chips using mature technical processes, which the Taiwanese company specializes in. Accordingly, it has already faced operating losses for five quarters in a row, and therefore cannot disperse its resources too actively, although cooperation with partners in Japan and India does not imply significant material costs on its part.