global chip supply risks exposed at semicon japan
Tokyo, Wednesday, 11 December 2024.
semicon japan, a major international semiconductor event, opened with a critical focus on the global dependency on Taiwan Semiconductor Manufacturing Company (TSMC) for advanced chip production. Industry leaders highlighted the potential risks associated with this reliance, warning that any disruption in TSMC’s operations could have severe impacts on global supply chains. Former Japanese lawmaker Akira Amari emphasized the strategic importance of diversifying semiconductor production away from TSMC. He noted that the concentration of cutting-edge chip manufacturing in Taiwan poses a significant risk to worldwide technological and economic stability. The discussions at the event underscored the urgency for countries and companies to develop alternative supply sources and reduce their vulnerability to geopolitical tensions. This gathering marks a pivotal moment in the semiconductor industry, as stakeholders seek solutions to mitigate these looming threats to global technology infrastructure.
Market dominance and supply chain vulnerability
TSMC’s commanding position in the semiconductor industry poses significant risks to global supply chains. The company currently holds 56.4% of the global market share in contracted semiconductor manufacturing [5]. Together with UMC, Taiwan-based companies control 64% of the market [5]. This concentration has raised alarms among industry experts, with former Japanese lawmaker Akira Amari warning that a Taiwan Strait blockade could halt most advanced chip supplies, potentially causing economic shock waves exceeding the 2008 financial crisis [1].
Global expansion and risk mitigation
Major industry players are actively working to diversify production locations. TSMC is investing heavily in overseas facilities, including a 1 trillion yen facility in Kumamoto Prefecture with Sony Group, a 10 billion euro plant in Dresden, Germany, and a $40 billion facility in Arizona [5]. SEMI CEO Ajit Manocha projects the semiconductor market will exceed $2 trillion by 2040, driven by AI and quantum computing advances [1].
Investment surge in manufacturing capacity
The industry is experiencing unprecedented expansion. According to SEMI, 108 new semiconductor factories will be constructed worldwide in the next three years, with Asia leading at 78 facilities, including 11 in Japan. The Americas will add 18 facilities, while Europe and the Middle East will construct 12 [1]. This growth is supported by initiatives like the US CHIPS Act, which has already triggered $450 billion in private-sector funding across 80 new manufacturing projects [4].
Technological innovation and power efficiency
Industry leaders are focusing on revolutionary technologies to address current challenges. Rapidus chairman Tetsuro Higashi predicts a shift from general-purpose to application-specific chips, potentially reducing power consumption to one-fifth of current levels [1]. The industry is also advancing in areas like 3D packaging and optical-electronic fusion, with companies like NTT exploring membrane-type semiconductor lasers for enhanced efficiency [1].