[Car Semiconductor Supply Shortage] US, Japan, and Germany Governments Request Taiwan to Increase Semiconductor Production... "Unprecedented"

"Supply Shortage Since Second Half of Last Year Due to COVID-19 Impact"
Early Increase in Production Difficult Despite Requests

Taiwan TSMC logo
Photo by Reuters Yonhap News

[Asia Economy Reporter Jeong Hyunjin] Amid the global expansion of supply and demand issues for automotive semiconductors, some countries including the United States, Japan, and Germany have reportedly requested Taiwan to increase semiconductor production, according to a report by Nihon Keizai Shimbun on the 25th. They have asked Taiwan's TSMC, which holds the largest market share in the global semiconductor foundry (contract manufacturing) sector, and UMC, ranked fourth in the industry, to expand production.

According to the report, a Taiwanese government official stated, "Due to the global shortage of automotive semiconductors, since the end of last year, requests have been made through diplomatic channels from various countries to increase semiconductor supply from Taiwan." In fact, on the 24th (local time), Bloomberg News and others reported that Peter Altmaier, Germany's Minister of Economic Affairs, sent a letter to the Taiwanese government emphasizing the importance of semiconductors to the German automotive industry and requested cooperation to resolve the supply issues.

Nihon Keizai explained, "It is unusual for countries to demand increased production from a specific country over shortages of manufacturing materials."

The Ministry of Economic Affairs, the administrative agency responsible for Taiwan's semiconductor industry, has already requested major semiconductor companies to increase production, and Nihon Keizai reported that it urged TSMC and UMC to expedite the expansion of automotive semiconductor production. A TSMC spokesperson said, "Responding to the demand for automotive semiconductors, which is currently the most scarce globally, is our top priority," adding, "We will continue to work closely with automotive-related companies to meet the demand."

The shortage of automotive semiconductors, which began in the second half of last year, has spread as semiconductor demand surged rapidly following the COVID-19 pandemic. With the increase in remote work, the supply of power management semiconductors used in PCs has become insufficient, and the recovery of the Chinese automotive market has led to an extreme shortage of automotive semiconductors.

Furthermore, the shortage has worsened as the United States imposed sanctions on SMIC, China's largest semiconductor foundry company. Although the Biden administration has taken office, the US-China conflict over advanced technologies including semiconductors is expected to continue, making it unlikely that sanctions will be easily lifted.

Despite requests from various countries, it is difficult to immediately increase semiconductor production. Automotive semiconductors have low profit margins, and if demand decreases, prices can quickly fall, so increasing investment for production expansion could lead to losses. Nihon Keizai predicted that although major semiconductor companies recently proposed a 10-20% price increase to the automotive industry, the supply shortage is unlikely to be resolved soon.

This content was produced with the assistance of AI translation services.