Mark Maurer of The Wall Street Journal reports that the manufacturer of power chips and sensors used in electric vehicles recently unveiled plans for a new $2 billion plant in the Czech Republic. Maurer writes:
ON Semiconductor, the Phoenix-based maker of semiconductor components, is diversifying its supply chain in response to customers’ concerns that China would promote use of its local chip suppliers.
The maker of power chips and sensors used in electric vehicles recently shared plans for a new $2 billion plant in the Czech Republic and is boosting its manufacturing capacity in South Korea, in part to improve the resilience of its supply chain.
The company’s maneuver reflects the challenge to offset the potential risk of losing ground in a dependable Chinese market. […]
Chinese suppliers are more likely to catch up to Onsemi and European chip makers STMicroelectronics and Infineon Technologies in three to five years on silicon-carbide substrate, which is used to make a power converter in electric vehicles, than on making the so-called traction inverter itself, said John Vinh, senior research analyst at KeyBanc Capital Markets.
“It’s just a matter of time before the Chinese figure it out,” Vinh said, referring to competing on performance and price. “They can manufacture a high-quality silicon-carbide substrate today, but they can’t do it at high yields.” […]
The company said it has received no funds from the Biden administration’s Chips Act, which provides for $39 billion of direct grants to back expansion of a U.S. semiconductor supply chain, but is using the 2022 legislation’s 25% tax credit for purchases of chip manufacturing equipment.
“I think the U.S. has got to continue to invest in U.S. chip manufacturing, but that doesn’t happen overnight,” Trent said.
Read more here.
$11 Billion German State Aid Approved for New Chip Plant
Hakan Ersen and Toby Sterling of Reuters report that TSMC’s project is the biggest approved so far under the EU Chips Act and the first in Germany. They write:
Taiwan’s TSMC (2330.TW), on Tuesday launched a major new computer chip plant in Dresden, Germany, expected to be a key supplier to European industry and carmakers after the EU Commission approved 5 billion euros ($5.5 billion) worth of state aid.
The large aid award for the project, which will cost 10 billion in all, is the biggest approved so far under the EU Chips Act, and the first in Germany.
It is also the first project in Europe under TSMC, the world’s largest contract chipmaker, and is expected to improve Europe’s resiliency if a chip shortage of the type experienced during the COVID pandemic happens again. […]
Following the pandemic shortages, TSMC is also building subsidized projects in the United States and Japan to ensure regional supplies.
Approval for state aid under Europe’s 43 billion euro Chips Act has been slow in coming, with only STMicroelectronics (STMPA.PA), projects in France and Italy previously winning grants.
The largest European chips project still seeking approval is a 30 billion euro plant planned by Intel (INTC.O), in Magdeburg, Germany that won’t break ground this year as initially planned.
Completion of the Intel plant, which would be Europe’s only plant making the most advanced computer chips, is expected 4-5 years after EU approval.
An Intel spokesperson said the company is “working closely with our EU government partners … (to) execute on our plans.”
Read more here.
