At present, the shortage of chip production capacity is difficult to change in the short term, especially as the price of automotive chips continues to rise, the procurement cycle has become longer, and various uncertainties have increased.

According to the current ranking of major fabs, semiconductors will be in a very tight situation in the first half of 2021. As global car sales continue to rise in 2021, it is expected that the supply of automotive chips will be tight in 2021.

A few days ago, an article in Spain’s "Cinco Días" column pointed out, “At present, some manufacturers temporarily suspend production due to the shortage of automotive chips. If this effect extends to other industries, it may have a serious negative impact on the economy. The semiconductor industry originally Sustainability and cyclical characteristics. In the past, it was only a problem in the semiconductor supply chain that led to a shortage of chip supply. Now it is due to the high integration of the semiconductor market and the industry is facing a shift in high-performance chip manufacturing mode, making chip supply fall short of expectations."

In recent years, with the development of technologies such as the Internet of Things, 5G, and cloud computing, the semiconductor industry has gradually developed towards smaller size and more energy-efficient products. However, due to the decline of Moore's Law, it means that every time the chip manufacturing process progresses to a smaller size, more time must be invested, which greatly increases the investment of the foundry and requires more professional knowledge and technology. The semiconductor manufacturing process is related to the surface density of each wafer. Apple’s latest iPhone 12 is produced using 5-nanometer technology, the CPU is A14 Bionic, and the number of transistors is as high as 11.8 billion. The current most advanced process is 5 nanometers.

Cinco Días believes that TSMC and Samsung have more advantages than other manufacturers in terms of semiconductor manufacturing with advanced processes. However, the biggest problem facing the two companies is geopolitical risk. TSMC’s main factories are concentrated in Taiwan, and Taiwan is part of China; Samsung Electronics must also face risks from North Korea. In addition, both are also affected by the US-China trade friction.

From a strategic point of view, the US government is worried about domestic high-end chip manufacturing, and believes that it is a priority in US security, military and commercial strategies. It may be pressure from American customers. TSMC and Samsung Electronics are both considering diversifying their manufacturing plants. TSMC will set up a plant in Arizona, while Samsung will expand the manufacturing capacity of the Texas plant.

It is worth mentioning that due to the shortage of automotive chips, US officials from the Biden administration convened an interim meeting of officials from relevant departments and the semiconductor industry in Taiwan. The industry expects that during this period, they will put pressure on TSMC and its peers to increase the supply of important chips to US automakers.

Prior to this, the United States, Japan, and Germany sought assistance from Taiwan, China through diplomatic channels regarding the shortage of automotive chips. The Ministry of Economic Affairs of Taiwan said that after the United States and Taiwan held an economic prosperity partnership last year, the supply chain cooperation between the two parties has become increasingly stronger. Close, and continue to maintain transactional consultation channels and close communication.