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Taiwanese Semiconductor Giants Navigate Costly Global Expansion

PSMC and TSMC Face Higher Overseas Costs Amid Global Semiconductor Industry Shift
t 2330.TW p 6770.TW u 2303.TW Blue Chip 150 Mid and Small Cap 2000 Tech 350 Semicon 75
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Taiwan’s semiconductor industry, led by giants like TSMC, UMC, and PSMC, is facing the complexities of global expansion, with economic and geopolitical factors at play. While these companies are establishing facilities worldwide, the cost implications are significant.

According to Taiwan’s Economic Daily News, PSMC Chairman Frank Huang highlighted the financial challenges of overseas expansion. Building a fab in Japan, for example, is estimated to be 1.5 times more costly than in Taiwan, with construction expenses 2.5 times higher and operational costs 50% greater. PSMC’s new plant in Japan is projected to reach profitability only three years post-establishment, a stark contrast to their Fab P5 in Taiwan, expected to break even this year.

PSMC’s move to assist India in establishing a fab facility reflects a broader trend of technology transfer in semiconductor manufacturing, a domain where South Korea and the United States have been more guarded. This initiative places PSMC in a unique position as a key player in global semiconductor expansion.

Similarly, TSMC, the industry leader, confronts the high costs of setting up plants abroad. The company reported that establishing a facility in the United States could be up to four times more expensive than in Taiwan, considering labor, regulatory, and living costs.

These economic challenges are underscored by the shifting geopolitical landscape, influencing the regional distribution of the semiconductor supply chain. While expansion is strategically necessary, it comes with a substantial financial burden, reflecting the delicate balance between global market reach and cost-efficiency in the semiconductor industry.

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