Global Water Intelligence
The microelectronics industry is known for being regionally concentrated. What is different about fab investment announcements in 2022? Though the traditional regional strongholds of manufacturing continue to thrive, some new geographies have been put on the map.
USA attracts semiconductor heavyweights in some atypical locations.
In 2022, chip manufacturers have declared several sizeable US investments, which were driven partly by the promise of governmental subsidies (confirmed by the funding of $52 billion in the CHIPS Act late last year).
Some end-user investment lies in traditional regional manufacturing strongholds, such as TSMC’s 2022 announcement to spend up to $40 billion on expanding its Arizona complex, instead of its initial investment of $12 billion. Another Taiwanese company, GlobalWafers, indicated it will utilize existing US semiconductor strongholds, and announced plans in 2022 to build a silicon carbide factory in Texas to produce wafers by 2025.
However, in 2022, some manufacturers announced intentions to construct outside their usual regional cores. Intel announced in 2022 that it will spend $20 billion to build two fabs in Ohio from 2022, with production starting in 2025. Furthermore, in addition to announcing a $15 billion investment in its core stronghold in Idaho, Micron publicized in 2022 that it will join the growing semiconductor ecosystem in upstate New York, spending $20 billion in its first phase of fab construction, with site preparation beginning in 2023. Mehrotra, CEO of Micron, indicated that the available talent pool in this region is a key reason for the site selection.
European investment surges from its low base but hinges on financial incentives
Germany has been the long-term heart of the European semiconductor manufacturing – but the country is set to see an upsurge in advanced manufacturing. Intel announced in 2022 that it will build a $18 billion mega-fab in Magdeburg, Germany, with construction beginning in 2023, and production planned for 2027. However, Intel announced early in 2023 that the project will be delayed due to increased estimated costs - with the intention of compelling the German government to increase its subsidies, which already were marked at $7.2 billion). Europe is potentially a prime spot for Intel, as the company announced in 2022 that it will spend an additional $12 billion in expanding its site in Leixlip, Ireland, and may spend as much as $89 billion in Europe over the next decade.
Other fab projects in Europe show similar intentions. Infineon Technologies announced plans in 2022 to build a $5 billion semiconductor fab in Dresden but indicated that the finalized plan will depending on funding through the European Chips Act. In 2022 source revealed that TSMC had reportedly been in talks with the European Commission about financial incentives to build its first European fab, with Dresden being the target location.
Some outliers from regional strongholds in Asia.
Fab announcements in China have swindled in 2022. Lots of construction is underway in China due to huge swathes of fab announcements in 2021, but new investment intentions are held back by declining domestic demand for electronic products, as well as pressure from import restrictions. This is reflected in TSMC’s 2022 decision to delay the construction of its higher-end 7nm-capable fab in Kaohsiung (but will continue to build its 28nm-capable fab in the same location).
Throughout most of Asia, new fab announcements stick mostly to traditional geographies. 2022 reports of newly planned fabs include SK Hynix’s announcement to build a $11 billion fab complex in Cheongju, South Korea, with production expected by 2025, as part of SK Hynix’s 2021 plan to build a $106 billion cluster of fabs. Other announcements include SK Hynix’s decisions to build a new fab in Dalian, China, to produce 3D NAND products after acquiring Intel’s regional assets. SMIC’s declared it will build a $7.5 billion factory in Tianjin, China – a location with a relatively small existing semiconductor ecosystem. Last year UMC approved $1.05 billion to expand in Tainan, Taiwan and construct a new plant in Singapore (production will start in the former by 2023 and in the latter by 2024).
The most remarkable shift in geographies in 2022 is the Indian government’s proposal of a $10 billion incentive program “for the Development of Semiconductors and Display Manufacturing Ecosystem” Memorandums of understanding to construct are already underway.For example, VedantaandFoxconnformed a JV to manufacture semiconductors in India at at 28nm technology nodes. Vedanta has earmarked a $15 billion manufacturing investment, with potential to scale up investment to as much as $20 billion.