A close-up of the CPU and motherboard socket laying on the table.
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Taiwan’s Economy Ministry said on Monday, after Minister Wang Mi-hwa spoke to the company’s top executives, that a Taiwanese semiconductor manufacturing company (TSMC) will prioritize production of car chips if it is able to increase capacity.
A ministry official said Minister Wang Mi-hwa spoke to senior executives of the company on Sunday about the matter.
The ministry said TSMC had informed the ministry that it would “improve” the chip production process to make it more efficient and prioritize the production of car chips if it was able to increase capacity.
TSMC, the world’s largest chip maker, said the current production capacity is full, but assured the ministry that “if production can be increased by improving production capacity, it will work with the government to consider auto chips a primary application.”
TSMC, in a statement to Reuters, referred to comments from CEO CC Wei on this month’s earnings call.
“Other than continuously maximizing our current capacity, Dr. Wei also emphasized at our investor conference that we work closely with clients and are moving some of their mature nodes into more advanced nodes, where we have a better ability to support them,” the company said.
Germany has asked Taiwan to persuade Taiwan manufacturers to help alleviate the shortage of semiconductor chips in the automotive sector, which is holding back its emerging economic recovery from the Covid-19 pandemic.
The request came in a letter sent by German Economy Minister Peter Altmaier to Wang.
The ministry said it will wait until the letter is received before deciding whether to contact TSMC again.
Automakers around the world have shut down assembly lines due to semiconductor delivery problems, which have been exacerbated in some cases by the Trump administration’s previous actions against major Chinese chip plants.
Several automakers were affected
The ministry told Reuters that it had received requests from both the United States and the European Union through “diplomatic channels” late last year, as well as from Germany and Japan this year.
It said that in the second quarter of last year, the auto companies reduced orders to TSMC, which in turn transferred its capacity to other customers, but in the second half of the year, the demand for car chips has returned.
“The Americans expressed their expectations late last year,” the ministry said.
“At the moment, everyone is talking to each other through diplomatic channels, including TSMC. Everyone’s hands are bound by orders, but from the government’s point of view, we will try as much as possible to help our important allies.”
A senior official in the Japanese Ministry of Economy, Trade and Industry told Reuters that the Japan Automobile Manufacturers Association and TSMC are already in contact, and the ministry has also approached the actual Japanese embassy in Taipei to request their support in those talks.
The official added that it is mainly a private sector exchange so the government is limited in what it can do.
In 2020, automotive chips accounted for only 3% of TSMC’s sales, lagging 48% for smartphones and 33% for high-performance chips.
In the fourth quarter, sales of TSMC auto chips jumped 27% from the previous quarter, but still accounted for only 3% of total sales in the quarter.
A senior Taiwan government official familiar with the case told Reuters that there was not much they could do.
“They dropped their orders for various reasons when the demand was low amid the epidemic. But now they want to increase their production.”
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