Taiwan Electronics Update

Article By : Keesjan Engelen

Taiwan really contributes more value to the iPad Pro than accounted for.

Taiwan’s share of total component cost on the latest iPad Pro surged from 1.7% to 18.5%, thanks to Ennostar’s development in mini-LED display technology.

Note this breakdown does not include the M1 chip, which is categorized as an American component, even though it is made by Taiwan Semiconductor Manufacturing Co. Ltd (TSMC).

This means Taiwan really contributes more value to the iPad Pro than accounted for.

Early in June, TSMC broke ground on the $12 billion Arizona plant. Apparently, Intel Corp. and TSMC are not as concerned about intensive water-usage as they are about electricity. We already saw the latest generation of EUV’s from ASML requiring 20x more energy usage. Relatively, water use is likely to go down due to improvements in water efficiency, restoration, and recycling.

Intel uses 12.6bn gallons of water a year and currently recycles more than 80% of it. They announced water conservation goals to be net-positive water use by 2030. TSMC is on the right track as well, achieving 87% water recycling.

IC packaging will be the next battleground as we near the end of Moore’s Law. This involves wire bonding the silicon to the metal leads that will connect it to the PCB, again using very costly equipment.

The leader in this category is Taiwan’s ASE Packaging Corp., this year already generating over $7 billion in chip packaging revenue compared to TSMC’s $3.6 billion (+20% YoY on both counts).

Both companies are approving major investments into advanced packaging technology this year, with ASE spending $2 billion on a new factory and TSMC spending $2.8 billion.

The global chip shortage could see delays until second quarter of 2022, according to Gartner. Taiwan’s spike in domestic Covid-19 cases, which began a month ago in Mid-may doesn’t help.

The world’s leading chip testing service, KYEC, has sent 2,100 foreign employees home after a serious cluster infection. The incident will slow its production in June by 30 to 35%. Other Taiwanese tech companies have also begun to report their own clusters.

SEMICON Taiwan 2021, originally scheduled for September, will be postponed as well. Pending how well domestic Covid-19 cases are contained, the convention may be rescheduled for December or early next year.

Good news is domestic cases have not yet affected export numbers. May’s export numbers are up 34.5% from last year with $13.27 billion worth of electronic components.

Taiwan was ranked as the world’s #8 most competitive economy by Swiss MBA school IMD.

About the Author

Keesjan Engelen is the CEO of Titoma, a mid-sized ODM firm for embedded electronics headquartered in Taiwan. Keesjan has been working in electronics in Taiwan and China for 25 years, and frequently writes about design for manufacturing in Asia. He emphasizes incorporating China components very early on in the design process, without getting yourself locked in.

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