According to nipponese agency Nikkei Asia, at least 5 suppliers for Taiwan Semiconductor Manufacturing Co. (TSMC) and Intel hold the construction of facilities in Arizona, which is simply a sign that rebuilding the American chip supply chain is more challenging than expected.
Manufacturers of chemicals and materials
- LCY Chemical,
- Solvay,
- Chang Chun Group,
- KPPC Advanced Chemicals (Kanto-PPC) and
- Topco Scientific
They announced investment plans and bought land for the construction of facilities in Arizona after 2 leading chip producers in the world, namely TSMC and Intel, started their own multi-billion-dollar investments in this state. These investments were the consequence of the US administration's actions to culminate in the CHIPS and discipline Act, a immense budget task aimed at revitalizing the American base of production of highly advanced semiconductor components.
However, the construction of these facilities, which are essential to build a complete chip supply chain, has been halted or importantly limited, as Nikkei Asia informed the directors of these companies.
In any cases delays are expected to be temporary, while in others projects will be subsequently reviewed, without a clear timeframe erstwhile they can be reactivated.
Most victims, and so they represent themselves in this peculiar situation chemical companies, attribute delays to expanding costs of construction materials and labor, as well as shortages of construction workers. Suppliers besides referred to slower than expected advancement in the expansion of Intel and TSMC.
The fact that many suppliers slow down their projects indicates that the problem does not concern 1 or 2 individual companies, but is more structural.
Three chip material directors told Nikkei Asia that the cost of building a mill in Arizona had increased 4 or 5 times compared to cost in Asia and is “a fewer times” higher than previously assumed.
The CEO of LCY Chemical, Vincent Liu, said that his company would adjust the pace of construction of a mill in the US in Arizona to the pace of improvement of the full chain. As a supplier to TSMC, Intel and Micron, LCY will alternatively send chemicals to the US by sea alternatively than rush to build a production facility. “In the case of chemicals, it is very crucial to have an economical scale to accomplish economical efficiency,” Liu said.
Solvay from Belgium, 1 of the world's largest suppliers of advanced purity hydrogen peroxide for chip production, delayed the construction of its Arizona plant without a time limit. Here, the origin of the investment frost was cited as cost-related concerns, as well as importantly weaker than expected by key customers, Intel and TSMC.
Chang Chun Group, another leading maker of semiconductor-grade hydrogen peroxide, importantly limited the construction of a fresh plant in Arizona. The Taiwanese chemical group began building part of the plant, but on a much smaller scale than planned. origin acquainted with the case said the cost is “a fewer times higher” than expected.
KPCT Advanced Chemicals, a joint venture company of Kanto-PPC and Chemtrade, besides suspended the construction of a advanced purity sulphuric acid mill in Arizona. Topco, a leading distributor of chemicals and materials, halted the construction of the planned logistics center in Arizona – as reported by Nikkei Asia 1 of the directors of this company.
“The key origin is that local request does not require so many local supplies yet”, said Topco manager Nikkei Asia. “Therefore we do not gotta bear the burden of these investments so quickly. It's not just the object itself. We ourselves must make additional investments to build roads and connect water and electricity around our campus."
All 5 companies developed plans and purchased land to build facilities in Casa Grande, a city located southeast of Phoenix. The location is attractive as it is located comparatively close to the 2 largest chip manufacturers in the planet – 30 minutes drive from where Intel expands its bets in Chandler and just over an hr drive from the TSMC mill in northwest Phoenix.
“Many materials companies are afraid to invest besides rapidly in fear that they will build a fresh mill before they even request it,” said Nikkei Asia Lita Shon-Roy, CEO of Techcet, investigation and consulting company for integrated circuits. “Many delays in building materials factories arise either from waiting for backing under CHIPS and discipline Act, or from waiting for stronger growth in the industry.”
Peter Hanbury, a partner in the U.S. consulting company Bain, specializing in production, said that the construction of these chemical plants is complicated due to the complex equipment required and strict requirements for semiconductor production.
“There are besides further challenges to environmental and safety government due to the nature of the chemicals. The suppliers of chemicals to chips have narrower profit margins than chip producers, and are so more delicate to cost increases," Hanbury said.
The labour marketplace crisis and material price inflation have already marked TSMC and Intel's investment and production plans. The Taiwanese chip maker reduced its production expansion plans developed in the past year and intends to introduce them only in 2025. Intel's construction in Arizona is slower than originally planned.
These and another delays in the implementation of investment intentions happen at a time erstwhile the U.S. government is preparing to finalise the grant programme under the CHIPS and discipline Act. The beneficiaries of these grants were to be leading global chip producers specified as Intel, TSMC and Samsung, who collectively declared over $100 billion of investment on American soil. As it turns out, financial support for suppliers of materials and chemicals will only be granted erstwhile the decision on subsidies for these chip producers has been taken, in accordance with the Trade Department procedure. Meanwhile, the U.S. presidential run is speeding up the best. What the current administration will decide may become obsolete in a fewer months. due to the fact that there could be a fresh ruling team. Maybe, but he doesn't have to. Chip investors most likely just want to wait. This, in turn, means further delays in the implementation of a key production facility for chips within the United States.
Source: Nikkei Asia
Editorial: Leszek B.
Email: [email protected]
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