Mark Liu, the Chairman of Taiwan Semiconductor Manufacturing Company (TSMC), has warned in could be another seven to eight months before the global semiconductor shortage is remedied.
In a rare interview with 60 Minutes on CBS, Liu explained that the shortage would be extended, particularly in chips used by automakers because of supply chain complexities.
“We heard about this shortage in December timeframe. And in January, we tried to squeeze as more chip as possible to the car companies. Today, we think we are two months ahead, that we can catch up the minimum requirement of our customers. Before the end of June,” said Liu.
“(But) there’s a time lag. In car chips particularly, the supply chain is long and complex. The supply takes about seven to eight months.
The semiconductor shortage impacting vehicle manufacturing emerged early in 2021. It was partly the result of the unexpected surge in new vehicle demand which followed global automakers cancelling semiconductor orders in the face of the COVID-19 pandemic in 2020.
The manufacturing of electronics, including mobile phones and gaming consoles, has also been impacted by the chip shortage as demand for electronics significantly increased during COVID-19 lockdowns.
Mark Liu on China, Taiwan and the semiconductor arms race
During the 60 Minutes interview, Mark Liu was asked about his views on concerns in the U.S. that 75% of semiconductor manufacturing current occurs in Asia.
“I understand their concern, first of all. But this is not about Asia or not Asia I mean, the shortage will happen no matter where the production is located because it’s due to the COVID,” he said.
Liu encouraged the U.S. Government to invest in the development of skills.
“I think U.S. ought to pursue to run faster, to invest in R&D, to produce more Ph.D., master, bachelor students to get into this manufacturing field instead of trying to move the supply chain, which is very costly and really non productive. That will slow down the innovation because– people trying to hold on their technology to their own and forsake the global collaboration.”
He was also asked about conflict between China and Taiwan. TSMC is widely viewed as a major deterrent to conflict between the nations – dubbed the “silicon shield”.
“China is one of our largest markets today. You know, over 25% of our revenue is to Chinese customers. We expect that this will remain an area of tension, and one that needs to be navigated carefully. Because if there’s any points that people can’t keep running their countries or running their businesses because of supply of one critical component like semiconductors, boy, that leads them to take very extreme postures on things because they have to.
“The world all needs Taiwan’s high-tech industry support. So they will not let the war happen in this region because it goes against interest of every country in the world.”
TSMC’s share price surge
Over the past 12 months the TSMC stock price (TPE: 2330) is up around 100%.
“After reporting record revenue in 2020 based on demand for 5G smartphones, notebooks for teleworking and high-performance computers, TSMC reached a commanding 54% market share with the next competitor, Samsung Electronics at a distant 18%,” says Kwan-Chen Ma, Director of the Argo Investments Institute.
“It is expected that TSMC’s market share dominance may continue as Apple remains TSMC’s major customer and will give the Taiwanese firm more business for chips made with its most advanced technology.”
TSMC and Samsung, are further discussed in this recent Asia Markets article.
Read the full Mark Liu interview transcript
Lesley Stahl: How and why did Intel fall behind?
Mark Liu: It is surprising for us too.
Mark Liu: We heard about this shortage in December timeframe. And in January, we tried to squeeze as more chip as possible to the car company. Today, we think we are two months ahead, that we can catch up the minimum requirement of our customers. Before the end of June.
Lesley Stahl: Are you saying that the shortage in chips for cars will end in two months?
Mark Liu: No. There’s a time lag. In car chips particularly, the supply chain is long and complex. The supply takes about seven to eight months.
Lesley Stahl: Should Americans be concerned that most chips are being manufactured in Asia today?
Mark Liu: I understand their concern, first of all. But this is not about Asia or not Asia I mean, the shortage will happen no matter where the production is located because it’s due to the COVID.
Lesley Stahl: But Pat Gelsinger at Intel talks about a need to rebalance the supply chain issue because so much, so many of the chips in the world now are made in Asia.
Mark Liu: I think U.S. ought to pursue to run faster, to invest in R&D, to produce more Ph.D., master, bachelor students to get into this manufacturing field instead of trying to move the supply chain, which is very costly and really non productive. That will slow down the innovation because– people trying to hold on their technology to their own and forsake the global collaboration.
Within the world of global collaboration there’s intense competition. Days after Intel announced spending $20 billion on two new fabs, TSMC announced it would spend $100 billion over three years on R&D, upgrades, and a new fab in Phoenix, Arizona, Intel’s backyard, where the Taiwanese company will produce the chips Apple needs but the Americans can’t make.
Mark Liu: That was a big investment.
But there’s a looming shadow over TSMC, which supplies chips for our cars, iPhones, and the supercomputer managing our nuclear stockpile: China’s President Xi Jinping, who has intensified his long-time threat to seize Taiwan.
China’s attempts to develop its own advanced chip industry have failed and so it’s been forced to import chips. But last year, Washington imposed restrictions on chipmakers from exporting certain semiconductors to china. Both Liu and Gelsinger fear the escalating trade war with China may backfire, and in Intel’s case: could hurt business.
Lesley Stahl: Are they your biggest customer?
Pat Gelsinger: China is one of our largest markets today. You know, over 25% of our revenue is to Chinese customers. We expect that this will remain an area of tension, and one that needs to be navigated carefully. Because if there’s any points that people can’t keep running their countries or running their businesses because of supply of one critical component like semiconductors, boy, that leads them to take very extreme postures on things because they have to.
The most extreme would be China invading Taiwan and in the process gaining control of TSMC. That could force the U.S. to defend Taiwan as we did Kuwait from the Iraqis 30 years ago. Then it was oil. Now it’s chips.
Lesley Stahl: The chip industry in Taiwan has been called the Silicon Shield.
Mark Liu: Yes.
Lesley Stahl: What does that mean?
Mark Liu: That means the world all needs Taiwan’s high-tech industry support. So they will not let the war happen in this region because it goes against interest of every country in the world.
Lesley Stahl: Do you think that in any way your industry is keeping Taiwan safe?
Mark Liu: I cannot comment on the safety. I mean, this is a changing world. Nobody want these things to happen. And I hope– I hope not too– either.