© Reuters. Emblem of Taiwan Semiconductor Manufacturing Co (TSMC), in Hsinchu

By Jeanny Kao and Yimou Lee

TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co Ltd (TSMC) will prioritise manufacturing of auto chips if it is ready to additional improve capability, Taiwan’s Economics Ministry advised Reuters, amid a worldwide scarcity that has hampered automotive manufacturing.

A ministry official mentioned Minister Wang Mei-hua spoke to senior firm executives on Sunday concerning the problem.

TSMC had advised the ministry it’ll “optimise” the manufacturing strategy of chips to make it extra environment friendly and prioritise auto chip manufacturing if it is ready to additional improve capability, the ministry mentioned.

TSMC, the world’s largest contract chipmaker, said that present manufacturing capability is full, however had assured the ministry that “if manufacturing might be elevated by optimising manufacturing capability, it’ll cooperate with the federal government to treat automotive chips as a major software”.

TSMC, in a press release to Reuters, referred to feedback from its Chief Govt Officer C.C. Wei on an earnings name this month.

“Aside from constantly maximising utilisation of our current capability, Dr. Wei additionally confirmed in our traders’ convention that we’re working with clients carefully and shifting a few of their mature nodes to extra superior nodes, the place now we have higher capability to assist them,” the corporate mentioned.

Germany has requested Taiwan to steer Taiwanese producers to assist ease a scarcity of semiconductor chips within the auto sector which is hampering its fledgling financial restoration from the COVID-19 pandemic.

The request was made in a letter from German Financial system Minister Peter Altmaier to Wang.

The ministry mentioned it might wait till it had acquired the letter earlier than deciding on whether or not to contact TSMC once more. Automakers all over the world are shutting meeting strains resulting from issues within the supply of semiconductors, which in some circumstances have been exacerbated by the previous Trump administration’s actions in opposition to key Chinese language chip factories.


The scarcity has affected Volkswagen (DE:), Ford Motor (NYSE:) Co, Subaru (OTC:) Corp, Toyota Motor (NYSE:) Corp, Nissan (OTC:) Motor Co Ltd, Fiat Chrysler Vehicles and different automotive makers.

The ministry advised Reuters that it had acquired requests from each america and the European Union via “diplomatic channels” late final yr, in addition to from Germany and Japan this yr.

It mentioned that within the second quarter of final yr auto firms reduce orders to TSMC, which in flip shifted capability to different shoppers, however within the second half of the yr demand for auto chips returned.

“The People did categorical the expectation late final yr,” the ministry mentioned.

“For the time being everyone seems to be speaking to one another via diplomatic channels, together with TSMC. Everybody’s fingers are tied with orders, however from the federal government’s perspective we are going to attempt to assist as a lot as we will for our necessary allies.”

A senior official at Japan’s Ministry of Financial system, Commerce and Trade advised Reuters Japan’s auto producers’ affiliation and TSMC have been already in contact, and the ministry has additionally reached out to Japan’s de facto embassy in Taipei to ask for his or her assist in these talks.

The official added that it’s primarily a private-sector trade so the federal government is restricted in what it might probably do.

In 2020, auto chips accounted just for 3% of TSMC’s gross sales, lagging smartphones’ 48% and 33% for prime efficiency chips.

Within the fourth quarter, gross sales for TSMC’s auto chips jumped 27% from the earlier quarter, however nonetheless solely accounted for 3% of general gross sales within the quarter.

A senior Taiwan authorities official aware of the difficulty advised Reuters there’s not a lot they might do.

“They dropped their orders resulting from numerous causes when demand was low amid the pandemic. However now they need to enhance their manufacturing.”