PSMC and SBI Partnership Update: A Shift in Semiconductor Manufacturing Plans
In August 2023, Powchip Semiconductor Manufacturing Corp (PSMC) unveiled a promising partnership with Japan’s SBI to establish a semiconductor manufacturing facility in Japan. However, recent developments have disrupted this plan. Reports from last Friday suggest that concerns regarding PSMC’s declining financial performance may have prompted the decision to halt the project. In contrast, PSMC has denied that financial issues influenced their choice, as stated in an article by CNA.
Understanding the PSMC-SBI Collaboration
PSMC articulated that their collaboration with SBI was structured under the Fab IP model. In this arrangement, PSMC would provide expertise in factory setup, staff training, and technology transfer, while SBI would be the beneficiary of service fees and royalty payments. The Taiwanese semiconductor manufacturer clarified that it would not be making significant investments or directly managing operations at the plant.
Announcement and Reactions
Following the dissolution of the partnership, PSMC’s board informed the Ministry of Economy, Trade and Industry (METI) in Japan about the decision. PSMC has expressed transparency in the matter, keeping SBI Holdings informed about their position. As highlighted in a report by Nikkei, PSMC conveyed its reluctance to take on the risks associated with the project, which was intended to be situated in Miyagi Prefecture.
Future of Semiconductor Manufacturing in Japan
The intended facility was projected to commence mass production by 2027, focusing on automotive semiconductors, with an ambitious investment plan totaling 800 billion yen. However, SBI announced intentions to pursue the project independently, seeking out new partnerships.
Challenges Faced by PSMC
In addition to this setback, PSMC has been grappling with challenges related to mature nodes, particularly due to oversupply from Chinese competitors. This scenario has led the company to experience operational losses for five consecutive quarters, spanning from April to June 2024.
Focus Shifts to Indian Semiconductor Initiative
Interestingly, this decision arrives shortly after PSMC’s recent announcement about collaborating with Tata Group in India. On September 26, PSMC finalized an agreement to aid in constructing the first 12-inch semiconductor fabrication facility in Dholera, Gujarat. As part of this partnership, PSMC will transfer mature process technologies and train local staff.
Economic Impact and Job Creation in India
This ambitious Indian venture involves an estimated investment of USD 11 billion, with a monthly capacity of 50,000 wafers. PSMC anticipates that this facility will create over 20,000 high-tech jobs in the region, substantially contributing to local economic growth.
Conclusion
The unfolding situation regarding PSMC’s partnership with SBI highlights the volatility and competitive nature of the global semiconductor industry. As PSMC navigates operational challenges and shifts its focus toward the Indian market, industry stakeholders will be keenly observing how these developments will shape the future of semiconductor manufacturing in Asia.
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(Photo credit: PSMC)