As of September 7, Linda Jackson for ‘ourtopnews’ reported that TSMC has instituted huge hikes on processor prices which vary from 3% (Apple) to 20% in some cases.
Companies like MediaTek will be particularly hit hard. A Taiwanese peer headquartered in Hsinchu, MediaTek became the biggest smartphone chipset vendor with 31% market share in Q3 2020. It’s chips are strong performers in regions like China and India and many entry level and mid-priced smartphones carry their chips in the African markets.
Last week the ‘Gadgetstripe’ website announced TECNO will feature MediaTek’s Helio G96 chipset in its CAMON 18 series to launch in Nigeria next month.
For Bloomberg in March of this year, Debby Wu, Ian King and Alan Crawford reported that manufacturers with products ranging from automotive to games consoles have had to cut back on production due to semiconductor scarcity.
It is hard for customers like MediaTek to do anything except swallow this hike.
This raises the question could this be the right time for a Nigeria based manufacturer to enter the frey?
The price of semi or technically skilled labour in Taiwan has increased tenfold since 1979. Most of East Coast Asia and Asia Pacific countries (including China) have seen dramatic rises in labour costs and Taiwan’s labour costs have shown the most dramatic increases of the region.
TSMC is the undisputed king of making the lowest manufacturing die sizes at any point in time, and therefore the fastest performing chips.
The smaller the die size, the tighter the tolerance levels on ‘nano-measurements’ and therefore the higher level of precision required to avoid the incidence of faulty chips.
TSMC’s current 5nm is in its second year in the marketplace. It features a transistor density of around 170 million transistors per square millimeter (MTr/mm2), making it the densest technology available today. By contrast, Samsung’s Foundry’s 5LPE can boast with about 125 MTr/mm2 ~130 MTr/mm2, whereas Intel’s 10 nm features an approximately 100 MTr/mm2 density – (Technosports.in)
They are on track to achieve 4nm and then 3nm technology at milestones next year, and 2nm by 2023.
In an attempt to reduce dependency on it’s administratively independent ‘protectorate’ Taiwan, China had been working on the Wuhan Hongxin Semiconductor Project, which was planned to house it’s first 7nm chip fabrication plant. After a catalogue of failures and unexpected outcomes and at a loss of RMB 128 billion (around $18.7 billion) in investment it was halted last year, with outstanding debts and unpaid wages.
Total salaries budget for similar operations to TSMC in Nigeria may indeed be cheaper. The two problematic cost areas facing a plant in Nigeria will be maintaining uninterrupted power to the right specification, and bearing the engagement costs of civil and statutory processes and activities.
One big question is could the 20% hike by TMSC offset that? Even if it could, the supply pressure in the marketplace may only be a temporary one. It was fuelled by two phenomenon that reached crisis point in 2020 – Trade stand offs between US and China, and of course, the pandemic. There is no guarantee these pressures will be sustained and TMSC may relax their terms later.
A second issue is which dynamic is native to Nigeria which could bring a PPP project like this to succeed where the Chinese ‘Wuhan Hongxin Semiconductor Project’ failed?
A final concern would be the ever sliding Naira – since even after the Capital Project is completed and the foundry is outfitted, ready to hit the ‘on’ switch; exotic materials will continue to need to be sourced from overseas for a very long time to come.
The biggest nation in Africa by GDP, with the biggest population is entitled to have the biggest dreams. The question is which actors are capable of converting these dreams to reality.
References and Acknowledgements (not in the main text body) :