South Korea and Taiwan will nonetheless be key semiconductor hubs in years to come back, at the same time as strain to diversify provide chains results in new competitors from locations such because the US and Germany, in accordance with the chief govt of US chipmaking tools provider MKS Devices.

John TC Lee, president and chief govt of MKS, added that the present stoop within the chip market was only a cyclical downturn, and that the trade was nonetheless on monitor to develop at a “wholesome charge” within the medium to long run.

“We’ve been by way of [this] many instances,” mentioned Lee in an interview with Nikkei Asia. “Possibly the chip trade capital spending would go all the way down to $70bn in [2023] from 2022. However , I’ve been on this trade a very long time. Ten years in the past that quantity was $35bn, and that was a very good yr. Now we are saying $70bn is a foul yr.”

MKS is a supplier of electronics subsystems, together with radio frequency (RF) energy sources and lasers utilized in chipmaking and different fields, and has prime international semiconductor tools makers as clients, together with Utilized Supplies and Lam Analysis.

Chipmakers depend on MKS’s RF energy sources to etch extraordinarily superb transistors, particularly for cutting-edge processors and 3D NAND flash reminiscence chips. In line with the corporate’s estimate, 85 per cent of the world’s chipmaking tools makes use of its applied sciences.

On the query of provide chain shifts, Lee expects South Korea and Taiwan will nonetheless be essential centres of chipmaking sooner or later regardless of main economies pushing to onshore important areas of manufacturing.

“So long as Samsung, SK Hynix and TSMC stay chip leaders, I believe Korea and Taiwan will proceed to be essential nations for semiconductor manufacturing,” Lee advised Nikkei Asia. He mentioned for many superior chip crops, the core applied sciences would in all probability develop near the main gamers’ headquarters and later be deployed to different locations if wanted.

This text is from Nikkei Asia, a worldwide publication with a uniquely Asian perspective on politics, the financial system, enterprise and worldwide affairs. Our personal correspondents and out of doors commentators from world wide share their views on Asia, whereas our Asia300 part supplies in-depth protection of 300 of the largest and fastest-growing listed firms from 11 economies exterior Japan.

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However the chief govt mentioned extra such chip “hubs” would in all probability emerge, particularly within the US and European nations resembling Germany. “It’s perhaps not as environment friendly at first however I believe as soon as a hub is established, it will get fairly environment friendly. And after getting a number of fabs [fabrication facilities] in a single space, the infrastructure is now supporting a number of fabs, not only one.”

The overarching pattern of units needing ever extra chips would additionally assist extra hubs to flourish, he mentioned. “The variety of chips will certainly proceed to develop in years to come back,” the CEO added.

However the semiconductor trade is not a spot for small firms, he cautioned, as the larger gamers will solely get greater. “Within the Nineteen Nineties, firms that had $20mn or $30mn in income have been superb,” he mentioned. “Now you possibly can’t try this as a result of the issues that we’ve got to resolve now are so troublesome. That requires loads of engineering, and loads of sustained engineering over a number of years.”

MKS has made a number of acquisitions over the previous few years to broaden its product portfolio and scale. In 2021 it acquired Photon Management, a provider of optical sensors for temperature management utilized in chipmaking. The next yr it purchased the speciality chemical compounds firm Atotech.

The acquisitions not solely assist MKS broaden the scope of its enterprise but in addition its manufacturing footprint, Lee mentioned. The corporate has manufacturing websites within the US, China, Mexico, Singapore, Malaysia, Thailand and different nations world wide.

Lee added that the unprecedented provide chain constraints of the previous two years made individuals realise how essential chips and their ecosystems have been.

“The availability chain constraints wakened all people. There’s loads of ecosystems and help that go all the best way again to your mining of minerals . . . Once you begin investigating the place’s the constraint, you retain happening and down [the supply chain] and also you realise, ‘Wow, the whole world financial system has one thing to do with making a chip’,” Lee mentioned.

A version of this article was first printed by Nikkei Asia on January 30 2023. ©2023 Nikkei Inc. All rights reserved.

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