TSMC: You Know What Would Be Fab? Some Local Neon Supplies

Taiwanese chipmaker TSMC is reported to be seeking local sources of neon gas for use in its fabs, following disruptions to global supply chains caused by the Russian war in Ukraine.

The semiconductor manufacturing giant is taking steps to shore up its supply chain following recent events, according to Nikkei Asia, citing TSMC's senior veep for Information Technology and Materials Management & Risk Management, JK Lin.

Lin said TSMC was working with several suppliers to explore the possibility of local production of neon gas in Taiwan within three to five years. However, he qualified this by adding that the company was not planning to source its entire supply locally.

Neon is a key consumable used in some semiconductor manufacturing processes, used in the argon-fluoride-neon mix used in excimer laser photolithography by some of the most advanced chip production processes. Two Ukrainian companies were responsible for producing around half of the global supply of semiconductor-grade neon.

As we reported earlier this year, these were forced to shut down operations during the first few weeks of the illegal war, leading to concerns that it could have had a knock-on effect on semiconductor shortages further down the line. About 70 percent of the neon produced in the world is said to be used for chip manufacturing.

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According to Nikkei, TSMC has continuity plans out to about five years ahead to make sure it has sources for the myriad of raw materials and chemicals it requires for semiconductor manufacturing, and also to ensure it has enough to meet the company's expansion plans.

Lin said that TSMC has become much more focused on risk management and supply chain resilience over the past few years, but emphasized that there are limits to local sourcing strategies, because the semiconductor industry is such a massive, globalized concern.

However, despite all the challenges, the chip giant posted an increase in revenue for its monthly report covering October. Revenue for the period was approximately NT$210.27 billion ($6.64 billion), an increase of just 1 percent over the previous month, but up by 56.3 percent when compared with October 2021.

Revenue for the months covering January to October this year totaled NT$1,848.63 billion ($58.63 billion), an increase of 44 percent compared to the same period last year. ®