Four of the five largest foreign direct investment (FDI) projects recorded in 2022 were in the semiconductor subsector. The global chip shortage has been a key topic for almost two years, and Covid-19-related supply chain issues, which impacted several industries, were significantly felt in the development of chips.
Several large pushes have been made to ease these supply chain issues, while also developing national and regional propositions for a key target sector for future growth and security. The US CHIPS and Science Act and European Chips Act are two prime examples.
In turn, foreign investment in semiconductors is on the rise. Provisional data from our FDI Projects Database shows an 18% increase in project numbers in 2022.https://datawrapper.dwcdn.net/EWCr0/2/
The importance of semiconductors cannot be understated. The industry is expected to grow annually by 12.2%, reaching $1.38trn by 2029, according to Fortune Business Insights. Chips are used across a plethora of industries and are particularly important in tech and automotive sectors.
Below are the five largest FDI projects announced in 2022 (where project value information was available):
1. TSMC increasing US investment to $40bn
TSMC, the world’s largest semiconductor company, announced plans to build a second semiconductor facility at its US site in Phoenix, Arizona, in December 2022. Previously, the company had invested $12bn (T$361.7bn) to build a new semiconductor plant on the site. Its latest plans up its total investment in the US to $40bn.
The second plant should open in 2026. It will produce tiny three-nanometre chips (the most advanced semiconductors). The company’s existing facility will start reducing the size of its current five-nanometre chips to four nanometres.
The investment amounts to one of the largest FDI projects in US history. It is also a firm nod to the US CHIPS and Science Act – a large-scale investment drive by the US to encourage research and development in the semiconductors industry. President Joe Biden has commented on the significance of this investment.
The TSMC project will put the US at the forefront of global semiconductor manufacturing. It also provides assurances to several large US companies that are continuing to feel the impact of the recent chip shortages.
2. Vedanta and Foxconn investing $18bn in India
Vedanta, an India-based oil, gas and metal company, signed two memoranda of understanding to establish a semiconductor fab unit, a display fab unit and a semiconductor assembling and testing unit in Gujarat, India. It will partner with Taiwan-based Foxconn in a 60:40 joint venture. The company estimates the project will cost around $18bn and create 100,000 jobs.
The proposed semiconductor manufacturing fab unit will operate on the 28-nanometre technology nodes and the display manufacturing unit will produce Generation 8 displays catering to small, medium and large applications.