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Tech: Why TSMC is the world's most underestimated tech giant

www.theedgemarkets.com, Feb. 17, 2021 – 

IF you order a new top-of-the-line sedan in Europe or North America these days, you might find there is a long waiting time unless it's a less popular model. The sudden car shortage has nothing to do with the spread of the South African or Brazilian strain of the coronavirus. The reason why automakers are not making enough cars and some plants of General Motors, Daimler, Ford, Toyota and Nissan are now idle is an acute shortage of semiconductors, which power functions from brakes to emission controls. "Electrification of vehicles is increasing the content of power chips 10-fold in every car," notes Pierre Ferragu, an analyst at New Street Research in New York.

Moreover, the value of chips inside every car – over US$1,000 (RM4,053) for Tesla's new Model Y – has been steadily growing as the auto industry transitions initially towards semi-autonomous and, eventually, self-driving technology. There is also a growing demand for chips that enable more infotainment and connectivity in vehicles.

Auto sales worldwide, including of light commercial vehicles, fell 14.5% to just 71 million vehicles last year. That led to an 8.4% decline in the sales of chips made for automobiles to just US$37 billion. This year, revenues from automotive chips are estimated to grow by more than 18%. So dire is the shortage of auto chips that the German and Japanese governments have publicly lobbied Taipei officials as well as chip industry executives to prioritise the manufacturing of auto chips. Global semiconductor revenues grew 6.5% in 2020, according to US trade group Semiconductor Industry Association. Tech research group IDC estimates that the worldwide chip market will grow 7.7% this year.

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