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Semiconductors

Taiwan's Nanya Tech says $10bn chip plant delayed 'several quarters'

Production now slated for 2025 as labor and material shortages bite

Lee Pei-Ing, president of Taiwanese chipmaker Nanya Technology, said production at a new plant in New Taipei City will be delayed until at least 2025. (Photo by Keiichiro Asahara)

TAIPEI -- Taiwan's Nanya Technology on Monday said construction of its $10.3 billion memory chip plant will be delayed for more than six months, and production will not start until 2025 at the earliest, in the latest sign that shortages of materials, equipment and construction workers are dragging on chipmakers' expansion plans.

Nanya Tech's president, Lee Pei-Ing, said the 300 billion New Taiwan dollar ($10.33 billion) plant in New Taipei City, in northern Taiwan, has also been hit by longer-than-expected environmental and other regulatory reviews.

"Our new plant now could only likely start to generate output by 2025," Lee told reporters on Monday. "The regulatory and environmental reviews are taking about two to three quarters longer than we expected, plus there are other factors, such as shortages of materials, components and construction workers."

The company had announced in April last year that construction would be completed by the end of 2023, with mass production to start in 2024.

Lee said construction licenses have not yet been obtained for the project but that he expects to receive approval and break ground no later than the first half of this year. Construction, materials and equipment costs will certainly increase, he said, which could lead to a slightly higher budget for the project.

The president's comments come as chipmakers and chip equipment manufacturers around the world grapple with unprecedented component shortages. Taiwan's UMC, the world's No. 4 contract chipmaker, told Nikkei Asia that it will take longer than expected to get production up to speed at its new plant in the southern Taiwanese city of Tainan due to delays in deliveries of vital equipment. Chipmaking equipment companies from Applied Materials and KLA to ASML have told their clients that the lead time for some chip tools could be as long as 18 months.

Nanya Tech is the world's fourth-biggest maker of dynamic random-access memory (DRAM) chips, behind Samsung, SK Hynix and Micron. DRAM chips are essential memory components that are used in all kinds of electronic devices from smartphones, PCs and data center servers to home appliances and cars.

Lee also warned of "significant uncertainties" on the horizon for both demand and supply, citing the Ukraine war, inflation and ongoing lockdowns in China.

"We do see demand for smartphones and consumer PCs started to slow ... The demand for TVs  is slowing, too. There are also seasonal factors. Currently it is the slow season for some consumer electronics," Lee said. "The Ukraine war has made the inflation concerns more severe, and that has started to hit consumer spending. China lockdowns, on the other hand, mainly affect the manufacturing side and logistics, currently."

Lee said he expects the average selling price of DRAM, an important barometer of electronics demand, to continue to decline slightly, by "low single digits in the current April to June period." The price drop will not be too sharp, he said, as inventories are still relatively healthy. DRAM prices began falling at the end of the last quarter of 2021, when inflation started to become a concern for the overall economic outlook.

Chairman Mark Liu of Taiwan Semiconductor Manufacturing Co. warned that there is a slowdown in smartphones, PCs, and TVs, while demand for automotive and high-performance computing, such as cloud servers, remains strong. Chairman Arthur Chiao of Winbond, another leading memory chip maker, told Nikkei Asia in an interview that the Ukraine war could have long-term impacts on the industry and economic outlook.

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