TSMC to build 3rd fab and make state-of-the art 2-nm chips in Phoenix

‘TSMC will invest more than $65 billion in total and add a third chip factory to the manufacturing complex it started building in 2021, U.S. officials said. The Taiwan-based company, the world’s largest contract chip maker, will also make currently cutting-edge 2-nanometer chips at one of the factories there.’

TSMC will get up to $6.6 billion from the U.S. government for its Arizona fabs, plus access to ~$5 billion in government loans and $50 million in workforce-development funding.
https://www.wsj.com/tech/taiwanese-chip-making-giant-tsmc-gets-6-6-billion-for-arizona-project-f75e9de4

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Good news but let’s see the first fab online first

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Hmm… is it good news for Intel’s foundry ambitions?

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I’ve said it before about Intel’s Valley of the Sun fab, and I’ll repeat it for AMD. This is a BAD place to build such a thirsty factory. Arizona’s farmers are cutting back on crops from no water, and housing permits are also cut back. The best places for fabs would get lots of rain. Washington would be great, but Arizona is very worker hostile (i.e. business friendly). As the Colorado River Basin continues having less water, the time will come when residents will get water and the foundry won’t, unless fabs are far more less water dependent than they were in the past.

Here’s an idea of how badly AZ treats its workers. I worked there for four years, then transferred to Washington for four months, then everybody was laid off. Instead of claiming unemployment from AZ immediately, with 17 quarters of earnings, I postponed starting unemployment three months to let my second quarter post. I received almost triple the unemployment amount for Washington for two quarters as I did for AZ for eight times as many quarters. That kind of friendliness is why we’ll have two fabs in a desert.

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Well Roleplayer, It’s good that you know what goes on where and can choose accordingly. I don’t think TSMC realises how uncompetitive the USA will be compared to Taiwan. It has to build the fabs on USA rates, pay the workers on USA rates and buy everything in at USA rates. Can it’s R&D survive?

I do agree with you about picking the right USA state to live/work in, not that I live there (sorry it’s an accident of birthplace), I am similarly inspecting a location’s tax rates to help find my ideal location.

Cheers

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Fab processing is highly automated and not labor intensive. The basic raw material is silicon wafers. Prices are so low some early expansion plants in the US shut down before they got started. The equipment is global. High purity processing chemicals used in small quantities.

Perhaps the engineering expertise to set up the equipment and keep it running is the greatest cost differential. Probably small. And of course constant technology advances increasing the number of transistors on a chip.

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I agree. Most of the articles “dissing” American manufacturing talk about operational costs. The biggest cost of a modern semi factory is capital, and EUV steppers are the same price regardless of where you install them.

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Well I would be surprised (if a comparison was possible), that USA built TSMC chips were not sold at a premium price. One hears of workers in Taiwan working incredibly long hours and being devoted to the job.

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I thought I heard/read that part of the deal for getting the Chips Act funding was no price difference.
True?
And how would that negotiation go with a customer like Apple, that is often the biggest customer on a new process that needs more than one fab can produce?

Mike

I assume that USA built TSMC chips would have a premium attached anyway (no invasion likely) so greater security of supply, which may make the sell to Apple and now Nvidia easier. You guys may be right and I wrong especially if it’s a condition of the Chip Act funding. I guess it would be likely that we won’t get a fair comparison anyway since it’s unlikely that TSMC may not want to produce the same chip in more than one country.

Let me put it another way, East Asia is full of very bright people who are prepared to work for relatively low wages, compared to Europe, the USA & Canada. How can a USA TSMC chip be cheaper than a Taiwan produced one? It can if the workforce is tiny.

The depreciation part of the cost is dominant. IF there was a big grant so the capital cost is reduced, thus reducing the depreciation cost, that may more than offset the increased cost of labor. I suspect this is a known quantity, and baked into the amount of the chips act grants.

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As the Colorado River Basin continues having less water, the time will come when residents will get water and the foundry won’t, unless fabs are far more less water dependent than they were in the past.

That ship has already sailed on both sides. On the fab side, water conservation is nice, but it can cost ten times as much to clean tap water to the necessary levels as to clean up wastewater in the fab at the source. Once someone figured out that not mixing the wastewater from different processes reduced recycling costs.

For the farmers, look for cuts that will put any farmer not using drip irrigation out of business. (Drip irrigation distributes water to the roots of the crops, not the leaves. The name comes from putting the nozzles an inch or so above the roots so that the roots don’t grow into the pipes.) Drip irrigation can be 20x as efficient as sprinklers, but even 1/4 the water use is a game changer. And yes, farmers have started installing drip systems–the capital cost is high, so converting a portion of their fields each year is the way forward.

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I thought I heard/read that part of the deal for getting the Chips Act funding was no price difference.True? And how would that negotiation go with a customer like Apple, that is often the biggest customer on a new process that needs more than one fab can produce?

Well, it appears to be happening. I suppose if they’re not delivering exactly the same part at different fabs on the same schedule then they can price differently for the same or similar chips and processes at different fabs at different times… They’ll work it out, I’m sure. $omehow.

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