Inside Taiwanese Chip Giant, a U.S. Expansion Stokes Tensions

[Daniel Nenni]

From the NY times but the authors are based in Seoul so the fix is in. They interviewed 11 TSMC employees. Had they interviewed TSMC North America employees they would have gotten much different answers.

"Employee doubts are rising about Taiwan Semiconductor Manufacturing Company’s $40 billion investment in an Arizona factory."

“The most difficult thing about wafer manufacturing is not technology,” he said. “The most difficult thing is personnel management. Americans are the worst at this, because Americans are the most difficult to manage.”

“TSMC’s investment in the U.S. from a business perspective makes no sense at all,” said Kirk Yang, chairman of the private equity firm Kirkland Capital and a former tech analyst, citing lofty costs. He added that TSMC might have been forced to set up a factory in the United States because of political considerations, but “so far, the Phoenix project has yielded very little benefit for TSMC or Taiwan.”

Inside Taiwanese Chip Giant, a U.S. Expansion Stokes Tensions

Employee doubts are rising about Taiwan Semiconductor Manufacturing Company’s $40 billion investment in an Arizona factory.

www.nytimes.com

 

[hskuo]

There is no surprise(all known and expected) up to now for TSM building fab in US, Japan and possible in Europe. I would say Kirk Yang did not study TSM situations in all aspects. It will be more clear when Biden's government have " plan to destruction of Taiwan".

https://twitter.com/i/web/status/1625945743000276995

 

[Daniel Nenni]

 

[hskuo]

View attachment 1070

Thanks.

 

[Daniel Nenni]

Ministry warns about false US reports - Taipei Times

Bringing Taiwan to the World and the World to Taiwan

www.taipeitimes.com

 

[hskuo]

Ministry warns about false US reports - Taipei Times

Bringing Taiwan to the World and the World to Taiwan

www.taipeitimes.com

Daniel: When we see some news in Taiwan, the first step is to check which news/publisher and reporter. Sometimes it is biased and you need to further check again. FYI.

 

[blueone]

Amazing. I was just reading a couple of days ago that the worldwide fertilizer shortage is going to persist well into 2023. Based on this thread I can see that's fake news.

 

[Daniel Nenni]

Daniel: When we see some news in Taiwan, the first step is to check which news/publisher and reporter. Sometimes it is biased and you need to further check again. FYI.

I do not believe most of what I read so that saves me a lot of time.

One thing I can tell you is that the big TSMC customers are very much in support of the AZ fab build and TSMC listens very carefully to big customers. If Apple, Nvidia, Qualcomm, and AMD said no need to build in AZ TSMC would not have, my opinion.

 

[hskuo]

I would reword it as "not due to the plan of destruction of Taiwan, but due to the threats of China invasion and the consequence of possible actions from US and China.
There is another old news: True/False?

https://twitter.com/i/web/status/1600181409096044544

 

[hskuo]

I do not believe most of what I read so that saves me a lot of time.

One thing I can tell you is that the big TSMC customers are very much in support of the AZ fab build and TSMC listens very carefully to big customers. If Apple, Nvidia, Qualcomm, and AMD said no need to build in AZ TSMC would not have, my opinion.

I would say it is "Chick and Egg" answer. Will tsmc build a fab with higher cost to sell at the same price to customers? Seems not. Will Apple, NV and AMD pay more for the wafers made in USA? Seems not. But due to geopolitical tension(stick) and subsides(carrots). It happened. As I remembered, several years ago, NY states lobbied TSM to build fabs there with incentive. It did not happen due to higher cost.

 

[hist78]

I would say it is "Chick and Egg" answer. Will tsmc build a fab with higher cost to sell at the same price to customers? Seems not. Will Apple, NV and AMD pay more for the wafers made in USA? Seems not. But due to geopolitical tension(stick) and subsides(carrots). It happened. As I remembered, several years ago, NY states lobbied TSM to build fabs there with incentive. It did not happen due to higher cost.

I think TSMC already said they will charge customers differently according to the fab location.

 

[Daniel Nenni]

I think TSMC already said they will charge differently according to the fab location.

This is my understanding as well. If we are going to buy "American" we need to pay for it. As history has shown the average American citizen will not pay more for American made goods so it will be interesting to see what happens here.

 

[nghanayem]

This is my understanding as well. If we are going to buy "American" we need to pay for it. As history has shown the average American citizen will not pay more for American made goods so it will be interesting to see what happens here.

My guess is folks like Apple will go "We would like 10% of our N5 to come from AZ please".

TSMC will go "It costs us 8% more per wafer here... Okay Apple we will charge you an extra 12% for this special request.".

Apple will then get the privilege of feeling that their supply chain is slightly more resilient, and just eat that averaged out 1.2% cost increase for their SOCs because it would have barely any material impact on their margins for a $1000 device/it would look less silly than raising the price of their devices by 1 dollar across the board. They can even put on a marketing spin, and tell investors/customers about how "responsible" Apple now is with their chip onshoring. A real win win for TSMC and it's systems/software customers.

Merchant chip vendors are another story though. For them I would have to imagine that between the small capacity of AZ and any mark up TSMC charges, very small percentages of their product stacks will get made at TSMC given the more direct impact this would have on their margins. That is of course unless their OEMs pressure them into it in an effort to secure their supply chains. If that does happen, then paying an extra 12% for 10% of your supply might just become part of the cost of doing business that need to be eaten or passed on (or some combination of the two).

 

[hist78]

My guess is folks like Apple will go "We would like 10% of our N5 to come from AZ please".

TSMC will go "It costs us 8% more per wafer here... Okay Apple we will charge you an extra 12% for this special request.".

Apple will then get the privilege of feeling that their supply chain is slightly more resilient, and just eat that averaged out 1.2% cost increase for their SOCs because it would have barely any material impact on their margins for a $1000 device/it would look less silly than raising the price of their devices by 1 dollar across the board. They can even put on a marketing spin, and tell investors/customers about how "responsible" Apple now is reducing with their chip onshoring. A real win win TSMC and it's systems/software customers.

Merchant chip vendors are another story though. For them I would have to imagine that between the small capacity of AZ and any mark up TSMC charges, very small percentages of their product stacks will get made at TSMC given the more direct impact this would have on their margins. That is of course unless their OEMs pressure them into it in an effort to secure their supply chains. If that does happen, then paying an extra 12% for 10% of your supply might just become part of the cost of doing business that need to be eaten or passed on (or some combination of the two).

Assume a Xilinx/AMD FPGA for F35 fighter jet unit cost changed from $10,000 (made in Taiwan) to $20,000 (made in Arizona) and a F35 costs $80 million to build.

And assume two FPGAs are needed for a F35.

So the percentages for the over all F35 costs:

FPGA made in Taiwan:
0.025% = $20,000/$80,000,000

FPGA made in Arizona:
0.045% = $40,000/$80,020,000

FPGA cost increase per F35:
0.025% = $20,000/$80,000,000

By reviewing the number above, I believe DoD, US Congress, and Lockheed Martin probably wouldn't think there is any issue they need to address.

 

[nghanayem]

Assume a Xilinx/AMD FPGA for F35 fighter jet unit cost changed from $10,000 (made in Taiwan) to $20,000 (made in Arizona) and a F35 costs $80 million to build.

And assume two FPGAs are needed for a F35.

So the percentages for the over all F35 costs:

FPGA made in Taiwan:
0.025% = $20,000/$80,000,000

FPGA made in Arizona:
0.045% = $40,000/$80,020,000

FPGA cost increase per F35:
0.025% = $20,000/$80,000,000

By reviewing the number above, I believe DoD, US Congress, and Lockheed Martin probably wouldn't think there is any issue they need to address.

In your defense industry example it is actually a win win for all parties involved (minus the US tax payer). TSMC gets to charge an extra markup to AMD, AMD can charge an arm and a leg extra markup to LM for the "Freedom edition" of their FPGA, and LM can charge uncle Sam a markup as them "just passing on the cost please don't look at our margins btw". The only loser in that situation would be the American people paying for everybody's fatter margins.

 

[lilo777]

View attachment 1070

That was probably just a joke. The rationale for it is a widely held (outside Anglo-Saxon universe) belief that US' imperial ambitions is a cause of many conflicts, current conflict in Ukraine being just the recent example.

 

[hist78]

In your defense industry example it is actually a win win for all parties involved (minus the US tax payer). TSMC gets to charge an extra markup to AMD, AMD can charge an arm and a leg extra markup to LM for the "Freedom edition" of their FPGA, and LM can charge uncle Sam a markup as them "just passing on the cost please don't look at our margins btw". The only loser in that situation would be the American people paying for everybody's fatter margins.

The total addressable market form national security related application is rather small for a leading edge foundry. US government knows they need to have large and civilian order volume to keep a domestic foundry viable.

Like what you calculated previously, Apple, AMD, Nvidia and many other fabless companies will be happy to help, either willingly or being told to so, for the Motherland!

Although I can see there are some unhappy witness/participants for this potluck party. One of them can be Intel.

 

[nghanayem]

Although I can see there are some unhappy witness/participants for this potluck party. One of them can be Intel.

How so? I don't see two small fabs changing that part of IFS's value proposition. R&D is still done in the ROC, and presumably mask data of some type will also live in the ROC. TSMC AZ will not have the capacity to run anything more than all DOD and a tiny fraction of the total merchant/systems company orders. If you are serious about a diversified fab that is "out of the line of fire" or want the assurance that R&D will never be disrupted and that your mask data could never fall into the hands of the PLA, then your only foundry choices would be GF, Skywater, and IFS. The way I see it TSMC AZ is a nice option for current TSMC customers that offers some piece of mind, but it is not a replacement for a foundry that does all of their manufacturing in low risk areas and has all of their R&D in the west.

 

[hskuo]

How so? I don't see two small fabs changing that part of IFS's value proposition. R&D is still done in the ROC, and presumably mask data of some type will also live in the ROC. TSMC AZ will not have the capacity to run anything more than all DOD and a tiny fraction of the total merchant/systems company orders. If you are serious about a diversified fab that is "out of the line of fire" or want the assurance that R&D will never be disrupted and that your mask data could never fall into the hands of the PLA, then your only foundry choices would be GF, Skywater, and IFS. The way I see it TSMC AZ is a nice option for current TSMC customers that offers some piece of mind, but it is not a replacement for a foundry that does all of their manufacturing in low risk areas and has all of their R&D in the west.

I believe new tsmc mask house will be established in Arizona and all sensitive TOs will have masking data in US.

 

[blueone]

I believe new tsmc mask house will be established in Arizona and all sensitive TOs will have masking data in US.

I can see where that would be true for the US defense projects, but for Apple and AMD, assuming that AZ can't come close to meeting their entire volume needs so Taiwan fabs are engaged anyway, I'd be surprised if TSMC moves their mask operations out of Taiwan. Why would Apple and AMD want to take the risk of a new group working on chips they can't survive without, when everything is working so well?