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TSMC Announces Updates for TSMC Arizona

I have no doubt TSMC is charging significantly more from customers that want to use its Arizona plant.
Hmmm, we'll probably never know for sure because there are probably non-disclosure agreements surrounding pricing contracts, but I suspect TSMC won't charge significantly more. Two reasons. First, the scale of TSMC's investment in AZ is too big to fail, so to speak. This isn't like their little Camas hobby. Second, TSMC's margins are already monopoly-high, as documented in the business press extensively. If TSMC gets too greedy, it might find their customers work more closely with IFS and Samsung to develop alternatives, just like the cloud companies worked hard to reduce their dependence on Intel's past monopoly margins on server CPUs.

I think the chips from TSMC's AZ operations will be transparently priced.
 
Intel doesn't have a "fab" in East Asia or South East Asia anymore. I believe the one in Dalian, China will eventually be transferred to SK Hynix. With so much semiconductor talents in East and South East Asia, it doesn't make sense for Intel to avoid that region even if they don't care about labor cost.

Now IFS' competitors are setting up fabs in Intel's home turf while Intel is still avoiding building a fab in East Asia and South East Asia. It will hurt Intel's ability to compete.
SE Asia was referring to how intel's packaging having almost exclusively moved there. They did this because packaging is more manpower intensive and thus the lower wages actually starts having a materiel effect on cost. There is also alot of GF and Micron wafer capacity in SE asia. Ergo if cost was the only factor TSMC should have left the ROC years ago to chase after SE asia or the PRC.

To say there is no talent in the US ignores all of the American tool vendors, semi firms, large pool of experienced mechanics/veterans, the large chemical industry in the US to pull talent from, and the fact that a large share of those TSMC engineers get educated in the USA.

IFS competitors are building small outposts in the west. There is more capacity being built out in the ROC right now than AZ will have even if it is fully built out. As I have stated before Apple could probably fill AZ by itself. Add in the rest of the ecosystem and AZ is nothing but a small colony. I think of it like the French in the American midwest. They were there, but not anywhere near what the British were doing on the east cost. They were just there to make some cash hunting for furs, whereas the Brits made their own England away from England. Same with TSMC AZ, it is there to make some cash from folks who do want to outsource some production. But it is not going to enable everyone to magically onshore all of their production. The part of IFS's value proposition pertaining to all fab capacity being in the west and packaging being in lower risk SE asia remains effectively unchanged (my opinion).
 
Now that is a number I can believe! Seems to line up with the structurally similar high performance chems or catalysts industries. Low staff, high capital cost, having to worry about strict environmental laws, and your input material costs often being much lower than equipment/processing costs. Depending on your exact locale chemical plant construction doesn't often vary by more than like 20-30% (unless you are a crazy person who is trying to build in California in which case it would actually cost like 5-10x).


I do hope you are aware that for these fabs staffing is a very tiny percent of the wafer cost, and that once fabs are depreciated (aka when they start printing money) that cost to build the shell becomes irrelevant. Most of intel's fabs have long since depreciated. All that needs to be done is either roll in some new tools for new IFS nodes, or add an expansion that is only stuffed with the new tools. Meanwhile things like i16 or the upper backend can still be done by the older fabs at that site. Ohio and Germany present their own problems, but at the very least they aren't insurmountable. They are being built in the lowest cost parts of their respective countries in areas that have a long history of manufacturing excellence and a plethora of excellent engineering schools nearby. More expensive than the ROC? Sure. But by the same metric the ROC is more expensive than the PRC or Malaysia. You go where you can source the talent.

I'd be more worried about intel's structural and process costs. Structural costs seems to be getting much better with i4/3/20/18A. Process cost is probably a longer term issue to solve. The IDM model/intel's historically higher ASPs than any other merchant chip maker meant that intel needed to ensure they had the best PPA and could get DD as low as possible as fast as possible so they could start cranking out xeons. Cost and die to die uniformity must have been a secondary concern because even if you end up with a bunch of i3s, they still get sold for more than a snapdragon (my understanding is that arm socs are often below $100 but that data could be out of date now that smartphones are regularly selling for over $1000). TSMC and Samsung don't have the luxury of high ASPs and many product bins (at least it seems like ARM socs and AMD cpus aren't binned as extensively). As a result more of their dies must be of a high grade. To change intel's process control and metrology methods will take a whole lot of experimentation and tweaking before they catch up to the other foundries on die to die uniformity. As a side note I wouldn't be surprised if at one point GF had this same problem given that AMD had a similar situation to intel.

I am aware what you pointed out about the relatively small percentage of semiconductor manufacturing in staffing cost. But I was talking about Intel made a strategic mistake in operating all their current and future fabs only in high income/high cost countries. Intel knew their cost is not competitive and announced to cut $23 billion from 2023 to 2025. But I don't think it's enough.

Intel's fab location and high cost has many consequences. For example, TSMC and Samsung can pay relatively high salary in their own countries (still much less than Ireland or Germany) to hire top talents from the top universities. On the other hand Intel often can't even compete against Google, Amazon, Facebook, or Microsoft in recruiting.
 
SE Asia was referring to how intel's packaging having almost exclusively moved there. They did this because packaging is more manpower intensive and thus the lower wages actually starts having a materiel effect on cost. There is also alot of GF and Micron wafer capacity in SE asia. Ergo if cost was the only factor TSMC should have left the ROC years ago to chase after SE asia or the PRC.

To say there is no talent in the US ignores all of the American tool vendors, semi firms, large pool of experienced mechanics/veterans, the large chemical industry in the US to pull talent from, and the fact that a large share of those TSMC engineers get educated in the USA.

IFS competitors are building small outposts in the west. There is more capacity being built out in the ROC right now than AZ will have even if it is fully built out. As I have stated before Apple could probably fill AZ by itself. Add in the rest of the ecosystem and AZ is nothing but a small colony. I think of it like the French in the American midwest. They were there, but not anywhere near what the British were doing on the east cost. They were just there to make some cash hunting for furs, whereas the Brits made their own England away from England. Same with TSMC AZ, it is there to make some cash from folks who do want to outsource some production. But it is not going to enable everyone to magically onshore all of their production. The part of IFS's value proposition pertaining to all fab capacity being in the west and packaging being in lower risk SE asia remains effectively unchanged (my opinion).

"To say there is no talent in the US ignores all of the American tool vendors, semi firms, large pool of experienced mechanics/veterans, the large chemical industry in the US to pull talent from, and the fact that a large share of those TSMC engineers get educated in the USA."

Did I say that?

My point is that if TSMC and Samsung dare to setup fabs in Intel's home turf to recruit talents, why Intel/IFS can't do the same thing in TSMC's or Samsung's home turf? There's a huge semiconductor manufacturing talent pool in East Asia and South East Asia that Intel chose to ignore.
 
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We (US) are at war with China.
D.C will keep spending.
The Fed will probably start printing.
> 10% inflation may be here to stay.
Whatever the foundries and packaging companies want, they will probably get.
The world is different now.

If you want it, here it is... come and get it...
 
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We (US) are at war with China.
D.C will keep spending.
The Fed will probably start printing.
> 10% inflation may be here to stay.
Whatever the foundries and packaging companies want, they will probably get.
The world is different now.

If you want it, here it is... come and get it...
10% inflation is definitely NOT hear to stay. The bigger risk is the Fed being too headstrong on raising and keeping rates high. CPI is a horribly lagged and yet is steadily going down despite still showing positive house price pressure despite the fact the housing market rolled over 8+ months ago. If you strip out housing and plug in the real up to date numbers, inflation has really come down hard. The big thing now is food prices. But the Fed isn’t and shouldn’t be in the business of destroying food demand and can’t do jack about a historic avian flu out break and grain shortages. As they say, the Fed is often late to do anything and then does too much to compensate. Every economic indicator is flashing warning signals about a slowing economy and those muppets are still taking about 5% and holding it there. I do agree however that we in the west are at war with China but it’s because they declared war on the global democratic order years ago and it’s just now we are waking up to it. Russia has pretty much outright declared an ideological war against us and China is their closest ally. Europe really needs to get its head out of the sand and realize just how much the CCP is intent on turning the world on its head. Trade didn’t change Russia and it sure as sh*t didn’t change China. You can tell a lot by the company they keep. China is friends with Russia (waging an imperialistic war of cultural extermination on Ukraine), Iran ( a dictatorial theocracy butchering it’s own people and hanging it’s dissidents by the thousands), Syria (another brutal dictatorship) and finally North Korea, need I say more? You can critique the U.S all you want but I can say unequivocally as a Canadian, I do and would 1000% prefer a world order headed by the U.S rather then the hellscape that China and friends would impose.
 
Congratulations. You dragged me into a partial fight (I agree with half of what you are saying).

If you strip off housing? Why would you do that? The BLS was caught lying recently. The inflation index is always changing to show less inflation. Higher interest rates will result in less competition. Hey, it's great for existing companies who can pass on the higher prices, and they will have no competition. Startups are screwed. They have to build up their assets at a higher interest rates and higher costs. As always, our government creates monopolies. Prices will continue to rise, but rents will decrease because people will rent by the rooms and live in backyard tests or minivans. Crime will continue to increase.

The Russia comment is out of scope, but now that you bring it up, we were the ones declaring war on Russia... since the brake-up of the USSR. We lied to Gorbachev. Promised to not extend NATO to the east, then proceeded to do the opposite of what we promised. China and Russia were natural enemies and have hated each other for 100s of years. All we did was pushed them towards each other. I was born in the US and am US biased, but Eisenhower called it in his 1960 speech and that is what is happening. Let's be honest here. Back to government spending...
I live in the US, but our government is out of control and both parties are going to keep spending. The US/dollar leadership is now threatened by China and it is time for war. That is what we do. We will spend the $$$ on technology. We have to.

The calculations that you guys came up with are appreciated and could be very accurate, but I believe there are 2 order variables that you guys are missing.

1) We are at war and competing in semis is probably considered mandatory now.
2) I only know of a few congressman/senators who want to balance our checkbook.

We are in unchartered territory. Too many variables.
 
9 out of 10 fabs are built by either Exyte or Fluor.

And they are bringing all those expensive specialist workers with them most of the time.

I doubt construction cost fluctuation is just due to contractors being n-times more expensive.
 
Congratulations. You dragged me into a partial fight (I agree with half of what you are saying).

If you strip off housing? Why would you do that? The BLS was caught lying recently. The inflation index is always changing to show less inflation. Higher interest rates will result in less competition. Hey, it's great for existing companies who can pass on the higher prices, and they will have no competition. Startups are screwed. They have to build up their assets at a higher interest rates and higher costs. As always, our government creates monopolies. Prices will continue to rise, but rents will decrease because people will rent by the rooms and live in backyard tests or minivans. Crime will continue to increase.

The Russia comment is out of scope, but now that you bring it up, we were the ones declaring war on Russia... since the brake-up of the USSR. We lied to Gorbachev. Promised to not extend NATO to the east, then proceeded to do the opposite of what we promised. China and Russia were natural enemies and have hated each other for 100s of years. All we did was pushed them towards each other. I was born in the US and am US biased, but Eisenhower called it in his 1960 speech and that is what is happening. Let's be honest here. Back to government spending...
I live in the US, but our government is out of control and both parties are going to keep spending. The US/dollar leadership is now threatened by China and it is time for war. That is what we do. We will spend the $$$ on technology. We have to.

The calculations that you guys came up with are appreciated and could be very accurate, but I believe there are 2 order variables that you guys are missing.

1) We are at war and competing in semis is probably considered mandatory now.
2) I only know of a few congressman/senators who want to balance our checkbook.

We are in unchartered territory. Too many variables.
Oh boy. This is big task but I’ll tackle it to stop this toxic Kremlin narratives further metastasis. First off we never promised Gorbachov or Russia anything of the sort. Not only is their no written treaty but the evidence that any verbal offer was tendered is sketchy at best. This is a narrative Putin and Russian commentators have pushed as an official narrative for decades. Secondly, NATO doesn’t go out seeking members, nor does the untied states or west. Members must APPLY to become part of NATO. Ignoring this crucial fact is extremely intellectually dishonest as it portrays these nations as having no free will of their own and treats their decisions as something that others have dominion over. Russia has trouble understanding this because this is how they have always operated, that is by using hard power to ensure hegemony. This is why they accuse the U.S being behind expansion. Don’t confuse something benefiting U.S strategic interests as being caused by the U.S. Russias actions alone are the cause behind its neighbours wanting nothing to do with it. Ask Georgia, ask the Baltics, ask Finland who’s been invaded as well, and what’s more ask Kazakhs how they feel about Russian commentators floating the idea of “denazifying” them because they drifting away from Russia as well. Ask the people of Belarus who in 2020 staged a huge uprising against Lukashenko after he rigged yet another election that was promptly put down by Russian troops brutality. Was that the U.S as well? Could it perhaps people are tired of a leader that has been in power for over TWO decades. Let me ask you a question, how many members have joined NATO and then tried to leave and conversely how was the Warsaw Pact created and kept together? I’ll tell you ZERO have expressed a desire to leave NATO while Russia has used its force to crush those who wanted to break free, I’m talking the Prague uprising, Hungry 1956 where Russia sent in tanks to crush decent. Could you imagine America doing to a NATO member? Also one other thing one has to ask, why do so many people want to join NATO. It is maybe BECAUSE Russia has a habit of attacking and subjugating it’s neighbours? Are you telling me the Baltic states, Poland etc don’t have have the right to join an alliance of their accord? Do you think it’s maybe because both were invaded by the Russians and forced into their hegemony? With Poland being invaded in league with the literally O.G Nazis and the Baltic states being invaded and subjugated by the soviets for 80 years pre WW2. History has shown these nations were right in seeking to join NATO. As Russia reacts to nations breaking free from its orbit by launching missiles in apartment blocks, levelling cities and kidnapping children by the tens of thousands. I think you missed Putin’s pre invasion speech. In his one hour unhinged ahistorical rant he questioned Ukraine’s right to exist, said it always belonged to Russia and stated that Ukrainians don’t really exist and are really confused Russians. This has been a war of cultural extermination from the start to end. It’s all laid out there. Do you really think Russia would stop at Ukraine if NATO didn’t exist? Russia still sees all land to used to occupy
as it’s rightful dominion. They have been very clear about this. This same unhinged narrative would be used in the baltics, Finland etc. Russia uses NATO as a strawman to justify behaviour it was already intent on following not the other way around. The NATO argument is purely a political instrument that Putin uses to rile up and justify the war to Russias brainwashed populace. Westerners who fall for this narrative fare just collateral damage and you really need to think clearer about this. Watch 1 hour of Russias nightly tv to see how unhinged these people are why decades of Kremlin propaganda. Everything that once was under Russia’s rule is theirs in their mind. Insane if we don’t stand up and stand with those holding back Russias attempt at hegemony.
 
What would the US do if Russia or China did the same in Mexico?

China was/is our problem. Russia wasn't. We turned natural enemies into friends. Dumb.

The conversation was about the feasibility of opening up competitive fabs in the US. I believe the US will continue to subsidize semiconductor industry and make it worthwhile. Other countries are doing the same.
 
My point is that if TSMC and Samsung dare to setup fabs in Intel's home turf to recruit talents, why Intel/IFS can't do the same thing in TSMC's or Samsung's home turf? There's a huge semiconductor manufacturing talent pool in East Asia and South East Asia that Intel chose to ignore.
Because taxpayers will throw a fit.
 
What would the US do if Russia or China did the same in Mexico?

China was/is our problem. Russia wasn't. We turned natural enemies into friends. Dumb.

The conversation was about the feasibility of opening up competitive fabs in the US. I believe the US will continue to subsidize semiconductor industry and make it worthwhile. Other countries are doing the same.
So you are going to compare hypotheticals to Russias over century of butchering it’s neighbours? And no the U.S would seek to literally genocide Mexico as Russia is to Ukraine…. And staying that we pushed Russia and China together by standing up wanton aggression by both parties? Surely you don’t think appeasement is a proven policy? Why is it at all surprising that two authoritarian states that seek to undermine the liberal world order would seek closer ties? Standing up to them and pushing back is hardly the only reason.
 
Do you think we are helping the Ukrainian people? Without offensive weapons, they are sitting ducks.
 
Oh... on the other topic, a dozen eggs are $7. Some areas have much lower prices though. I heard that you can get $899 of free groceries in some parts of the US. How do you beat that?
 
Back to semis and IFS vs TSMC, any more recent predictions on TSMC fabbing 16nm in AZ or anywhere outside of Taiwan and China? Any movement on the Japan-TSMC 16nm?
 
10% inflation is definitely NOT hear to stay. The bigger risk is the Fed being too headstrong on raising and keeping rates high. CPI is a horribly lagged and yet is steadily going down despite still showing positive house price pressure despite the fact the housing market rolled over 8+ months ago.

The US is heading towards self-sufficiency,more onshore manufacturing,moving away from decades of globalised supply-chain system which emphasis on reducing cost. This will inevitably increase the production cost thus increase CPI in long term,the more onshore manufacturing the higher CPI increase will occur
 
What would the US do if Russia or China did the same in Mexico?
Such a stupid piece of Russian propaganda. The commonality between eastern Europe and Mexico is not geographic relationships. It is that of their own free will in both locations, whether near or far from Russia, the local population overwhelmingly prefer the USA. You may recall Russia had a great deal of influence over Mexico in the 20th century, Mexico had a communist leadership for decades. But today the voting by foot is to the USA. Which part of eastern Europe has a major desire to emigrate to Russia? But we generally fulfil quotas for them to emigrate to the USA.

Russia simply ignores the wishes of its neighbors, and it has done forever. It portrays their desire to escape, deeply rooted in experience, in paranoid terms as persecution of Russia. Nope.
 
Nvidia and Qualcomm will use AZ fabs and TW fabs to fulfill a continuity of business mandate. This is also why Ireland has to be EUV qualified before we‘ll see Intel 4.

The point is, its not enough to have 1 fab in one location producing a product, having 2 or more locations, geographically separate and exposed to different natural and man-made risks, is necessary. It’s similar to how corporate officers don’t all fly on the same airplane.

Fun speculation: If Russia or China cut the fiber optics to TW or IR would that disrupt fab operations? I think it would. Planning for business continuity in 2023 is not an idle thought experiment.
 
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