TSMC Scores Subsidies and Picks Site for $12 Billion U.S. Plant

[Daniel Nenni]

Taiwan Semiconductor Manufacturing Co. has secured government subsidies for its envisioned $12 billion chip plant in Arizona, moving closer toward finalizing a facility designed to allay national security concerns and shift high-tech manufacturing to America.

TSMC, the main chipmaker to Apple Inc. and Huawei Technologies Co., has picked a site for the future plant and both federal and state governments have agreed to help make up for the higher cost of fabricating semiconductors in the U.S., Chairman Mark Liu told reporters Tuesday. Negotiations continue over the specifics of those incentives, he said without elaborating or identifying the site’s location.

The decision to situate a plant in Arizona came after White House officials warned about the threat inherent in having much of the world’s electronics made outside of the U.S. TSMC had negotiated a deal with the administration to create American jobs and produce sensitive components domestically for national security reasons. It announced the project just before Washington leveled new restrictions on the sale of chips to Huawei, seeking to contain one of TSMC’s largest customers.

TSMC has set aside land adjacent to its selected plot and hopes to convince its own suppliers to set up operations in the vicinity over time, Liu added. They would join the likes of Intel Corp. and Micron Technologies Inc., which already operate facilities in the western state and have helped build a vibrant local semiconductor industry over the years. The scope of any eventual subsidies would require blessing from Congress, Liu added.

“Subsidies will be a key factor in TSMC’s decision to set up a fab in the U.S.,” he said. “We are still talking to the U.S. government. Our request is that the state and federal governments together make up for the cost gap between the U.S. and Taiwan.”

TSMC Scores Subsidies and Picks Site for $12 Billion U.S. Plant

(Bloomberg) -- Taiwan Semiconductor Manufacturing Co. has secured government subsidies for its envisioned $12 billion chip plant in Arizona, moving closer toward finalizing a facility designed to allay national security concerns and shift high-tech manufacturing to America.TSMC, the main...

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[Daniel Nenni]

Well there you go:

Chairman Mark Liu “Subsidies will be a key factor in TSMC’s decision to set up a fab in the U.S.,” he said. “We are still talking to the U.S. government. Our request is that the state and federal governments together make up for the cost gap between the U.S. and Taiwan.”

No subsidies no fab! No subsidies no fab! No subsidies no fab! Just my opinion of course...

 

[hist78]

When this case comes to US Congress and Senate, I think the debate will be among three possible proposals:

1. To subsidize TSMC, a foreign and public traded company from an ally country, who has proven records of building advanced chips for many American companies to build a leading edge fab in the State of Arizona.

2. To subsidize Intel, a domestic and public traded company, who has very "limited" success of building chips for other companies to build a leading edge 7nm fab in US. This new Intel fab will produce both Intel and other non-Intel semiconductor products. And if history can tell us, Intel will be struggling with this new 7nm production as it did with their 10nm rollout.

3. Do both 1 and 2 for political reason in order to show that the Administration is impartial to domestic and foreign companies. It will allow DoD, Air Force, Navy, Space Force, DOE, NASA, NSA, NRO and CIA to get the product they want manufactured from a fab in the US. At the end of day, each of those agency is more interested in getting the real product than helping a particular company.

 

[hist78]

Another possible idea I saw was to ask TSMC, Intel, and other semiconductor companies to form a joint venture. I don't believe it will work from the business and operation point of view. Additionally it means TSMC must license or transfer/share some their technologies to this joint venture. This forced technology transfer is exactly the bad behavior that US administration doesn't like and accuses PRC is violating.

 

[benb]

The economics of offshoring vs. onshoring is finally coming into focus.
The global standard cutting edge fab is $10B USD, in Taiwan or Korea, Singapore, and parts of China.
In the USA, $12B.
The gap: $2B.
This is just the facility cost, not operating cost.
20% is a lot.
Someone should study this cost gap and figure out a way to make USA competitive again rather than just forking over subsidies. It’s a “teach a man to fish” moment.
And it’s time to take a hard look at our traditional American exceptionalism, which has become traditional American overpricedness, uncompetitiveness, and red tapeness.

 

[benb]

When this case comes to US Congress and Senate, I think the debate will be among three possible proposals:

1. To subsidize TSMC, Samsung a foreign and public traded company from an ally country, who has proven records of building advanced chips for many American companies to build a leading edge fab in the State of Arizona Texas.

 

[Portland]

President Trump will find a way to coerce tsmc without the subsidies.

We have 2 weeks of riots. I'm for it, we've seen what mobs of people with idle hands will do.

 

[hist78]

I'm wondering why Samsung's name is kind of missing in many news I have read regarding the new fab for making advanced chips in US.

One possibility is that major defenses industry players are already using TSMC's services. Like I mentioned earlier, at the end of day, DoD and many federal agencies care more about to have a domestic produced product for their national security related application. To achieve this goal is more important than anything else. Because DoD is the major force behind this Semi Made in USA project, DoD will naturally follow what fab service those defense contractors have chosen. That's TSMC in this case.

 

[benb]

There also isn‘t any news about handouts for Global Foundries, located in New York.
New York and Texas are both big states with lots of electoral college votes.
Arizona has fewer electoral college votes.
My theory is US politicians don’t know a TSMC from a Samsung from a Global Foundry. But they know New and Texas are important states in an election year.

 

[hist78]

For the US presidential election, it's almost certain that New York will go with Democratic Party and Texas will stay with Republican party. That means neither states will be a high priority state for Trump or Biden. On the other hand, Arizona is more competitive for both parties to grab. I guess from Trump's point of view, Arizona is probably a state he needs to pay more attention than New York or Texas.

 

[hskuo]

The economics of offshoring vs. onshoring is finally coming into focus.
The global standard cutting edge fab is $10B USD, in Taiwan or Korea, Singapore, and parts of China.
In the USA, $12B.
The gap: $2B.
This is just the facility cost, not operating cost.
20% is a lot.
Someone should study this cost gap and figure out a way to make USA competitive again rather than just forking over subsidies. It’s a “teach a man to fish” moment.
And it’s time to take a hard look at our traditional American exceptionalism, which has become traditional American overpricedness, uncompetitiveness, and red tapeness.

Some ball park number for your reference: Typically $10B USD is for 30~40kwspm current leading edge Fab, but tsmc new AZ fab will provide 20kwspm capacity only.

 

[benb]

I’ve heard it all: Yes but capa is different, yes but taxes and foreign exchange is different, yes but foreign subsidies, yes but labor costs are different, yes but local electrical, water and construction code standards are different, yes but waste standards are different...the list is endless. In the end, for one or all of these reasons, it’s 20% more expensive in the US for the same thing.

You watch, Tesla’s Shanghai factory will be 20% less expensive than Fremont.