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TSMC May Charge 30 Percent More for Chips Made at its Arizona Fabs

upstart writes:

The chipmaker is looking for $15 billion in subsidies from the US government:

Setting up a chip factory in the US is an expensive endeavor, especially when compared to doing the same in Asia. Still, companies like TSMC are investing billions into doing just that, wooed by government subsidies and the idea of achieving a geographically diverse supply chain that is less prone to disruptions. As a result, chips made by the Taiwanese giant in the US could end up 30 percent more expensive than those made in its home country.

Back in December, TSMC announced it would pour no less than $40 billion into building two advanced chip factories in Arizona. In other words, the world's biggest chipmaker made the largest direct foreign investment in Arizona history and one of the largest in US history. When they become operational, the fabs will employ thousands of people and produce around 600,000 wafers per year.

The move represents a significant shift in mindset for TSMC leadership, which has traditionally been reluctant to establish chip manufacturing facilities in the US. One reason has to do with Taiwan's policy of keeping its most advanced technologies locally even as it builds external manufacturing arms for a more resilient global supply chain.

Another reason has to do with cost – setting up and operating a factory on American soil is up to 50 percent more expensive than in Taiwan. Then you'd need to source materials like rare earth metals and semiconductor-grade neon as well as a steady supply of water to keep the facility running at full capacity. And last but not least, you need a lot of skilled (and cheap) labor, something that is easier to find in Asia as opposed to North America and even Europe.

Naturally, this means TSMC will have extra costs in the US that will translate into higher prices for wafers made in Arizona as opposed to those made in Taiwan. Some industry insiders estimate that chips made in America on N5 and N4 process nodes will cost up to 30 percent more than those made in the Asian country.

It's not just the US that's more expensive than Taiwan for chip manufacturers, either. Chips made on older, more mature process technologies like N28, N22, N16, and N12 at TSMC's Japanese arm in Kumamoto are also 10-15 percent more expensive to make than similar chips made in the company's home country.

Just like the US, Japan is looking o reignite its once-dominant semiconductor industry. Last year, we learned the two countries kicked off a joint research and development arm for 2nm-class process technologies and beyond.

TSMC Plans Up to $11 Billion German Chip Fab Investment: Report

upstart writes:

Its first fab in Europe will concentrate on 28nm production:

TSMC is said to be in wide ranging talks about the significant investment required to open a new chip fab in Saxony, Germany. Private investment may be as high as €10 billion (~$11 billion), according to "people familiar with the matter" talking to Bloomberg reporters. Public funds might end up matching that amount, to reel in this strategic investment, but the European Commission will have to greenlight any state aid. It is understood that TSMC's first fab in Europe will concentrate on 28nm production.

If the plans reported upon by Bloomberg are correct, TSMC will work in partnership with NXP Semiconductors, Robert Bosch, and Infineon Technologies to provide a wide base for the venture. The partnership will spread the €10 billion (~$11 billion) investment risk. TSMC partners' local business knowledge will help in both planning and the raising of state aid. Public funds won't quite meet the private investment level, at least initially. Bloomberg's report says that state subsidy levels will start at around the €7 billion mark ($7.75 billion), but could well rise to match the private investment capital.

If the EU Chips Act was designed to catch the biggest fish in semiconductors, TSMC and its partners' plans will be hard to resist. According to Bloomberg, it is typical for similar projects to gain 40% funding through EU subsidies, as the region strides to double its global semiconductor production share by 2030. Approval for these state subsidies will have to come from the European Commission, and negotiations over the size of subsidies will understandably be intense.

If the negotiations run smoothly, Bloomberg says that the Saxony chip fab project could be approved by TSMC by August. It won't be a leading edge facility, says the source, instead it will be tasked with churning out 28nm chips. A report shared by AnandTech last summer says that TSMC is "strongly encouraging its customers," still using its oldest nodes to migrate their mature designs to 28nm, which will become a new base level semiconductor component fab choice. While PC enthusiasts might turn their noses up at 28nm, the output will be welcomed by manufacturers who fared badly during the chip drought of the early 2020s.

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