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TSMC May Charge 30 Percent More for Chips Made at its Arizona Fabs
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TSMC may charge 30 percent more for chips made at its Arizona fabs [techspot.com]:
TechSpot is about to celebrate its 25th anniversary. TechSpot means tech analysis and advice you can trust [techspot.com].
The big picture: 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 [techspot.com] 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 [techspot.com] and semiconductor-grade neon [techspot.com] as well as a steady supply of water [techspot.com] 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 [techspot.com] 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 [digitimes.com] than those made in the Asian country.
Also read: How did TSMC get so good? [techspot.com]
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 [techspot.com] 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 [techspot.com] its once-dominant semiconductor industry. Last year, we learned the two countries kicked off a joint research and development arm [techspot.com] for 2nm-class process technologies and beyond.
Still, that's unlikely to bring costs down for US-made chips as wafer suppliers are undergoing capacity expansions [techspot.com] that can't keep up with the chip foundry expansions of companies like TSMC, Intel, and Samsung – all of which are building new fabs in the US and elsewhere.
Furthermore, bleeding-edge EUV equipment [techspot.com] from ASML is in short supply, and a single machine costs up to $160 million, with the next-generation version set to cost up to $400 million [reuters.com] apiece. And research and development costs for chips made using more advanced process nodes have skyrocketed in recent years.
Like Intel and Samsung, TSMC wants to cover some of the cost of setting up its Arizona fabs using $15 billion from the CHIPS Act [techspot.com] funding pool. At the same time, TSMC founder Morris Chang has expressed doubts [techspot.com] about the US' ability to quickly boost local manufacturing by simply throwing more money at the problem. He also believes sanctions [techspot.com] against China have the potential to increase chip prices over time as a result of industry fragmentation.
In the end, even if chip manufacturing is more expensive in the US, companies with deep pockets like Apple [techspot.com] will no doubt be happy to pay a little extra to ensure they have a diverse supply chain that isn't prone to the same issues that cropped up in recent years. And with a US presence, TSMC is essentially buying an insurance policy for its operations both in the US as well as in Taiwan – a win-win situation.
TSMC Plans Up to $11 Billion German Chip Fab Investment: Report
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TSMC Plans Up to $11 Billion German Chip Fab Investment: Report [tomshardware.com]:
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 [bloomberg.com] 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 [tomshardware.com] 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 [tomshardware.com] 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.
TSMC's 28nm Node
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 [anandtech.com] 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.
In the wake of Bloomberg's report, the Taiwanese chip-making giant has confirmed to Reuters [reuters.com] that it is still evaluating the possibility of building a fab in Europe. However, that doesn't really confirm nor deny anything of substance. Also remember, at this stage the plans could still change or fall through, even if the unnamed sources speaking to Bloomberg are highly credible.
Will Intel be a Neighbor?
We reported last month that Intel was still in negotiations with the German government over the scale of subsidies on offer. It was looking for a further $5 billion [tomshardware.com] in subsidies, which will be used to establish a new chip fab near Magdeburg [tomshardware.com].
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DDR5 Price Drops Stalling Because of Supply Constraints: Report
See more latest ► [tomshardware.com]
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 [bloomberg.com] 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 [tomshardware.com] 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 [tomshardware.com] 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.
TSMC's 28nm Node
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 [anandtech.com] 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.
In the wake of Bloomberg's report, the Taiwanese chip-making giant has confirmed to Reuters [reuters.com] that it is still evaluating the possibility of building a fab in Europe. However, that doesn't really confirm nor deny anything of substance. Also remember, at this stage the plans could still change or fall through, even if the unnamed sources speaking to Bloomberg are highly credible.
Will Intel be a Neighbor?
We reported last month that Intel was still in negotiations with the German government over the scale of subsidies on offer. It was looking for a further $5 billion [tomshardware.com] in subsidies, which will be used to establish a new chip fab near Magdeburg [tomshardware.com].
Get instant access to breaking news, in-depth reviews and helpful tips.
Contact me with news and offers from other Future brandsReceive email from us on behalf of our trusted partners or sponsorsBy submitting your information you agree to the Terms & Conditions [futureplc.com] (opens in new tab) and Privacy Policy [futureplc.com] (opens in new tab) and are aged 16 or over.
DDR5 Price Drops Stalling Because of Supply Constraints: Report
See more latest ► [tomshardware.com]
