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Well in principle Texas has lower (almost half) industrial energy costs than Taiwan, which could help reduce wafer production costs especially at the lower reso

Well in principle Texas has lower (almost half) industrial energy costs than Taiwan, which could help reduce wafer production costs especially at the lower resolution nodes. As Moore’s Law slows, things like energy and raw material costs may matter more. And having wafer plants close to fab plants can help. Rough order of magnitude, but for a lower cost wafer (think like 90nm or above, not 7nm), electricity and energy could be about 10% of the overall cost. As a lot of the capital cost of the automation and industrial equipment is the same wherever in the world you are, that might be an important factor. Taiwan is an island that imports almost all of its energy. Texas is an energy rich state with lots of wind, solar, and especially natural gas that is exported to the world. We talk about higher natural gas prices in the US with Texas seeing slightly above $4/MMBTU, but LNG prices in Asia are above $35/MMBTU at the moment, nearly an order of magnitude higher. The government of Taiwan is basically eating half the entire cost of LNG right now to keep costs low for businesses and consumers, but that’s not a sustainable strategy. (At the moment, industrial electricity is about 13¢/kWh in Taiwan even with the government subsidizing most of the LNG cost and 7-8¢/kWh in Texas.)

mrweasel 5y ago
I was wondering why Texas keep coming up when new US fabs a being talked about. From an outsider it just looks like the low energy cost comes from failing to properly manage and upgrade the Texas energy grid.
- megaman821 5y ago
  The Texas grid has been diversified and transmission upgraded. The problem is that it hasn't been winterized. While this is costly, I doubt this is the main reason why prices are low. Texas has a large, cheap supply of natural gas and good areas for both wind and solar.
- Robotbeat 5y ago
  The energy prices are low because Texas has tons of oil and gas and wind. The energy grid is actually more efficiently managed than California, which has had similar problems with electricity supply. But the main reason Texas comes up is it has a very long history in semiconductors with a big workforce and lots of semiconductor companies.
  - posguy 5y ago
    Efficiency in electrical grids can often be counterproductive to reliability. It is economically efficient to not winterize your generation capacity or build longhaul electrical transport infrastructure to move electricity regionally, but without these rarely used elements you could end up with severe load shedding or a black start event.
    - Robotbeat 5y ago
      Clearly. Texas needs winterization. But of course, you can be both economically inefficient AND unreliable. California is one such example.
pie42000 5y ago
Why are people concerned about energy and material costs? Semiconductors are probably the highest margin manufactured goods on the planet, with materials and energy being the lowest cost input to the process. The only good that can compete is bottled water or movie theater popcorn. This is 100% politically motivated.
- Robotbeat 5y ago
  It takes about 3 kWh per square centimeter to make a high-quality silicon wafer. 90 nm node silicon wafer might cost about three dollars per square centimeter. So it isn’t a rounding error for actual wafer production. The unsubsidized electricity cost in Taiwan is on the order of 30¢/kWh for natural gas vs about 7-8¢/kWh in Texas. So the difference isn’t zero. Purifying and growing high quality wafers is very, very energy intensive. This becomes more important as Moore’s Law slows and more of chip costs become just the wafer costs.

mrweasel 5y ago

I was wondering why Texas keep coming up when new US fabs a being talked about. From an outsider it just looks like the low energy cost comes from failing to properly manage and upgrade the Texas energy grid.

megaman821 5y ago
The Texas grid has been diversified and transmission upgraded. The problem is that it hasn't been winterized. While this is costly, I doubt this is the main reason why prices are low. Texas has a large, cheap supply of natural gas and good areas for both wind and solar.
Robotbeat 5y ago
The energy prices are low because Texas has tons of oil and gas and wind. The energy grid is actually more efficiently managed than California, which has had similar problems with electricity supply. But the main reason Texas comes up is it has a very long history in semiconductors with a big workforce and lots of semiconductor companies.
- posguy 5y ago
  Efficiency in electrical grids can often be counterproductive to reliability. It is economically efficient to not winterize your generation capacity or build longhaul electrical transport infrastructure to move electricity regionally, but without these rarely used elements you could end up with severe load shedding or a black start event.
  - Robotbeat 5y ago
    Clearly. Texas needs winterization. But of course, you can be both economically inefficient AND unreliable. California is one such example.

pie42000 5y ago

Why are people concerned about energy and material costs? Semiconductors are probably the highest margin manufactured goods on the planet, with materials and energy being the lowest cost input to the process. The only good that can compete is bottled water or movie theater popcorn. This is 100% politically motivated.

Robotbeat 5y ago
It takes about 3 kWh per square centimeter to make a high-quality silicon wafer. 90 nm node silicon wafer might cost about three dollars per square centimeter. So it isn’t a rounding error for actual wafer production. The unsubsidized electricity cost in Taiwan is on the order of 30¢/kWh for natural gas vs about 7-8¢/kWh in Texas. So the difference isn’t zero. Purifying and growing high quality wafers is very, very energy intensive. This becomes more important as Moore’s Law slows and more of chip costs become just the wafer costs.