5 ms·

This perhaps will do much more than the CHIPS act to remove the geopolitical risk associated with TSMC/Taiwan. A rational US administration would encourage this

by pm90 3y ago

This perhaps will do much more than the CHIPS act to remove the geopolitical risk associated with TSMC/Taiwan. A rational US administration would encourage this kind of development rather than stubbornly try to revive the sector domestically.

ikrenji 3y ago
if japan can revive the sector domestically, surely usa can to
vasco 3y ago
Can't both be done? Everyone understood semiconductors will be the oil of the next wars when the covid supply chain disruption happened. The next few years have just been everyone trying to figure out what to do so they don't have to modify designs in times of war.
jtriangle 3y ago
Both are pretty difficult models to pull off because none of the above has the edge Taiwan has, which is cheap skilled labor. Until you can match labor cost with automation, it's DOA, regardless of how good your fabs are, and the automation isn't there yet.
- aembleton 3y ago
  Could provide subsidies like we do with farming.
- resolutebat 3y ago
  Genuine question: is labor cost really that important for cutting-edge fabs? I would have assumed the tooling would be far more expensive.
  - cm2187 3y ago
    I am doubtful as well. We are told these factories cost 10s of billions to build though the number of people on the floor doesn't seem very different than any other factory. I find that hard to believe that labour is a primary driver.
  - FooBarWidget 3y ago
    If you read a couple of articles featuring what TSMC said, then it's clear that work culture/ethic is a major reason why they have so much trouble getting their Arizona plant running. This work ethic is at least in some part related to cost: they expect long, possibly unpaid, overtime.
  - jtriangle 3y ago
    Yes, but you amortize the cost of the tooling out over the lifetime of the tooling, and you're paying on a loan for that. Labor is an ongoing, and increasing cost, not just wages, but also insurance, payroll taxes, etc. Also remember the tooling is a fixed cost, it'll cost you (many) millions in Taiwan the same as it will in Japan or the US, so the cost of skilled labor is what ultimately affects your margins.
- rgmerk 3y ago
  Are Taiwanese labour costs significantly lower than Japan these days?
  - visarga 3y ago
    Taiwan educated generations of people into this field, Japan probably has higher costs to hire in the same sector or simply doesn't have the people.
throwaway4good 3y ago
Taiwan's economy is deeply dependent on TSMC. By preventing TSMC from selling to the mainland while encouraging subsidies for TSMC's competitors in other countries the US is really squeezing Taiwan with unclear long-term consequences.
- sidkshatriya 3y ago
  My understanding is that those subsidies would be available to TSMC for the fabs it is/would be setting up in the US. So, basically TSMC as a corporate entity's profits/revenues can keep chugging along. Taiwan itself continues to have a risky/uncertain future.
  - throwaway4good 3y ago
    It is potentially a lot of jobs and economic activity leaving Taiwan for the US, Europe or Japan. Most of the US subsidies are going to Intel (including for them setting up their foundry services which directly competes with TSMC). However there are some for TSMC for setting up in the US, that is true.
    - swiftflame 3y ago
      [dead]
- modernpink 3y ago
  Taiwan can be economically squeezed by western derisking and moving sensitive tech out of Taiwan or it can continue to be militarily squeezed by China if it continues to be the single point of failure in the western technology chain. The former appears to be the better choice than the latter.
Longlius 3y ago
The sector doesn't need to be 'revived' domestically, it just needs to be reinvigorated. Intel only lost the edge from 2018 onwards and it's still among the most sophisticated producers in the world. It's not a dead industry in need of continuous subsidy to be viable.
edgyquant 3y ago
No a rational admin would accept that we can’t afford to ever be at risk of losing our flow of chips and subsidize as needed, just as with agriculture, to ensure we can provide everything we need. Which is why the last two presidents have pushed hard for this and it’s a bipartisan talking point

by pm90 3y ago

ikrenji 3y ago

if japan can revive the sector domestically, surely usa can to

vasco 3y ago

Can't both be done? Everyone understood semiconductors will be the oil of the next wars when the covid supply chain disruption happened. The next few years have just been everyone trying to figure out what to do so they don't have to modify designs in times of war.

jtriangle 3y ago

Both are pretty difficult models to pull off because none of the above has the edge Taiwan has, which is cheap skilled labor. Until you can match labor cost with automation, it's DOA, regardless of how good your fabs are, and the automation isn't there yet.

aembleton 3y ago
Could provide subsidies like we do with farming.
resolutebat 3y ago
Genuine question: is labor cost really that important for cutting-edge fabs? I would have assumed the tooling would be far more expensive.
- cm2187 3y ago
  I am doubtful as well. We are told these factories cost 10s of billions to build though the number of people on the floor doesn't seem very different than any other factory. I find that hard to believe that labour is a primary driver.
- FooBarWidget 3y ago
  If you read a couple of articles featuring what TSMC said, then it's clear that work culture/ethic is a major reason why they have so much trouble getting their Arizona plant running. This work ethic is at least in some part related to cost: they expect long, possibly unpaid, overtime.
- jtriangle 3y ago
  Yes, but you amortize the cost of the tooling out over the lifetime of the tooling, and you're paying on a loan for that. Labor is an ongoing, and increasing cost, not just wages, but also insurance, payroll taxes, etc. Also remember the tooling is a fixed cost, it'll cost you (many) millions in Taiwan the same as it will in Japan or the US, so the cost of skilled labor is what ultimately affects your margins.
rgmerk 3y ago
Are Taiwanese labour costs significantly lower than Japan these days?
- visarga 3y ago
  Taiwan educated generations of people into this field, Japan probably has higher costs to hire in the same sector or simply doesn't have the people.

throwaway4good 3y ago

Taiwan's economy is deeply dependent on TSMC. By preventing TSMC from selling to the mainland while encouraging subsidies for TSMC's competitors in other countries the US is really squeezing Taiwan with unclear long-term consequences.

sidkshatriya 3y ago
My understanding is that those subsidies would be available to TSMC for the fabs it is/would be setting up in the US. So, basically TSMC as a corporate entity's profits/revenues can keep chugging along. Taiwan itself continues to have a risky/uncertain future.
- throwaway4good 3y ago
  It is potentially a lot of jobs and economic activity leaving Taiwan for the US, Europe or Japan. Most of the US subsidies are going to Intel (including for them setting up their foundry services which directly competes with TSMC). However there are some for TSMC for setting up in the US, that is true.
  - swiftflame 3y ago
    [dead]
modernpink 3y ago
Taiwan can be economically squeezed by western derisking and moving sensitive tech out of Taiwan or it can continue to be militarily squeezed by China if it continues to be the single point of failure in the western technology chain. The former appears to be the better choice than the latter.

Longlius 3y ago

The sector doesn't need to be 'revived' domestically, it just needs to be reinvigorated. Intel only lost the edge from 2018 onwards and it's still among the most sophisticated producers in the world. It's not a dead industry in need of continuous subsidy to be viable.

edgyquant 3y ago

No a rational admin would accept that we can’t afford to ever be at risk of losing our flow of chips and subsidize as needed, just as with agriculture, to ensure we can provide everything we need. Which is why the last two presidents have pushed hard for this and it’s a bipartisan talking point