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Does anyone have any insight on how they make it economically viable? US salaries are astronomically high compared to the rest of the world. In the tech sector

Does anyone have any insight on how they make it economically viable? US salaries are astronomically high compared to the rest of the world. In the tech sector that's doubly so. Everything is incredibly expensive there. Is this basically a small facility to keep some politicians happy? Or is it used to provide some supply military gear at 50x the price? Will it get shut down in a few years once everyone forgets about it?

adgjlsfhk1 1y ago
semi manufacturing is highly automated, and not much of the cost is labor.
alex43578 1y ago
Intel has a fab a few miles away, and setting aside Intel's challenges, they're producing chips just fine. Semiconductor production is massively automated and the wafers are ludicrously high revenue/margin products. This isn't like using US labor to stitch t-shirts.
- rajnathani 1y ago
  > the wafers are ludicrously high revenue/margin products. Agree except this point, as at least for MCUs which are of US origin and yet cost ~$1 per chip which also includes reel packaging and distribution margins etc.
evrimoztamur 1y ago
Just print more money, it's a matter of national security. If the US is in a distrustful state, it's a good investment for the government, military or non-military (e.g. global trade getting more expensive for various reasons).
deleted 1y ago
[deleted]
parineum 1y ago
Salaries aren't a huge part of manufacturing like people think. Once the factory is built, accounting for logistics of shipping and remote management, it's not a huge difference financially. Getting the factory built, however, takes significantly more time and costs more in both actual dollars but, more importantly, the opportunity cost lost to not producing products in that extra build time.
- DanielHB 1y ago
  And they got subsidies to set up the factory I guess?
  - parineum 1y ago
    Yes.
gambiting 1y ago
Some hardware any superpower should be able to produce on home soil almost no matter the cost. That's why even Russia keeps domestic fabs making chips at some ancient process node - not to sell them for profit, but to maintain an ability to produce chips for the military and their own economy should things go down as they say.
westpfelia 1y ago
Well.. considering the mark up for the H100's is like 80 grand. I think there is a little wiggle room.
elcritch 1y ago
US Workers while costing more do seem are still competitive at expensive high value tasks. There was some reports a year back where the TSMC labs in Arizona while employee costs were higher also had 4% higher yield [1]. I'd wager combining that with US defense contracts for US made chips would be lucrative for NVidia. 1: https://news.ycombinator.com/item?id=41952534 https://news.ycombinator.com/item?id=41952534
- contrarian1234 1y ago
  is it high value? I know a guy working at a fab in Taiwan and he makes peanuts ($2-3K a month?). It's basically a factory job. From what he said it sounded braindead. TSMC is known for overpaying and having PhDs stare at assembly lines though - so I dunno.
  - razakel 1y ago
    The average salary in Taiwan is about $1,500, though.
    - contrarian1234 1y ago
      sorry, I should have thought about it a bit more. It's likely closer to 2K than 3K. A professor at Taiwan University makes ~3K. My only other point of reference is another friend's husband who works as an electric engineer at a LED manufacturer - making 2K a month. Minimum wage is $1K. Point being.. they're miserable jobs and the salaries are low low low. I get fabs sound fancy, but I'm not super sure anyone should be stoked these kinds of jobs are "coming back" to the US.
      - lesuorac 1y ago
        While I am more of the belief that these people are wanting a time with less income equality and conflating that with factory work. There's going to be a bunch of people wanting any job [1] and more in the coming years. So they'd probably cheer a local walmart as much as a local tsmc. [1]: https://www.bls.gov/web/empsit/cpseea10.htm https://www.bls.gov/web/empsit/cpseea10.htm
tiahura 1y ago
What I find weird is that a year ago there were reports in the NYT and elsewhere that TSMC was unable to make the AZ plant work because of lazy / dumb Americans. And then 6 months later, poof, 180, the reports were that they were right on track???
ksec 1y ago
In terms of Labour, the number one cost of a node is R&D. And that is happening in Taiwan not in US. And if US could somehow provide lower electricity cost to Fabs, which is the number one cost in production, it will offset a lot of expensive items on the list. The actual labour cost for running the Fab is comparatively small.
cashsterling 1y ago
Modern high-end fabs have extremely expensive equipment and are highly automated... like they are so automated that people don't actually handle wafers... it is almost all robotic. Thus, salaries and cost of services do not factor in as heavily as you might think to fab economics. Data suggests that TSMC's per wafer costs in Arizona are 10-30% higher than Taiwan and that Arizona fab is relatively new. It's economics will probably improve over time, narrowing the margin to 5-15%. Looking towards the future, power costs and other global supply chain factors could very easily make TSMC's Arizona fab less expensive and more reliable to operate over time. For one, the US is completely energy independent... Taiwan is not.
- bfrog 1y ago
  Aren’t TSM fabs in the US little islands of Taiwanese workers? How is this domestic knowledge and manufacturing not exactly?
  - clayhacks 1y ago
    They are majority Taiwanese employees for now, but I’m sure they’re hiring Americans to grow and backfill. They just wanted to bootstrap the knowledge and wisdom, but over enough time that can be shared and spread among Americans as well
    - nothercastle 1y ago
      Yeah right like they are just going to let that knowledge go

adgjlsfhk1 1y ago

semi manufacturing is highly automated, and not much of the cost is labor.

alex43578 1y ago

Intel has a fab a few miles away, and setting aside Intel's challenges, they're producing chips just fine. Semiconductor production is massively automated and the wafers are ludicrously high revenue/margin products. This isn't like using US labor to stitch t-shirts.

rajnathani 1y ago
> the wafers are ludicrously high revenue/margin products. Agree except this point, as at least for MCUs which are of US origin and yet cost ~$1 per chip which also includes reel packaging and distribution margins etc.

evrimoztamur 1y ago

Just print more money, it's a matter of national security. If the US is in a distrustful state, it's a good investment for the government, military or non-military (e.g. global trade getting more expensive for various reasons).

deleted 1y ago

[deleted]

parineum 1y ago

Salaries aren't a huge part of manufacturing like people think. Once the factory is built, accounting for logistics of shipping and remote management, it's not a huge difference financially. Getting the factory built, however, takes significantly more time and costs more in both actual dollars but, more importantly, the opportunity cost lost to not producing products in that extra build time.

DanielHB 1y ago
And they got subsidies to set up the factory I guess?
- parineum 1y ago
  Yes.

gambiting 1y ago

Some hardware any superpower should be able to produce on home soil almost no matter the cost. That's why even Russia keeps domestic fabs making chips at some ancient process node - not to sell them for profit, but to maintain an ability to produce chips for the military and their own economy should things go down as they say.

westpfelia 1y ago

Well.. considering the mark up for the H100's is like 80 grand. I think there is a little wiggle room.

elcritch 1y ago

US Workers while costing more do seem are still competitive at expensive high value tasks. There was some reports a year back where the TSMC labs in Arizona while employee costs were higher also had 4% higher yield [1]. I'd wager combining that with US defense contracts for US made chips would be lucrative for NVidia. 1: https://news.ycombinator.com/item?id=41952534 https://news.ycombinator.com/item?id=41952534

contrarian1234 1y ago
is it high value? I know a guy working at a fab in Taiwan and he makes peanuts ($2-3K a month?). It's basically a factory job. From what he said it sounded braindead. TSMC is known for overpaying and having PhDs stare at assembly lines though - so I dunno.
- razakel 1y ago
  The average salary in Taiwan is about $1,500, though.
  - contrarian1234 1y ago
    sorry, I should have thought about it a bit more. It's likely closer to 2K than 3K. A professor at Taiwan University makes ~3K. My only other point of reference is another friend's husband who works as an electric engineer at a LED manufacturer - making 2K a month. Minimum wage is $1K. Point being.. they're miserable jobs and the salaries are low low low. I get fabs sound fancy, but I'm not super sure anyone should be stoked these kinds of jobs are "coming back" to the US.
    - lesuorac 1y ago
      While I am more of the belief that these people are wanting a time with less income equality and conflating that with factory work. There's going to be a bunch of people wanting any job [1] and more in the coming years. So they'd probably cheer a local walmart as much as a local tsmc. [1]: https://www.bls.gov/web/empsit/cpseea10.htm https://www.bls.gov/web/empsit/cpseea10.htm

tiahura 1y ago

What I find weird is that a year ago there were reports in the NYT and elsewhere that TSMC was unable to make the AZ plant work because of lazy / dumb Americans. And then 6 months later, poof, 180, the reports were that they were right on track???

ksec 1y ago

In terms of Labour, the number one cost of a node is R&D. And that is happening in Taiwan not in US. And if US could somehow provide lower electricity cost to Fabs, which is the number one cost in production, it will offset a lot of expensive items on the list. The actual labour cost for running the Fab is comparatively small.

cashsterling 1y ago

Modern high-end fabs have extremely expensive equipment and are highly automated... like they are so automated that people don't actually handle wafers... it is almost all robotic. Thus, salaries and cost of services do not factor in as heavily as you might think to fab economics. Data suggests that TSMC's per wafer costs in Arizona are 10-30% higher than Taiwan and that Arizona fab is relatively new. It's economics will probably improve over time, narrowing the margin to 5-15%. Looking towards the future, power costs and other global supply chain factors could very easily make TSMC's Arizona fab less expensive and more reliable to operate over time. For one, the US is completely energy independent... Taiwan is not.

bfrog 1y ago
Aren’t TSM fabs in the US little islands of Taiwanese workers? How is this domestic knowledge and manufacturing not exactly?
- clayhacks 1y ago
  They are majority Taiwanese employees for now, but I’m sure they’re hiring Americans to grow and backfill. They just wanted to bootstrap the knowledge and wisdom, but over enough time that can be shared and spread among Americans as well
  - nothercastle 1y ago
    Yeah right like they are just going to let that knowledge go