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?
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.
> 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.
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.
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
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.
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.
It's high value but low margins work. It played a major role into why Intel began offshoring a large portion of it's fab work abroad back in the 1990s-2000s, and also why TSMC became a player in the space undercutting Japanese, Korean, Singapore, and Malaysian/American (Intel) vendors.
In Taiwan they are by far the highest paying employer (maybe Google/Microsoft branches here are comparable). The base pay is usually not impressive, but they come with insane bonus packages. They basically hoover up all the top graduates that haven't left abroad.
They're kind of notorious for have overqualified workers. PhDs left monitoring assembly lines or writing accounting software
My bad - didn't see the qualifier for Taiwan there.
Yea, TSMC pay is decent by Taiwan standards, but imo that's largely because Taiwan salaries are fairly low even compared to other East Asian nations when factoring CoL.
Googling TSMC margin and it looks to be 53%-59% gross margin. That is after they became the leading global fab of course.
No doubt keeping costs low helped them get to that stage. Still that's a crazy margin. I imagine much of it's re-invested.
IMHO, Intel could've kept up but dropped the ball pretty hard. The volume of ARM / cell phone cpus caught them off guard and huge amounts of revunue let TSMC drive forward.
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.
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.
I've had a number of friends who worked at Micron in Boise at their semi-fabs. Yes boring work, but the pay was decent. Especially for guys just graduating. I think it was like a 4-10 schedule.
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.
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.
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.
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???
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).
It is a few generations behind: Blackwell is still on N4, which is an N5 variant. Meanwhile TSMC has been shipping N3 family processes in large volume products (Apple) for more than 2 years already, and is starting to ramp the next major node family (N2) for Apple et al. next year.
NVIDIA has often lagged on process, since they drive such large dies, but having the first major project demo wafer on N4 now is literally 2 generations behind Taiwan.
Forgot about AMD's brief GPU flirtation with glofo. ATI used TSMC. I think it was only Polaris that ever shipped anything from NY. That's admittedly a couple of legendary value cards though.
The EU was funding fab lines, several levels back up the chain IIRC? The idea being that the chips doing car comms, engine management, cruder FPGA, old ARM cores, can be done fast, and stop supply chain weaknesses for things Europe needs chips in, like cars (and tanks, and UAVs and ...)
I'm not saying tiny lines aren't cool. I'm just saying the idea you can't be successful if you make cruder, older resolution chips is probably wrong: Your printer and your car don't care if the Dice is 10mm not 5mm, and the track lines are 5x wider. MILSPEC stuff probably runs cruder for other reasons. Resiliency? Verilog proofs?
I also have no idea how many dice you get off a single ingot these days. 300mm wide, but how long?
>The EU was funding fab lines, several levels back up the chain IIRC?
Yeah but much larger(16-12nm) and much less profitable nodes than what Taiwan, the US or even Japan and China have now.
> I'm just saying the idea you can't be successful if you make cruder, older resolution chips is probably wrong
Define success. Smallest nodes are bringing in the most profits and every country prefers more profits versus less profits, especially Europe given it's budget deficits and welfare spending.
Larger nodes that aren't very profitable are good for national security but Russia and even North Korea are proof you don't need much domestic semiconductor industry to completely terrorize neighboring countries and level entire cities. WW1-style artillery shells and rifle rounds will do just fine.
Yes, I think that's true. But I also think from re-establishing a viable VLSI industry on cruder tech, Europe (like China) can move up the food chain into the smaller lines, as the tech beds in. The irony of ASML being a JV with strong European roots, but the VLSI moving to "anywhere but europe" at scale stands out.
I don't buy labour costs. I think it's probably post-VLSI packaging, assembly of devices, and compliance with HAZMAT that made the moves to Asia and Latin America happen. These plants don't use a lot of cheap labour. So wage cost cannot explain the decision.
There are interesting posts going back decades (crufty google doc shares, USENET posts..) talking about what the work culture at TSMC is like, about Intel management. I think VLSI is like cheese making: if you wear the wrong perfume on the wrong day, you destroy the entire output in one go. But that doesn't justify 16 hour days and toxic management.
Background: The CHIPS and Science Act, which is the key legislation behind the major incentives and on-shoring of semiconductor manufacturing in general and this achievement specifically, was signed into law by Biden on August 9, 2022.
What other options are there for Nvidia? EU as a whole is largely non-viable due to the schizophrenic nature of EU regulations. AI development has been made de-facto illegal in EU, auto industry is being ran to the ground, so there are hardly any customers for GPU's. Now mainland China certainly would be an interesting option, but State Department would throw a shitfit.
The problem they are alluding to is environmental regulations - it's outright impossible or very very expensive to do certain manufacturing processes, especially silicon and medicine, due to the substances involved. And that is valid for both the US and EU actually, there's a reason Silicon Valley is the densest concentration of Superfund sites in the US, and there is a reason why most of SV production has left for China and Taiwan.
An additional problem is, both the US and EU have been pretty happy to just ship off the environmental damage to Asia to the tune of "out of sight out of mind". We got cheaper products (especially in medicine, our healthcare systems would outright collapse if it weren't for Chinese and Indian generics and precursors), but the total amount of environmental damage in the world hasn't shrunk, it has grown.
> it's outright impossible or very very expensive to do certain manufacturing processes, especially silicon and medicine, due to the substances involved.
I think you're, er, exaggerating this a little; Intel and GlobalFoundries both have large fabs in Europe. Given that Intel is going to be fabbing some nVidia chips, some of those will quite likely be made in their "Intel 4" (ie 7nm) fab in Ireland. And GlobalFoundries has a big (albeit older-tech) fab in Germany. Bosch also has a big 40nm fab in Germany for car stuff; old process, but high volume.
It's only fairly recently that the most advanced fabs have been outside the US or Europe; until late last decade the most advanced process was usually either made at Intel's Irish plant, or one of their US ones. And GlobalFoundries was also competitive at one time.
As for medicine, the world's largest drug exporting countries are Germany, Switzerland, the US, and Ireland, more or less in that order, though it shifts around a bit. Besides the US, _all_ of the top ten exporters are in the EU or EFTA. Germany is also one of the largest, if not the largest, exporters of medical _equipment_.
> I think you're, er, exaggerating this a little; Intel and GlobalFoundries both have large fabs in Europe. Given that Intel is going to be fabbing some nVidia chips, some of those will quite likely be made in their "Intel 4" (ie 7nm) fab in Ireland. And GlobalFoundries has a big (albeit older-tech) fab in Germany. Bosch also has a big 40nm fab in Germany for car stuff; old process, but high volume.
The thing is, the old GlobalFoundries fab has been constructed decades ago. Building something like this from scratch nowadays involves so much more paperwork than back then, it's a massive hurdle to overcome.
> As for medicine, the world's largest drug exporting countries are Germany, Switzerland, the US, and Ireland, more or less in that order
Finished medicine yes. But the precursors and "active pharmaceutical ingredients" (APIs)? 40% China, 20% India... and that's the total market share. For some ingredients, you got 95% (vit B) to 98% (Chloramphenicol) of the entire world's supply being made in China [1]. And of the APIs made in the EU or US, quite a lot depend on precursors made in India and China, or filler materials.
Medicine isn't about curing patients any more, it is about making money first and foremost, and that's why everyone and their dog went to India and China - India first because India is more cooperative with international audit teams than China is. And even then, there have been quite the amount of scandals [2][3][4].
(Side note re [4]: wtf is that banner "Democrats have shut down the government"?! Yes, everyone knows about the government shutdown, but ... isn't it illegal to blatantly engage in partisanship for government agencies?!)
> The thing is, the old GlobalFoundries fab has been constructed decades ago. Building something like this from scratch nowadays involves so much more paperwork than back then, it's a massive hurdle to overcome.
The big Bosch fab was built in 2021 (they previously had a smaller one, I think). The latest Intel fab in Ireland was finished in 2023.
You can't pack up a chemical factory and ship it overseas in a matter of weeks... in any case, BASF has let go hundreds of people last year and shut down part of said plant [1], partially due to staff cost but also due to a move to China planned to be finalized in 2030 [2]. They're aiming for 50% of gross income to come from China... utter madness if you ask me.
I mean, like having to hire hundreds of lawyers and assessors to just MAYBE get a construction permit within 2 or 3 years, if you want to build a gigafactory. Or any factory for that matter.
Just adding to the other commenters pointing out the unstable genius:
What do you think would have been the reaction of the angry TACO-lord if NVIDIA had announced that they're investing in the EU and not the US?
We know by now how weak his self-esteem is. He'd probably send some ICE agents in there and stopped all government contracts or something stupid like that.
At this point, decisions in this mafia country are not following (economical) logic anymore. It's utter, unstable madness.
Most of the monopolies in the GPU supply chain (ASML, Zeiss etc.) are European companies. The “EU has no AI” narrative is mostly pushed by VCs so they can keep raising funds from European investors.
