TSMC Founder Says Growing Domestic US Chip Production is Wasteful and Expensive

[Vayra86]

He believes the US is lacking the talent, Chang also praises US chip design talent, bit of a contradiction there?

He is correct though. Look at the percentage and level of math students in Asia compared to EU or US. Its staggering, like two worlds apart. When it comes to bulk of workforce, we haven't got jack shit in EU or US. This takes a whole lot of time to build up. It requires an ecosystem that spans over decades. The EU has similar issues when it comes to say, military. Everything you cut away in those budgets is one simple wave goodbye but getting it back takes massive effort and lots of time.

 

[Zareek]

I checked the Taiwanese average wage. It's 55k NTD per month. That's the equivalent of 17k UK pound annual salary.

The UK average salary is over 10k higher. I think US is higher still.

Average means squat, look up median individual incomes. They are the best practical measurement of the typical person's income. Averages get thrown off badly due to those with insanely high incomes, this is especially true for the US. Things are a lot closer than you think, US versus UK. Either country is a big difference from Taiwan.

 

[lilhasselhoffer]

He believes the US is lacking the talent, Chang also praises US chip design talent, bit of a contradiction there?

No.

I'll be honest here, it sounds like talent is talent. That said, it it not. What he could have said more accurately it:
"The US doesn't have the manpower and labor history required to manufacture in the same way that Taiwan does. Conversely, Taiwan doesn't have the design skills to make that fabrication capability into anything useful."

Let me start this conversations by starting.
1) Raw materials are mined and converted - see: very low skilled countries
2) Machines are made, to turn those raw materials into complex goods - see: Germany (where EUV machines are fabricated)
3) Engineers design the complex goods - see: The US
4) Low paid, but highly educated areas manufacture the complex goods - see: Taiwan

1 exists to be low cost, high risk, low skills, and high labor. 2 exists to be high cost, low risk, high skills, and moderate labor. 3 exists to be high cost, low risk, high skills, and low labor. Finally, 4 is low cost, low risk, high skills, and moderate labor. Notice none of this overlaps.




The "burn" here is that the US doesn't make anything anymore. They can't compete against the skilled laborers from other countries, because they cost too much. The counter-burn is that Taiwan has labor but no ability to design. Both are useless without the other.

My $0.02 is that this is correct, if a bit simplistic. I've worked at plenty of places with three shifts...but when you think about the US it's difficult to equate that to how many people work "banker hours." I think this is just a myopic view of a country that is much bigger than people think, especially when you're comparing to an island nation...that was taken over from the natives after the CCP won the civil war post WWII.
It's hard, but go to Europe. Go to Taiwan. Ask them what the "average American" is...and be surprised. Sometimes a lot of the truth is lost when people aren't willing to understand that LA, Chicago, Detroit, Tulsa, Boise, and Ore are all cities amongst the same country. What do all of these cities have in common...? Basically nothing other than being in the same country. Despite this, people believe they "understand" America. It's the same jangoistic idiocy that leads people in the US joking about Russia being composed of bears on unicycles.

 

[AsRock]

America has excellent plumbers but we suck at making pipes.

Only because America ( and other western country's). keeps giving the jobs out to every one else.

 

[eidairaman1]

Yeah, they don't want competition. They want to be able to charge their customers whatever they want.

Just like aircraft parts, embraer wants that , but where I work we have a pma which are exactly the same parts or better for less, same for Raytheon Hawker Sidley we have a pma as well. So we compete with the "Goliaths"

 

[ModEl4]

I didn't see the video yet, but if he said the following:
"However, he does mention that if the PRC decided to start a war with Taiwan, then the bet is likely to pay off for the US"
Then:
1) He thinks that USA made a bet with financing and giving incentives for expanding the local semiconductor manufacturing capacity
2) this bet will pay off only if PRC start a war with Taiwan
Well i don't know anyone making a bet without wanting to win
Just tell me when the new fabs will be ready, I need to buy before that.
Just joking, it's what he said, just blame Morris Chang.

 

[sirlesliechao]

I think he's on point. You can see the reality of this in effect with Intel as an example. Intel was the leader in the space for decades until they weren't. For the last decade or more all they did was fumble and add "+" after "+" and now we, the gov thinks they are the entity to bring the US back into the forefront? There's a disconnect here imo. And this is not touching on the logistics, workforce, and high cost of manufacturing in the US.

The problem was more so that intel's scaling was overly aggressive. They also used cobalt for some of the earlier metal layers.
If you look at Intel 10nm transistor density, at 10nm it is 2x that of TSMC.
Workforce costs might be higher in the US, but as compared to consumables, I don't think the difference is as significant as they claim.

 

[boidsonly]

When Chang is flying the Red Chinese flag atop his plants, he'll quickly change his attitude.
When MWIMB spent millions in Clarksville TN to start building a semiconductor plant, Red China dumped them on the market. Construction was halted and the property was eventually sold. The local state college started a slew of classes aimed at filling the positions at the plant.
Taiwan is freely manufacturing on borrowed time.

 

[noel_fs]

this is probably bullshit, im not even an american

i cant see the logic behind that statement

 

[R-T-B]

I checked the Taiwanese average wage. It's 55k NTD per month. That's the equivalent of 17k UK pound annual salary.

The UK average salary is over 10k higher. I think US is higher still.

I guess overall national wealth and wealth per capita can be very, very different. Thanks for the stats.

Only because America ( and other western country's). keeps giving the jobs out to every one else.

Why would that affect the quality of domestic made pipes?

Assuming a pipe is still in fact made here, the quality level should be based on the experience of the worker, not how many asians are churning them out.

 

[AsRock]

I guess overall national wealth and wealth per capita can be very, very different. Thanks for the stats.


Why would that affect the quality of domestic made pipes?

Assuming a pipe is still in fact made here, the quality level should be based on the experience of the worker, not how many asians are churning them out.

I was not really on about pipes in general, a pipe made in China verses one made in the US ?. who's would you trust ?.

 

[R-T-B]

I was not really on about pipes in general, a pipe made in China verses one made in the US ?. who's would you trust ?.

The heavier one. Better for beating up zombies.

 

[thestryker6]

TSMC is having issues with staffing their Arizona fab, and from what I've gathered it's due to their work expectations. Intel is relatively next door, pays better, doesn't work their people to the bone and isn't having the same issues. Intel also never stopped manufacturing in the US and their profit margins have been perfectly fine. His take sounds far more like someone invested in the US *not* expanding chip making capability.

The issues Intel had with 10nm were entirely hubris based: they were very density aggressive, used exotic materials, dismissed EUV, and cut R&D spending. The first product that came out on a more advanced process than Intel had was in September 2018. Intel being successful with IDFIFS2 would be huge for the entire industry as it would bring another leading edge manufacturing process to the worldwide market.

 

[Richards]

TSMC is having issues with staffing their Arizona fab, and from what I've gathered it's due to their work expectations. Intel is relatively next door, pays better, doesn't work their people to the bone and isn't having the same issues. Intel also never stopped manufacturing in the US and their profit margins have been perfectly fine. His take sounds far more like someone invested in the US *not* expanding chip making capability.

The issues Intel had with 10nm were entirely hubris based: they were very density aggressive, used exotic materials, dismissed EUV, and cut R&D spending. The first product that came out on a more advanced process than Intel had was in September 2018. Intel being successful with IDF2 would be huge for the entire industry as it would bring another leading edge manufacturing process to the worldwide market.

Intel will be back in the lead with ribbonfet node.. intel is a innovative company

 

[MentalAcetylide]

Hi,
Yep gov picking winners hardly ever works long term it's just a tax money dumping ground to and for the already rich Solyndra solar power company come to mind

Yeah, and I'm not even sure Solyndra is around anymore. They were "loaned" approximately $535 million USD and it just disappeared. I think certain individuals that were running the company at the time, and also the people who ok'ed the loan should've been thrown in jail. It should've been obvious from the start given the extremely high cost of the materials used to manufacture their panels that they weren't going to be making money.

 

[watzupken]

That’s why I believe this aggressive fab expansion program in US and EU is not going to end up well. You can throw money at the fab and equipment problem, but you can’t solve issues like lack of people trained in this expertise, and also factors like raw materials which is sourced globally. The fact that US is so urgently trying to diversify chip production out of Taiwan don’t feel right to me, especially when they have been poking at China over Taiwan. Ultimately if China invades Taiwan, US is going to be the ultimate beneficiary for fab businesses.

 

[TheLostSwede]

I checked the Taiwanese average wage. It's 55k NTD per month. That's the equivalent of 17k UK pound annual salary.

The UK average salary is over 10k higher. I think US is higher still.

Except most people in Taiwan earn far less. That's entry level manager salary at most companies, plus bonus admittedly.
35-45k is a far more normal salary.

I concur there isn't much of a choice, but a bad choice is still a bad choice. They're paying Gelsinger 180 million for godsake, a ton of the subsidies is just going to line their coffers. If Intel was capable they would have already done so a decade ago. There's no where to go with this as Intel is not a leader, they don't have the human capital to get anywhere close to TSMC. I understand your point that they have to do what they have to do. Though I disagree that the gap in overhead TSMC may shrink, cuz the cost for the US will definitely skyrocket making a potential cost scale for Taiwan a moot point. I suppose this is more of a rant...

It's like the crap the gov is pulling with getting behind the US legacy automakers Ford and GM, touting how they are leading the US revolution in EVs, which is a literal joke. GM sold 26 ev cars in Q4 2021, and Ford's EV sales dropped 46% in Q1 2022, and the gov is pushing these two as the leaders. Meanwhile the real leader reported 30%+ gross margin for Q1 2022 when Ford and GM have 0% margins for auto sales. They make almost zero profits selling vehicles and instead the real profits come from post sales and financing, ludicrous.

With regards to CEO pay, the two top people at TSMC each got paid just over NT$144 million last year. Quite a difference, yet that's hardly a crap salary in any currency.

Taiwan is one of the most wealthy countries in Asia, largely due to things like TSMC. Not sure where the sweatshop allegations are coming from...

You're aware that a significant amount of labour in Taiwan comes from the Philippines, Indonesia, Vietnam and Thailand, right? Some of them are almost treated like slave labour. Maybe not in the semiconductor industry, but look up the Taiwanese fishing fleet and your opinion about Taiwan might drop a peg or two. The Taiwanese treat their neighbouring nations like crap.

 

[Baum]

its funny how you all react to this...


you need to build chips on your american continent even if you are inefficient at start it is of strategic value...

and yes of cause some taiwanese "founder" doesn't like the idear as it saves taiwan less from the claw of china, the us is not going to world war when china attacs taiwan after europe is self absorbt by ukraine war


Any move to "not produce chips" on your own continent is a stategic error on epic scale, it just show you learned nothing from the last years

 

[Renald]

He is not wrong based on simple facts : working a fab 24/7 without power grid shortage, and low costs for paying extra all the workers, it's not clearly not a good idea in the USA.
The wage needed to live in the US is far more higher than any country : everything is expensive. A 1M dollar bill because of 2 weeks in the ICU is just insane. Same goes for houses, insurances, rent, etc.

It's easier in Europe because our average wage is lower, and we don't have power shortage problems.

As mentionned before, if US' is qualified enough to design chips, but they can't technically run fabs without make huge efforts which aren't profitable except for production independence.

Just to give you an indication : 30$/h wage reprensents 4200$/month for us, which is huge. Many people don't reach that even with a Master degree and a good expertise.
Average in europe is around 2500€/month (global) in "rich" countries.

 

[newtekie1]

So his argument for why US Chip manufacturing is futile is that the US can exploit slave labor like they do? That probably isn't the boast they think it is.

 

[R-T-B]

You're aware that a significant amount of labour in Taiwan comes from the Philippines, Indonesia, Vietnam and Thailand, right? Some of them are almost treated like slave labour. Maybe not in the semiconductor industry, but look up the Taiwanese fishing fleet and your opinion about Taiwan might drop a peg or two. The Taiwanese treat their neighbouring nations like crap.

As said, I was only going by world factbook stats, and completely oblivious. Thanks for the primer.

 

[TheLostSwede]

As said, I was only going by world factbook stats, and completely oblivious. Thanks for the primer.

It's easy to get the impression that the Taiwanese treat people nicely, but it's sadly far from the truth.
Most higher management and HR departments in Taiwan, are trying to keep salaries as low as possible.
The standard for salaries is a website called 104, which is an employment website that list salaries and everyone is seemingly trying to compete with regards to who can pay the least to hire someone...

 

[MarsM4N]

It will be even more expensive for the West when China takes over Taiwan. I don't even wanna know how many Chinese agents sneaking around in their company, handing over private intellectual property to the CCP. That alone leads to massive loss once they start to produce their copy pasta CCP chips. With production in the West you can control such things way better.

And saying muricans can't do the job is nonsense. There are enough competent people who can be trained. In the end it just shows that we went too far with our grashopper capitalism. We need to bring essential production back. Which will also create more meaningful jobs, good for mental health of all who would otherwise waste their life in stupid jobs (paper shovelers, keyboard smashers, seat heaters, etc.).

 

[onemanhitsquad]

who cares what "Chong" says...the Chinese haven't had an original idea since spaghetti

 

[eidairaman1]

TSMC is having issues with staffing their Arizona fab, and from what I've gathered it's due to their work expectations. Intel is relatively next door, pays better, doesn't work their people to the bone and isn't having the same issues. Intel also never stopped manufacturing in the US and their profit margins have been perfectly fine. His take sounds far more like someone invested in the US *not* expanding chip making capability.

The issues Intel had with 10nm were entirely hubris based: they were very density aggressive, used exotic materials, dismissed EUV, and cut R&D spending. The first product that came out on a more advanced process than Intel had was in September 2018. Intel being successful with IDFIFS2 would be huge for the entire industry as it would bring another leading edge manufacturing process to the worldwide market.

So TSMC is acting like Foxconn?

It will be even more expensive for the West when China takes over Taiwan. I don't even wanna know how many Chinese agents sneaking around in their company, handing over private intellectual property to the CCP. That alone leads to massive loss once they start to produce their copy pasta CCP chips. With production in the West you can control such things way better.

And saying muricans can't do the job is nonsense. There are enough competent people who can be trained. In the end it just shows that we went too far with our grashopper capitalism. We need to bring essential production back. Which will also create more meaningful jobs, good for mental health of all who would otherwise waste their life in stupid jobs (paper shovelers, keyboard smashers, seat heaters, etc.).

We can thank NAFTA in the 90s for the bs in the US.

Fyi paper pushers/deskjockeys.

Im a blue collar worker being a Landing gear tech, I love computers but I can't sit at one and do paper work all day. (Yes paperwork is about 50% of my job)

So his argument for why US Chip manufacturing is futile is that the US can exploit slave labor like they do? That probably isn't the boast they think it is.

It be good if TI, AMD had their own fabs here.

Fab 51 was originally an AMD Fab in Dresden Germany that was sold to Globalfoundries unfortunately.