TSMC Arizona Operations Only 10% More Expensive Than Taiwanese Fab Operations

[mav1178]

There was a civil war in mainland China in 1927 to 1936 which resumed from 1945 to 1949. It opposed the People's Republic of China (PRC - communists) to the Republic of China (ROC - centrist/rightist party) . ROC lost and fled to independant Taiwan, ruling as an autoritative power at the beginning until transitioning to democracy since 1988.

this part is incorrect.

Taiwan (as a territory) was first brought under Imperial China control during the Ming Dynasty, then as the Qing Dynasty took over in the 17th Century the remnants of the Ming Dynasty fled there (until they were taken over by Qing forces in ~1683)

China lost the first Sino-Japanese war in 1895 and gave up Taiwan (and renounced its influence over Korea, paving the way for Japan to annex Korea just prior to WWI), but Taiwan was officially returned to China after it lost WWII.

the key part here that is the important part: Taiwan was given up by the Qing Dynasty in 1895, the ROC was founded in 1911 but lost the mainland part of the Civil War in 1949 and fled to Taiwan, but at that time there were already two "Chinas" - PRC founded in 1949 and the ROC which only ruled over Taiwan and some minor islands.

while it is true that the KMT ruled under martial law until 1988, Taiwan was not "independent" and a large part of the Taiwanese independence movement centers around this grey area.

so to say "independent Taiwan" is glossing over a lot of the background info that helps people to understand why 1) China wants to invade Taiwan so badly, and 2) why Taiwan is under US protection (which mostly stems from the need to stop communism starting in 1950 when the Korean War broke out, prior to that the US was essentially giving up on the ROC government... otherwise if communism conquered Korea, then the next target would have been Japan, which the US spent way too many lives fighting against and didn't want to lose)

(context - I was born and raised in Taiwan. I have many family members deeply associated with the KMT, but my dad's side is like 300 years of history rooted in Taiwan, so I have a very deep and unique perspective of what happens there)

Um, are you kidding? China's Naval forces do not compare to Taiwan, the US and Japan. Little known fact, Japan and Taiwan, though competitors, value and honor each other. Japan will be as much an alliy of Taiwan as the US, if not more-so. China can not win a Naval conflict concerning Taiwan.

fixed for you - Taiwan's naval forces do not exist in any meaningful capacity, their best ships are essentially leftover from the 1970s (Kidd-Class destroyers for example were originally built for Iran prior to 1979) - so you can leave Taiwan out of this.

Taiwan has been wanting to buy ships with AEGIS capability for the last 20 years, but the US refuses to transfer this technology to them. so until then, they can only rely on the US 7th Fleet and Japan to help defend.

Taiwan's entire defensive capability is built around destroying as much of the invasion fleet landing capability during the initial assault, and bottlenecking landing craft capability as there are not a large amount of beachheads suitable to land on. But the real strategy is to buy the island approximately 72-96 hours so allies (presumably US/Japan) can respond in time before it is too late to repel the attack.

 

[the54thvoid]

I mean, at some point the politics line wasn't just crossed; it was set on fire, pushed over a cliff, and then buried under an avalanche of varying degrees of nationalism, sabre-rattling, false-confidence, and some actual history.

A question relevant to the actual topic is: will the increase costs be absorbed by TSMC, or passed on to the consumer?

 

[billEST]

I mean, at some point the politics line wasn't just crossed; it was set on fire, pushed over a cliff, and then buried under an avalanche of varying degrees of nationalism, sabre-rattling, false-confidence, and some actual history.

A question relevant to the actual topic is: will the increase costs be absorbed by TSMC, or passed on to the consumer?

believe they will lost 20%

 

[mav1178]

A question relevant to the actual topic is: will the increase costs be absorbed by TSMC, or passed on to the consumer?

"there won't be tariffs since the product will be made in the USA!"

that is the current US policy statement when it comes to product. TSMC will price it as they see fit.

keep in mind this is just manufacturing of the chips. people overlook the other aspects of semiconductor manufacturing such as packaging, finished goods production, etc.

it just means the actual chips themselves will be made in USA at a ~10% price increase. if we want to have a discussion about final cost to consumers then short answer is it will be passed to consumers, and long story is it will depend on how many loopholes/exemptions can be added to ensure this isn't tariffed.

 

[RandallFlagg]

A question relevant to the actual topic is: will the increase costs be absorbed by TSMC, or passed on to the consumer?

Honestly this question is probably one of scale and time. From the original article, it appears most of the cost is both up-front and due to being inexperienced in building and staffing fab in the US, which resulted in actual construction and initial staffing being more expensive.

I read two things into that. One, future US based TSMC fabs likely won't have anywhere near the same cost penalty.

Two, since it's mostly up-front cost, how much extra it costs will be a function of the useful life of the fab.

Their main problem right now is likely the packaging processes that have to be done in Taiwan. This is where scale comes in. The extra transport and handling / paperwork involved is likely a rounding error if say, 50,000 wafers with 2.5M dies are being sent all at once. But if it is smaller, say 500 wafers with 25,000 dies, then it's likely prohibitive.

So this fab is probably only cost-effective for large contracts, not smaller ones. This is probably all built into the prices offered to clients. i.e. like energy, the first 500 cost you X, the next 5000 you get a 10% discount, the next 50,000 you get a 20% discount etc. Oversimplified I'm sure, but I'd bet it works similar to that if not using that exact method.

So to the query, I think the scale problem (transport cost) is passed on to the buyer and the consumer. The up-front capital cost, I don't think TSMC will pass that cost on to anyone. They paid that to learn a new skill, how to build a fab in the US.

 

[N3utro]

this part is incorrect.

Thanks for the details, it's very interesting! I hope this story doesn't end where it's currently headed and that everyone can live in peace, even if it sounds far stretched

 

[bitsandboots]

I mean why don't you ask your effin greedy trillion dollar corps to pay more, especially the likes of Apple/Walmart/Exxon/Amazon et al

They're not mine. If I was I'd be deliciously rich, but I would make some changes if I could.
My posts weren't to promote USA, just to say I don't see why TSMC can't find success outside of Asia, and that includes Europe.

 

[mav1178]

Thanks for the details, it's very interesting! I hope this story doesn't end where it's currently headed and that everyone can live in peace, even if it sounds far stretched

no problem - as is the case with geopolitics, there are many nuances as to why things are the way they are.

most know that North and South Korea are technically still at war and only signed an armistice - almost no one knows that China/Taiwan never stopped fighting in any capacity, they stopped firing artillery shells at each other only in 1979 after a weird informal period of firing shells at each other every other day.

oddest part is, the entire worldwide tech industry is built up on Taiwanese companies invested in manufacturing in China when the two sides have been heavily invested economically in each other but war is threatened at any time. China and its political leadership has always wanted to defeat the Nationalists since WWII ended, that was always the end goal, they just want to take Taiwan back mostly to 1) achieve final victory over KMT, and 2) resolve the humiliation that stems from Taiwan being given up in 1895 to Japan, since that is a huge part of Chinese identity (that they fought a "War of Resistance against Japanese Aggression 抗日戰爭).

if you didn't know any better you'd think there was peace between the two. there isn't any agreement in place, they just haven't fought anything since the 1950s and China has mostly resorted to military exercises to increasingly show Taiwan/rest of the world what it is capable of.

you can read more about this on Wikipedia and others, but the 8 years between 1937 to 1945 where the Chinese political factions united to fight the Japanese was the last time the KMT/CCP cooperated in any meaningful fashion for the greater good of the people.

 

[MentalAcetylide]

The first country outside of Taiwan that TSMC built fabs in, was xina...
You also have to understand that xina wants TSMC if they were to invade, so their goal would be to prevent any kind of damage to TSMC and its fabs.

So far, a much bigger threats to TSMC are the regular earth quakes, typhoons and the increasingly common droughts in Taiwan, as TSMC needs a lot of water to operate, even though they've gotten better at recycling it.


The issues is that the glorious leader has said that Taiwan will be ruled by xina and that xina will take the islands by force if they must. He can't go back on his word, as that would make him look weak, which could cause him to lose power...

The problem is that China needs to control the information in Taiwan & enough time to make reunification more widely acceptable among the population. Until then, taking the island nation, while doable, would be much much more of a loss than a gain. It would be like killing the goose that laid the golden egg & throwing the golden egg away.

 

[rusty caterpillar]

IMO First of all if US wanted military supremacy in the region the should have armed India with
nuclear propulsion submarines. Is a very subversive weapon good to have if you want to sabotage
strategic movements of PLA navy or just control choke points. An extraordinary weapon to have even if you have just a silly pond next to your country, like Black Sea.
India is a very useful ally to have in that region simply because of man power capacity to counter CHN manpower, while US is a bit too far and having logistic chains interrupted will come with high losses and tactical retreats which will be costly.

Despite all the advancements in weaponry you still need manpower, to handle the sophisticated weapons and a lot for logistics.
But is wiser to arm that Quad ally next to China and not "rebuff politely" the cooperation as US did in 2021.
Instead US chose to cooperate with Australia which is far and have very little manpower simply because they can control better Australia politics.
French submarines will be delivered to India too slow and in small numbers.

As China shake hands in secret with Russia over Bolshoy Ussuriy island, a small piece of land with strategic link to the Pacific.
I believe Russia and CHN shook hands for that land in exchange for exports of nitrocellulose and drone materials to Russia when they need it.

CHN will invade a land as quiet as possible with no opposition if possible but, that will be far from it if they try to invade Taiwan.
Besides Taiwan fits as glove for CHN economy, as much as the world needs high end chips they also need low end chips and assembly lines which will be provided by CHN and make a profit.
Invading Taiwan will disrupt that gravely for CHN economy which will hurt badly already internal issues of CHN economy, they can't afford that.

If CHN wants to become a regional Hegemon they can't do mistakes like invading Taiwan.
I don't see that happening in the next 10 years.

 

[TheLostSwede]

The problem is that China needs to control the information in Taiwan & enough time to make reunification more widely acceptable among the population. Until then, taking the island nation, while doable, would be much much more of a loss than a gain. It would be like killing the goose that laid the golden egg & throwing the golden egg away.

Currently, there's a big anti xina thing going on in Taiwan. Also, as older people pass away, fewer and fewer people are for any kind of "unification", as fewer and fewer people feel they have any kind of connection with west Taiwan. A change of political system in west Taiwan might change that sentiment, but that's not likely to happen any time soon.

 

[OkieDan]

Lmao, they will take back Taiwan. It's just a matter of time. Even Elon admits this. And this decision has kind of already been made for Chang. Don't move and get tariff'd to hell and eventually lose your silicon shield.

How can the CCP "take back" something that's never been in their possession?