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Hardware

TSMC Arizona Chip Plant Will Be a 'Paperweight', Says Analyst 126

When it comes to reducing American dependence on Taiwan, the TSMC Arizona chip plant will be little more than a useless paperweight, says an analyst at one chip research firm. "The TSMC Arizona fab is effectively a paperweight in any geopolitical tension or war [with China over Taiwan] due to the fact that it still requires sending the chips back to Taiwan for packaging," said Dylan Patel, chief analyst at SemiAnalysis. 9to5Mac reports: A new report in The Information says while Apple chips may be made in the U.S., they will still need to be sent back to Taiwan before they get anywhere near an Apple device: "The Arizona factory -- which has been a focal point of the Biden plan and will cost $40 billion to build -- will do little to make the U.S. self-reliant in chips. That's because many advanced chips made in Arizona for Apple or other customers such as Nvidia, AMD and Tesla will still require assembly in Taiwan in a process known as packaging, according to interviews with multiple TSMC engineers and former Apple employees."

Given that TSMC has been struggling even to build a chip fab for older tech, there seems no prospect that it would ever attempt to set up chip packaging facilities in the U.S. "Building this type of facility is a huge expenditure of [capital], time, and effort, and it does not seem likely that TSMC will want to do this anytime soon in the desert in Arizona, particularly given all the problems the firm has encountered with construction, costs and personnel so far," said Paul Triolo, senior vice president for China at consultancy DGA-Albright Stonebridge Group.
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TSMC Arizona Chip Plant Will Be a 'Paperweight', Says Analyst

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  • by drinkypoo ( 153816 ) <drink@hyperlogos.org> on Wednesday September 13, 2023 @09:22PM (#63846836) Homepage Journal

    Thanks for that.

    So uh, probably some more government money appears out of the sky to pay for a packaging plant.

    • Trade wars are expensive. Someone has to pay for them and it's not going to be Apple.
      • Apple is responsible for much of TSMC's profitability. So maybe they will!

      • Its not a trade war, its infrastructure security. Its having a domestic source for critical manufacturing components.

        Do you not understand the value of a second source?
        • Capitalism does not care bout your "infrastructure security" as anyone paying attention over the past 35 years or so can see.
          If the vastly profitable corporations who own all that stuff thought America was going to be the best place for them to make anything they would build these factories in America and pay for it all themselves.
          I'm old enough to remember when China decided to court Western capital to develop their economy.
          Some of us said that we shouldn't deal with an authoritarian dictatorship, bu
          • by drnb ( 2434720 )

            Capitalism does not care bout your "infrastructure security" as anyone paying attention over the past 35 years or so can see.

            However a national government interested in self preservation is.

            If the vastly profitable corporations who own all that stuff thought America was going to be the best place for them to make anything they would build these factories in America and pay for it all themselves.

            You may not have noticed, but Apple and others are already diversifying production to avoid over reliance on the PRC/CCP. Second and Tertiary sources of key technology may or may not in the US, but will be outside of a country China is threatening to invade.

            As for US based manufacturing. Global multinational corporation due that all the time where military equipment is involved. Corps have no problem complying with such laws, creating US ba

            • However a national government interested in self preservation is.

              You'll need to explain that, because it makes no real sense.
              Apple might be (trying) to diversify away from China, but that's not for the reasons you think. The fact is Chinese workers are not as cheap as they once were which is the real reason Apple is trying India on for size. Also Vietnam. Neither of those places are going to give Apple what they want though.
              Also, there is no possible way for China to successfully invade Taiwan, and anybody who has ever read a book knows it.
              America never "forced" a

              • by drnb ( 2434720 )

                However a national government interested in self preservation is.

                You'll need to explain that, because it makes no real sense.

                Again, consider forcing Japanese car manufacturers to move some production to the US.

                Apple might be (trying) to diversify away from China, but that's not for the reasons you think. The fact is Chinese workers are not as cheap as they once were which is the real reason Apple is trying India on for size. Also Vietnam. Neither of those places are going to give Apple what they want though.

                Not quite. Manufacturing in India is key to Apple gaining market share in India. An Indian made iPhone is key to get many Indians to switch from Android to Apple.

                Also, whether Apple likes it or not they are being caught in US/China politics. They recognize the hazard involved and are trying to minimize the disruption governments can create for them.

                Also, there is no possible way for China to successfully invade Taiwan, and anybody who has ever read a book knows it.

                Which of these books was written in an era where China had the naval capa

                • There is no possibility China gets enough soldiers across the Straights of Taiwan to invade.
                  The last time anyone even tried a landing like that was 1944, and the Allies had a practise first in Italy. They also had the Royal Navy and complete air superiority.
                  Also, the Germans didn't have satellites.
                  China can build as many ships as it likes, it still can't do it. The Chinese also know that and they're not going to try, because why would they? They're not America. They don't invade places.
                  Apple sell as
                  • by drnb ( 2434720 )

                    There is no possibility China gets enough soldiers across the Straights of Taiwan to invade.

                    They are aggressively building that capability. The PLAN Navy is the second largest in the world already, although a ship v ship, missile v missile, is misleading. An invasion of Taiwan is a LOCAL fight for China. Its not who has more ships on paper, its who has more ships, more firepower, at the fight. China could commit most of their navy to this fight, the US could not. Taiwan is about 100 miles from mainland China. There are Chinese islands far closer than that. China will have land based missile covera

                    • That's completely delusional. The good news is that the adults in the room know China is not going to invade Taiwan.
                      Ever.
                    • by drnb ( 2434720 )

                      That's completely delusional. The good news is that the adults in the room know China is not going to invade Taiwan. Ever.

                      LOL - when you take pysch 101 pay attention to the concept of projects.

                      The adults are very much worried over the increasing capabilities of the room. The adults are very much concerned about land based missiles. Again, your WW2 thinking is the delusion here.

                    • Oh yes. China is going to cram a bunch of soldiers into their land based missiles and shoot them at Taiwan.
                      Hilarious.
                    • by drnb ( 2434720 )

                      Oh yes. China is going to cram a bunch of soldiers into their land based missiles and shoot them at Taiwan. Hilarious.

                      Thank you for demonstrating you are utterly unqualified for this discussion.

                    • Care to explain how China invades Taiwan using missiles?
                      You can't.
                    • by drnb ( 2434720 )

                      Care to explain how China invades Taiwan using missiles? You can't.

                      Its explained in previous posts.

                    • No it's not
                    • by drnb ( 2434720 )
                      That's a reader comprehension problem. Try harder.
                    • Try explaining how China gets the vast number of troops over the Taiwan Strait without American Satellites seeing them coming and Taiwan sinking the ships with the missiles they've been buying from America for the past 50 years.
                      I did ask you about that but you told me about how the Chinese Navy is the second biggest in the world as if destroyers are troop transports, and as if Taiwan wouldn't see them coming.
                      It's not possible, and won't be possible until America stops providing Taiwan vast amounts of mi
    • Re: (Score:2, Troll)

      by Train0987 ( 1059246 )

      The US has offered to fully fund relocating all of TSMC's plants out of Taiwan along with all of the necessary engineers and their families. They prefer China.

      • by myowntrueself ( 607117 ) on Wednesday September 13, 2023 @10:20PM (#63846946)

        The US has offered to fully fund relocating all of TSMC's plants out of Taiwan along with all of the necessary engineers and their families. They prefer China.

        Taiwan helps US become self sufficient on chip fab.
        US says to Taiwan "Thanks, and since we don't need you any more, we're not going to bother helping protect you from China"
        China rubs hands together.

        • Not exactly. The US invested in Taiwan since Chiang Kai Shek to maintain a thorn in the side of China. That thorn, and China as an antagonist, serve a crucial function for the US MIC. They don't actually want a direct war with China. They don't actually want Taiwanese independence. They want a divided China.
          • by drnb ( 2434720 )

            Not exactly. The US invested in Taiwan since Chiang Kai Shek to maintain a thorn in the side of China. That thorn, and China as an antagonist, serve a crucial function for the US MIC. They don't actually want a direct war with China. They don't actually want Taiwanese independence. They want a divided China.

            A ROC : PRC split of 24 : 1400, or 1.7% : 98.3% is not really a divided China.

            The US genuinely wants Taiwan independence. It is in our economic and political interest. Whether that desire is enough to go to war with the PRC is a different question. Should the PRC invade Taiwan, one of the first casualties of the war will be the Chip Fabs. That is about the only US intervention that is a virtual certainty.

        • The US has offered to fully fund relocating all of TSMC's plants out of Taiwan along with all of the necessary engineers and their families. They prefer China.

          Taiwan helps US become self sufficient on chip fab.
          US says to Taiwan "Thanks, and since we don't need you any more, we're not going to bother helping protect you from China"
          China rubs hands together.

          I suspect the reason TSMC & Taiwan went along with this is some variation of "give the Americans enough of a chip plant so they don't go full out to create a competitor but small enough that we're still essential". The state of the plant seems to track with this.

      • >> The US has offered to fully fund relocating all of TSMC's plants out of Taiwan
        While China has offered to relocate China into and around all the TSMC plants of Taiwan.

    • Thanks for that.

      So uh, probably some more government money appears out of the sky to pay for a packaging plant.

      DING! WINNAR!

      This is the beginning of the, "Hey, they gave us money. I'll bet we can get more," gravy train. I look for tech companies to become much like the larger telecoms. Constantly getting more and more government money shoved at them in the name of building something better, never actually crossing that finish line, and always needing just a little bit more. I said it the second the CHIPS act was announced. You don't hand fat wads of cash to profitable businesses and expect them to do anything more t

  • Huh? (Score:3, Interesting)

    by Anonymous Coward on Wednesday September 13, 2023 @09:28PM (#63846852)

    Did that chief analyst show that the plant is likely to not actually work and produce stuff it's supposed to produce?

    Or he's just saying stupid stuff like a farm is a paperweight because it doesn't make you self reliant in food? Even if it might be a step towards self reliance?

    p.s. not saying that it is or is not going to work. FWIW I find it strange to build something that requires lots of water in Arizona. Heck I'd target a place that has much fewer earthquakes/year than Taiwan so to have a chance to be even better than them. I dunno much about chip fab but I'm guessing that earthquakes are unhelpful when making nm stuff.

    • Re: Huh? (Score:4, Informative)

      by ArmoredDragon ( 3450605 ) on Wednesday September 13, 2023 @10:41PM (#63846972)

      It's just stupid stuff because this is nothing new. Intel has been fabricating semiconductors in Arizona for years. And guess what happens after that? They go to Malaysia for packaging, and then the chip gets "made in Malaysia" etched on it. Packaging has never been all that complicated.

    • by chill ( 34294 )

      But as Forrester research director Glenn O'Donnell told CNBC, chip-fabrication plants are similar to indoor swimming pools -- "you need a lot to fill it, but you don't have to add much to keep it going."

      https://arstechnica.com/gadgets/2021/06/why-do-chip-makers-keep-building-foundries-in-the-arizona-desert/ [arstechnica.com]

    • I find it strange to build something that requires lots of water in Arizona. Heck I'd target a place that has much fewer earthquakes/year than Taiwan so to have a chance to be even better than them. I dunno much about chip fab but I'm guessing that earthquakes are unhelpful when making nm stuff.

      Part of the reason for picking Arizona is the geological stability and relative lack of earthquakes (though the state does get an occasional quake over 5.0), combined with other factors like available land and tax benefits. A large enough quake in California could be felt in Arizona, but for the most part, there's much lower risk.

      As for the water, chip fabs do use a lot of water but they also recycle it. The water they use is ultra-purified, and it's usually cheaper to refilter the water used than to purify

  • Instead, let's just not have any jobs. Being employed sucks. Who needs money, when there's plenty of tree bark around? Oh wait, it's Arizona. Cactus spines?

  • by aaarrrgggh ( 9205 ) on Wednesday September 13, 2023 @09:43PM (#63846886)

    Environmental issues aside, I always thought the (relatively) easy part of the process was packaging. The real issue any chips need to go back to China before being integrated in an Apple device is the devices aren't made/assembled in the US.

    • by Whateverthisis ( 7004192 ) on Wednesday September 13, 2023 @11:13PM (#63847016)
      Packaging for chips is actually the bane of every single chip's existence. There's quite a bit of art to it. Do you mount it on a ceramic package, or a PCB? Do you encapsulate it? With what, a polymer or a hard cap? Do you use wirebonding or flip-chip?

      Most chip design firms have 4 to 5 packaging engineers for every silicon engineer; while the processes are standardized there's quite a bit of customization involved on every single chip.

      This particular point refers to processors, which is only going to use a few standard packaging methods, but they're still variation in how every chip is packaged.

      This seems disingenuous to me though TSMC has all these complaints about the US workforce, but TSMC built a highly specialized workforce you can't find anywhere else on the globe. They need to get out of Taiwan and they have to adapt to that reality. PLus, Mexico is a hop skip and a jump away from Arizona and there is some reasonably inexpensive flip-chip packaging and other methods there.

      • by AmiMoJo ( 196126 )

        I get the impression that these days much of the issue with packaging comes down to heat dissipation and getting so many signals out.

        Used to be you would just take wires out from the edges of the die to pins. These days it's all BGA, and you need to ensure that the chip can transfer away enough heat at the same time.

        Oh, and some physical protection for the secure parts of the chip too. A lot of security features can be bypassed by dissolving the package and applying UV light to the right area.

        • While that's true, that is a function of COST. You can always add more wires, that's not a problem. But the cost of packaging goes up.

          We all spend a ton of time talking about processors and 3nm nodes and high tech blah blah blah. But the cost of a chip is primarily in it's package; in many chips the COGS of a chip is between 50-80% packaging. Most issues with packaging can be solved technically. Not all issues can be solved affordably.

      • "Most chip design firms have 4 to 5 packaging engineers for every silicon engineer"

        But the issue at hand isn't the engineering of the packaging, it's the manufacture. The engineers are not on the line operating the packaging equipment.

        Test and packaging facilities are less technically demanding than a fab. If TSMC has the ability to build a fab somewhere other than Taiwan then they have the ability to build a packaging facility somewhere other than Taiwan.

    • No, it is not easy.

  • My office is paperless

    • Maybe they are expecting their customers to be government agencies. Some of them could really use a lot of paperweights!

      • Maybe they are expecting their customers to be government agencies. Some of them could really use a lot of paperweights!

        I hear that the US Government is particularly adept at buying vapourware.

  • Now TSMC.
  • Serioously? (Score:5, Informative)

    by Gravis Zero ( 934156 ) on Wednesday September 13, 2023 @10:17PM (#63846944)

    Guess that analyst is overlooking some stuff. A quick search and OH, look a packaging plant is being built.

    SK Hynix to break ground on new U.S. chip packaging plant early next year [reuters.com]

    But let's be honestly, compared the fabrication, packaging isn't a big deal. It doesn't rely on a single company and it doesn't need a machine only built by a different but singular company, it's just matter of building it. The US has packaging heavy-hitters like Amkor and Intel. They tend to like building stuff in Vietnam but I don't foresee the US starting another war with them.

    The analyst is being hyperbolic but hey, that's what gets the clicks.

    • TSMC maintains their own packaging and test facilities with proprietary packaging technology. They won't be very keen on licensing their tech to a competitor just to use their stateside facility.

      In the event of a war, they may not have a choice.

      • TSMC maintains their own packaging and test facilities with proprietary packaging technology.

        Which doesn't mean that the chips will only work when packaged using that proprietary technology.

        Meanwhile, the CHIPS law subsidizes new packaging plants as well as new fabs. At least one US chip packaging plant is already under construction (as another poster noted). SpaceX has a project to build their own.

        (I had heard that an American Indian tribe already runs a semicondor chip packaging operation, but didn't fi

  • You probably do not realize the significance of loosing access to high end chips by the US, especially today with the new gold rush in the name of AI - the US military and economy would be shortly on it's knees. Just read the news what's happening in the Taiwan Strait - I hope it's just pushing around and nothing will come out of it, but forecasts are dire.

    Production (what is it now EUV?) is the most critical and the most difficult to master, it took TMSC about 10 years (with ready machines, which are produ

  • I'm pretty sure SMIC will build as many fans as the US asks for. After all, thanks to the US sanctions, they're advancing their tech faster than ever before. I'm quite sure the prices will be much cheaper too.
  • The premise of this opinion is that all parts of the manufacturing pipeline must be brought online at the same time or the entire endeavor is a waste. It assumes that Taiwan will never set up packaging plants or other needed parts of the pipeline in the US. That may prove to be how events unfold in the future, but that is not the only likely outcome.

    For example, the Taiwanese government may desire TSMC as a hostage that the US feels a need to protect. However, TSMC decision makers may think more about conti

  • by VeryFluffyBunny ( 5037285 ) on Thursday September 14, 2023 @02:11AM (#63847212)
    Chip fab is high-tech, hi knowledge, disciplined work right? Taiwan does very well in its education system. Waaay better than the USA (https://en.wikipedia.org/wiki/Programme_for_International_Student_Assessment#Ranking_results), so I guess as well as building the factories, the USA will have to import the highly educated workers too. I bet that'll go down just great with the National Conservatives in power. At the same time, the GOP are hell-bent on rolling back all the kinds of human rights, openness, & tolerance that make a society pleasant to live in. I'd rather live in Taiwan.
  • ... we are to believe on the one hand that (say) a state can go zero-carbon in five years or whatever, but on the other hand that making our own chips here is impossible.

    I learn so much from the popular press.

    • " but on the other hand that making our own chips here is impossible."

      No, the claim is even dumber than that: making chips here is possible, but packaging them anywhere other than Taiwan is impossible.

  • Chip companies send chips across the oceans for packaging all the time. There are more options than just Taiwan. There is packaging capability in several places around the globe. The density of value in silicon is huge. The cost of flying dice across the ocean is negligible compared to the millions of dollars of unpackaged dice you can fit in the hold of a plane.

    TSMC almost certainly has a plan. They wouldn't just build a factory that could be rendered useless. It might involve building die manufacturing so

  • So, it makes more sense to build a packaging facility in low labour cost countries. Intel had one in costa rica a while ago. It was closed (probably because of lack of enough skilled labour).

    For TSMC Mexico or Brazil are better bets. Mexico in particular due to Nafta++ is a good geopolitical bet. It also helps Mexico has a Pacific connection, which makes shipping finished product to Asia for assembly easier.

    If I were the Supply chain officer of an USoA tech company of sufficient scale (Apple, HP Ink, HPE,

  • The plant neednâ(TM)t be a paperweight. Clearly it isnâ(TM)t sufficient in and of itself. But it would make little sense to try to build up the entire logistical chain all at once.

  • Essentially they cut the water, put a wire board on them, bond tiny wires, and cover it in plastic or ceramic. This is all done with automated machines. Compared to making the wafer packaging is easy and can be outsourced and/or done across the street from the fab
  • Chip packaging is not that difficult. It is very easy to ramp up if needed. Package companies are spread out throughout the world.
  • What they refer to as "packaging" is really called "Fab" in the industry. Masking, dicing, assembly on PCBs...a lot of places outside of Taiwan including the US do that. TFA is assuming TSMC would have to continue to do the entire process in-house instead of outsourcing. They could easily outsource the fab part, just as Apple already does with other components.

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