Thursday, April 21st 2022

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

According to an article over on The Register, the TSMC founder, Morris Chang, isn't overly impressed by US efforts to grow its domestic chip production. In a podcast hosted by the Brookings Institution, Morris Chang said that the US' attempt to grow its domestic chip production will be "a wasteful, expensive exercise in futility." The reason behind his comment is that he believes the US is lacking the talent to work in the fabs, or possibly the willingness to work triple-shift to keep the fabs running 24/7, unlike the Taiwanese. Furthermore, he states that the US can't compete in terms of cost, as he claims it's 50 percent more expensive to manufacture chips in the US compared to Taiwan.

It should be pointed out that Morris Chang is no longer involved with the day to day operations at TSMC and the above are just his opinion. When questioned about why TSMC is building a fab in Arizona, Chang said that TSMC decided to do it because they were urged to do so by the US government. He also believes that despite government subsidies, the US is unlikely to become self-sufficient when it comes to semiconductors, especially as the cost per chip will be much higher, which will make it hard to compete internationally. 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, but there are obviously other problems that such a situation would bring as well. Chang also praises US chip design talent and says that Taiwan has very little talent in comparison and that TSMC has none. However, the latter doesn't seem to be entirely true, based on the fact that TSMC is helping its customers to optimise their designs for the various production nodes at TSMC. For those interested, the podcast can be found below.

Source: The Register
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56 Comments on TSMC Founder Says Growing Domestic US Chip Production is Wasteful and Expensive

#1
Tigger
I'm the only one
He believes the US is lacking the talent, Chang also praises US chip design talent, bit of a contradiction there?
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#2
TheLostSwede
TiggerHe believes the US is lacking the talent, Chang also praises US chip design talent, bit of a contradiction there?
Factory labourers and engineers aren't the same as chip designers though.
In a way I guess he's looking down on the Taiwanese, since they're apparently only good enough to make things for others.
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#3
Daven
TiggerHe believes the US is lacking the talent, Chang also praises US chip design talent, bit of a contradiction there?
America has excellent plumbers but we suck at making pipes.
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#4
phanbuey
All this is moot since they can't guarantee that they wont be CCP controlled in the next 5-10 years, nor can they guarantee supply chain of chips to the US.

So ability to get chips > efficiency in making chips.
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#5
Unregistered
It's just more tribalism. 'My people are better than your people'.
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#6
DeathtoGnomes
The reason behind his comment is that he believes the US is lacking the talent to work in the fabs, or possibly the willingness to work triple-shift to keep the fabs running 24/7, unlike the Taiwanese. Furthermore, he states that the US can't compete in terms of cost, as he claims it's 50 percent more expensive to manufacture chips in the US compared to Taiwan.
Hey Changee, I goit your talent hanging.

Futhermore,
and the above are just hismy opinion.
The average person is commonly confused with skill and talent, both can be trained but only a trained skill can give the illusion of talent to those are not skilled in the same trade environment. I've seen people that are brilliant mechanics on paper, but when it comes down to actually working, they miraculously digress into stupidity. I've also seen the opposite at true too.

I see no reason why the US cant step up to the plate on this, its not pure rocket science. Since it takes money to make money, I think they should implement some skilled education for those that have comprehension of what they are getting into on that.
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#7
mouacyk
Politics sucks. Pretty sure the TSMC workers are happy with the opportunities they have.
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#8
Darmok N Jalad
Isn’t TSMC building a fab in Arizona? That’s going to be a mighty long commute for the Taiwanese worker.
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#9
dorsetknob
"YOUR RMA REQUEST IS CON-REFUSED"
America has Reserved 1000's of Green Cards for TSMC Employee's in case of PRC invading Taiwan .

Getting Skilled Workers is Easier than Setting up and or expanding a Foundry.
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#10
ymbaja
Propaganda… Can’t really see him saying “hey build 1000 chip factories in the US, Our shareholders really enjoy the competition”. I mean why would he?
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#11
Haile Selassie
What I read is the fact Mr.Chang does not like competition and he would like to keep his little sandbox for himself and his South Korean buddy.
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#12
thesmokingman
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.
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#13
phanbuey
thesmokingmanI 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.
It doesn't really matter though, there isn't another choice.

US has to have chips to power the economy, and they have to be able to guarantee their supply. Intel is only second to TSMC; Europe, Africa, Asia, Russia, China (yet) don't have anything close to Intel or TSMC in terms of capability, and are trying to desperately develop them despite inefficiencies and being behind for the same reason.

As the US Gov't your options are:
1) develop your technology and subsidize the high costs. or
2) let your technology die in the name of efficiency and hope that nothing bad happens to Taiw... ahem the "Republic of China", and that your supply of chips is uninterrupted by pandemics, foreign government, wars, trade disputes etc.

Not to mention as Taiwan's and other Asian economies mature, the costs of manufacturing there will also increase, so any efficiencies stemming from lack of quality of life or manufacturing salaries are temporary.
Posted on Reply
#14
thesmokingman
phanbueyIt doesn't really matter though, there isn't another choice.

US has to have chips to power the economy, and they have to be able to guarantee their supply. Intel is only second to TSMC; Europe, Africa, Asia, Russia, China (yet) don't have anything close to Intel or TSMC in terms of capability, and are trying to desperately develop them despite inefficiencies and being behind for the same reason.

As the US Gov't your options are:
1) develop your technology and subsidize the high costs. or
2) let your technology die in the name of efficiency and hope that nothing bad happens to Taiw... ahem the "Republic of China", and that your supply of chips is uninterrupted by pandemics, foreign government, wars, trade disputes etc.

Not to mention as Taiwan's and other Asian economies mature, the costs of manufacturing there will also increase, so any efficiencies stemming from lack of quality of life or manufacturing salaries are temporary.
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.
Posted on Reply
#15
phanbuey
thesmokingmanIt'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.
That's a whole other bag of worms, but yes... unfortunate that.
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#16
R-T-B
NanochipAmerican chip factory workers can’t afford Teslas and Rivians on Taiwanese sweatshop wages.
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...
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#17
Steevo
Enriching governments and people other than our own, and giving the ability for them to shut down supply when they choose or if/when China takes over.
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#18
ThrashZone
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 :laugh:
Posted on Reply
#19
lexluthermiester
TheLostSwedeMorris Chang
Yeah, Mr Chang is in Taiwan. His perspective is based on Taiwanese thinking. TSMC is an excellent and productive company, but it is NOT without it's problems and flaws. When TSMC becomes a perfect company and Taiwan a perfect nation, he will then have the credibility to cast such opinions with merit. Until then, he should focus on his own business.
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#20
bonehead123
well....
  • Decrepit old, rich, clueless guys that think they can/will influence the PRC or their decisions or the market in general... they suck
  • Any company or government that lets politics impede or interfere with progress and/or improving the quality of life for everyone.. they suk
  • Anyone who does not firmly believe in diversification and self reliance.. they suk
  • Politicians... they suk..
'nuff said :D
Posted on Reply
#21
the54thvoid
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.
Posted on Reply
#22
erocker
*
Yeah, they don't want competition. They want to be able to charge their customers whatever they want.
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#23
Vayra86
TiggerHe 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.
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#24
Zareek
the54thvoidI 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.
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#25
lilhasselhoffer
TiggerHe 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.
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