AMD Chips Made at TSMC USA to Cost 5-20 Percent More, But Worth it: CEO Lisa Su

[btarunr]

In an interview with Bloomberg, AMD CEO Dr Lisa Su revealed that the company's chips manufactured at the U.S. based fab of TSMC will cost anywhere between 5% to 20% more than the ones TSMC makes back home in Taiwan, but assured that the added cost and supply-chain resilience would make the price-hike worth the effort. Su alluded to the lack of supply-chain resilience being sorely felt by the tech industry during the COVID-19 pandemic years, causing significant second order effects across the world economy.

TSMC has a manufacturing facility in Arizona, but its most advanced node is 4 nm EUV, referred to internally as the N4 family of foundry nodes by TSMC. AMD makes various CPUs, GPUs, FPGAs, and other devices on the TSMC N4P node, but the company is transitioning to the new TSMC N2 (2 nm Nanosheet) node, starting with its next-generation "Zen 6" CPU family. It is widely expected that while the CCDs of "Zen 6" based Ryzen desktop and EPYC server processors are based on N2, the company will introduce new-generation I/O dies for both its client and server processors that will be built on TSMC N4P, advancing from the current TSMC N6.



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[LabRat 891]

Unless this allows them to circumvent costs elsewhere, I'm not sure how this can be spun to the investors...
Otherwise, 'happy to see more domestic technology production.

 

[Chomiq]

Lisa Su knows what would happen if a certain country tried to reclaim "its territory".

 

[Chaitanya]

Lisa Su knows what would happen if a certain country tried to reclaim "its territory".

Not much different from actions of certain Jester leading a country staking claims on territories of its allies.

 

[Why_Me]

TSMC, Intel and Samsung all producing chips in the US.

 

[Chomiq]

TSMC, Intel and Samsung all producing chips in the US.

Intel, kek.

 

[Why_Me]

Intel, kek.

Intel processors are used in US automobiles, machinery, US defense such as tanks, jets, etc ... the list goes on and on.

 

[john_]

This could be just a statement to make TSMC and Trump happy.

Someone could say "you aren't going to pay that 5%-20% in the end Lisa, I will".

For me, I just hope that this statement means that they feel confident and ready to flood the market with more CPUs and GPUs. That they feel it's more important to have quantity to fulfill huge orders and try to get even more market share from Intel and whatever they can from Nvidia. They do need capacity against Nvidia, they will definitely need more capacity against Intel is 18A/14A starts producing good yields.
Until now I was speculating that AMD preferred to have a controllable inventory of CPUs/GPUs to not end up with a huge pile of unsellable products. I wish they become more aggressive and start producing more stuff for the market. Then we could hope prices to go down at least a little.

 

[Jermelescu]

If they were to cost up to 20% more, that would mean a ~5% increase in shelf price.

 

[Quicks]

Worth it for who?

Consumer is already paying well above MSRP. So the prices go up again?

Not worth it for me...

 

[GodisanAtheist]

Good to have a supply chain for semi-conductors that is not dependent on a country 30 miles off the coast of it's big brother who wants to invade it.

So from the perspective of having a diversified supply chain, it's a small price to pay.

Presumably the chips produced at the US fabs would be the really high margin parts, Epic dies and such, so eithe AMD eats the increased cost or the client is not nearly as sensitive to pricing as consumers would be if the price increases.

 

[RandallFlagg]

Worth it for who?

Consumer is already paying well above MSRP. So the prices go up again?

Not worth it for me...

It doesn't work that way.

Google price demand curve. This is why people predicting inflation spikes due to tariffs have been consistently wrong, they either don't understand or don't want to understand (bias) this Econ 101 concept.

Demand Curves: What They Are, Types, and Example

The demand curve is a graphical representation of the relationship between the price of a good and the quantity demanded.

www.investopedia.com

 

[Darmok N Jalad]

It really is about having more production elsewhere. It doesn’t even have to be politically driven. One natural disaster could also massively disrupt a market where supply is often not meeting demand.

 

[Chomiq]

Intel processors are used in US automobiles, machinery, US defense such as tanks, jets, etc ... the list goes on and on.

I guess that's why they're doing this:

Gov. Mike DeWine responds to news Intel will 'further slow' construction on Ohio factories

Intel's first Ohio factory was originally set to open in 2025 but has already been delayed to 2030 or 2031.

eu.dispatch.com

 

[SSGBryan]

Good to have a supply chain for semi-conductors that is not dependent on a country 30 miles off the coast of it's big brother who wants to invade it.

So from the perspective of having a diversified supply chain, it's a small price to pay.

Presumably the chips produced at the US fabs would be the really high margin parts, Epic dies and such, so eithe AMD eats the increased cost or the client is not nearly as sensitive to pricing as consumers would be if the price increases.

It's a couple hundred miles - it's also irrelevant, because that other country literally does not have the sealift capability to land an invasion force.

AMD isn't going to eat costs - line go up.

 

[GodisanAtheist]

It's a couple hundred miles - it's also irrelevant, because that other country literally does not have the sealift capability to land an invasion force.

AMD isn't going to eat costs - line go up.

- Nvm, guess people really don't have the ability to speak around political topics on here.

 

[lilhasselhoffer]

So....if you actually read this flatly then it's pretty apparent what is being said. What they are saying is that a chip ready to ship at a dock door in the US is 5-20% more costly than one sitting at a dock door in Taiwan. With that little nugget, let's introduce a tariff of say 10%. If that 5-20% is not weighted, and you only spend about 3% of the chip's price shipping it, then the only chips which will cost more in the US for the US are the 14-20% band. This presumably being based off of variable costs for resources which do not yet have a local pricing/sourcing option...

So what AMD is really saying is that they remove the delays at ports, they remove the variability of tariffs, and they have local buyers which are willing to pump a crap ton of money into them. For that, there should basically be a financial wash.

What I read is that AMD is telling people that it wasn't as expensive as they thought, it won't really impact their profitability, and consumers could see some minor increase to costs...which may or may not be justified but definitely will support the bottom line profitability. Anyone else missing the obvious "we did it right" style victory claim?

- Guess we're both wrong, Taiwan is 110 miles off the coast of China. Not 30 or "a couple hundred".

China has been speed running updating it's military in a big way. It's military doesn't have to be good enough to invade or fight the United States, it just needs to be good enough to invade and fight Taiwan. If Ukraine has shown anything its that while western weapons systems are the best in the world by a longshot, they are expensive, difficult to manufacture, and frankly the nature of warfare has rapidly changed to employ a cheap drone swarm doctrine that no modern military (most of which are geared toward toppling banana republics instead of near peer level engagements) is really ready to face.

China also has 1.5 billion people. It also has more people than the United States and Europe combined x 2, it can meat wave a problem in a way that the western world cannot even fathom.

This isn't a China Weeb post, this is a "the west needs to wake the fuck up" post and stop underestimating China post.

The US almost immediately turned on itself after the USSR fell. Maybe we need a new cold war with China to give us a unity of purpose again.

Man, this is a "I didn't read the rules of the forum explicitly forbidding political talk post."

Please check yourself, and refrain from getting a thread closed down. You too @SSGBryan.

 

[lexluthermiester]

Unless this allows them to circumvent costs elsewhere, I'm not sure how this can be spun to the investors...
Otherwise, 'happy to see more domestic technology production.

That depends on how you look at it.

 

[UniformCube]

- Guess we're both wrong, Taiwan is 110 miles off the coast of China. Not 30 or "a couple hundred".

China has been speed running updating it's military in a big way. It's military doesn't have to be good enough to invade or fight the United States, it just needs to be good enough to invade and fight Taiwan. If Ukraine has shown anything its that while western weapons systems are the best in the world by a longshot, they are expensive, difficult to manufacture, and frankly the nature of warfare has rapidly changed to employ a cheap drone swarm doctrine that no modern military (most of which are geared toward toppling banana republics instead of near peer level engagements) is really ready to face.

China also has 1.5 billion people. It also has more people than the United States and Europe combined x 2, it can meat wave a problem in a way that the western world cannot even fathom.

This isn't a China Weeb post, this is a "the west needs to wake the fuck up" post and stop underestimating China post.

The US almost immediately turned on itself after the USSR fell. Maybe we need a new cold war with China to give us a unity of purpose again.

what is this pro-american political nonsense, how is this allowed?

 

[maximumterror]

It really is about having more production elsewhere. It doesn’t even have to be politically driven. One natural disaster could also massively disrupt a market where supply is often not meeting demand.

Taiwan is home to 28 million people, but the only thing you care about in the event of disaster on this island is the cost of your computer parts. Great!

 

[Darmok N Jalad]

Taiwan is home to 28 million people, but the only thing you care about in the event of disaster on this island is the cost of your computer parts. Great!

Seriously? I didn’t say “who cares about the people of Taiwan.” Good grief.

 

[Why_Me]

I guess that's why they're doing this:

Gov. Mike DeWine responds to news Intel will 'further slow' construction on Ohio factories

Intel's first Ohio factory was originally set to open in 2025 but has already been delayed to 2030 or 2031.

eu.dispatch.com

Intel already has four foundries in the US. The Ohio location makes five.

 

[bonehead123]

"What we've got here... is failya to commmmunicate. Some folks you just can't reach. So you get what we had here last week, which is the way they wants it. . . well, they gets it."

(Said with a long, slow, southern draw) - The Captain to the prisoners in Cool Hand Luke

Translation:

Everyone in the US said they wanted chips made here, and we gots that, so now, it's time to "pay the piper"....

Pony up sukaz, and stop whining about it already......hahahaha

 

[tpa-pr]

Unless this allows them to circumvent costs elsewhere, I'm not sure how this can be spun to the investors...
Otherwise, 'happy to see more domestic technology production.

I'm no economics expert but I suspect the "domestic technology" is how it'll be spun to investors. "Chips we build at home are less likely to be subject to regulation and tariffs, which is a win for us".

And from a purely logical perspective this just seems like a no-brainer for TSMC as well, having plants and tech offshore in the event of the worst-case scenario happening. As Q from 007 once said: "always have an escape plan".

 

[RandallFlagg]

AMD has a gross margin of 50.9%. This means what they sell to AIBs and so on costs a little more than double what it cost AMD to make - including chip packing and transport. For easy math, AMD has it made for $49.10, they sell it for $100.

Let's say 'It' is midranger and actually sells by AMD for $200, meaning it cost $98.20 to make

Then AIBs / OEMs / wholesalers and retailers buy AMDs parts, and mark them up further. Estimates of what the markup is from that to retail are mostly ~20-40%. Taking the midpoint of 30%, this is a $260 item at retail, +sales Tax since we're talking the US.

So lets take the midpoint of 12.5% additional cost to make in the US. That's on the $98.10. So if AMD keeps its margin the same, now it costs $110.36 to make and sells it for $211.44 to wholesalers / retailers etc. instead of $200

Retail likewise keeps its 30% margin the same too, which means retail price goes from $260 to 274.87

It' not even 15 bucks.

As an American, unlike quite a few posters here, very worth this extremely small and infrequent cost to have advanced chip production on US soil. I mean, In the past 5 months avg income in the US went up 2% while inflation drive prices up only 1%. I spent $57 getting BBQ with the wife last weekend.

$15?

I'm good with it.