"He would say that, wouldn't he?"
TSMC founder Morris Chang, a key player in the semiconductor industry since its inception, thinks America's attempt to grow its domestic chip production will be "a wasteful, expensive exercise in futility." Speaking on Tuesday as a guest of the Brookings Institution think tank, Chang said that the US chose a trajectory in the …
"I think the parent posts confuse the survival of the hive (capitalism) withe the survival of bees (capitalists)"
To be honest I am working on the basis that businesses have survived decades through careful management and stewardship. A political party plans to the next election. To get elected they over promise and pass the bill to the next lot who are of course making their own promises to get elected.
A socialist country falls into the usual state run problems of central control and the best surviving example is N.Korea, which sacrifices many bees and relies on aid from outside countries to keep the hive from collapsing.
I will mention that capitalism is only one part as how free the market is plays a very important part.
>and make a long term investment in training them
Not gonna happen. That would involve investing their money and not giving themselves bonuses or wasting it on stupid pet projects.
The sad bit, is we can't protect taiwan as long as it is such a high valued target, and being the predominant country for chips makes them a very high value, strategic target.
Nowhere near as many as there are now but quite a lot: chip manufacturing was already an established industry there when TSMC started.
The origin legend (possibly true) of TSMC is that there were lots of chip fabs around which belonged to chip vendors. Some would sell fab capacity to fabless firms. A problem for fabless firms was that the fabbing firm might steal the design and sell competing chips cheaper (because they don't have to recoup the design cost since they stole it). So the idea for TSMC was to start a chip fab company that *only* ran fabs and did not sell any chips itself. This way it had no temptation to steal designs & so could be trustworthy.
Quite. TSMCs stock has done rather well of late.
Though he is right that America and the UK haven’t really done anything about the untenable state of higher education funding or shortage of STEM education in particular. Empty fabs ain’t doing jack.
High energy and water prices are a factor in locating chip fabs too.
The fact that you are better means nothing to the USA. They will fine you, they will steal your technology, they will harass your staff.
You don't believe me? Pilkington float glass process - world beating technology, stolen by the USA. Before that the USA stolen penicillin. Ask Alstom how they feel about being sh*t upon by the USA and having the whole company stolen by the USA.
TSMC may think it's the best, and it probably is. But that won't stop the USA toppling it or stealing it.
Your examples may be true but in that case it's irrelevant. Chang said it: the design part is made in the US. There is nothing to steal from TSMC on this. The strength of TSMC has nothing to do with technology, but with technicity and societal choices.
It's not about “top notch” minds. The belief that it is is part of what got the USA in this mess, but the high cost of education in the States is the real killer for manufacturing competitiveness. (I won’t mention healthcare costs, as that cripples all sectors’ competitiveness, not just that of the manufacturers)
High levels of college debt from even the most modest of institutions makes it impossible for companies to hire high-skilled operatives at internationally-competitive wage rates.
That same system of amassing debt just to get educated discourages manufacturing workers from even bothering, leading to lower skill levels in the work-force, thus exacerbating the previous wage issue through lack of supply.
Basically, the whole education system in the USA discourages “making things” as a career option, and this is why, as Chang noted, the USA has pivoted away from mass manufacturing towards services and niche, cutting-edge technology. The alternative would require a ground-up overhaul of how Americans are educated, and that’s both impractical (districts, counties, states, private colleges and federal government all have fingers in the pie, but nobody is in charge of enough of it to change anything), and politically lethal for either party.
From the article:
One think tank said that it thinks there will be several thousand positions left unfilled in any new factories due to a lack of suitably skilled semiconductor manufacturing workers in the nation.
Seems to me I've heard this refrain before...I wonder where....
Oh yeah...this is the same refrain from that old song...what's the title, again? Yes...now I remember: The H1-B Blues, by the Big Tech Grumblers.
Some said it was a catchy tune, but nobody could dance to it.
Surely if there is a shortage of talent that isn't necessarily of high calibre, yet is somewhat specialized, won't the US just pillage the cream of the mexican crop? Why, they could even build the plants next to the Rio Grande and have the talent work in some special immigration zone. Much more effective - no need for visas.
Bottom line, there will be zero labor shortage given upcoming economic headwinds. Phoenix is the fastest growing metro in the USA so tents and home prices went from very affordable to approaching California prices.
HOWEVER… interest rates are rising, home prices will drop across the USA, and migration to Phoenix will drop, thereby keeping housing costs lower than where they are today.
My international relations experience says Taiwan will continue to be a high risk supplier, and American companies will naturally migrate back to USA origins for critical components.
My thoughts, free bubblegum anyone?
the US and other countries saw professionals moving away from manufacturing
The US government and American business handed American manufacturing talent and capacity to China on a silver platter.
In the meantime, south of the American border, several Latin American countries are struggling with high unemployment.
manufacturing chips in the US is 50 percent more expensive than in Taiwan
The moment a fleet of container ships show up on the west coast loaded with cheap goods from the Far East, "Made in the USA" is all but a dream.
Yes, there are "factories" out there but those factories make more money from the tax breaks than the good they produce.
Intel has FABs in Arizona, New Mexico, and Oregon in the US, in Ireland, in Israel, and soon in Ohio and Germany and they all make money. Intel seems to know how to build and run FABs almost anywhere while TSMC (at least used to) have trouble doing it anywhere but Taiwan. Maybe Intel knows something that TSMC does not?
Global foundries, TI, Micron and more manufacture in the US and make money.
TSMC has benefited from years of government subsidies (and done a great job of leveraging them).
Intel now has some counterbalancing subsidies - it will be interesting to see how this pans out.
Even if it's not profitable, the US are right to help for a plant to exist locally. Not for economical reasons, but for strategical ones. A country has to be independent in critical domains, and must maintain a local capacity even if it means losing money. Money is not the alpha and omega of everything, especially at the State level.
Warning that costs are high, the workforce is scarce, etc . . all of that is just laying down the groundwork for when the Texas plant will never open.
Or, when it does, it will be with reduced capacity and it will stay that way for all the years TSMC has tax exemptions for.
Then it will more everything back to Taiwan.
Just you watch.
Pretty much bollox, but he would say that. Where does that come from? Is he paying his guys nowt? The cost is on building, equipt and materials running costs, not so much the people. The capital costs will be the same.
There are still semi engineers that can be hired in the States, they just have to hire the older guys they laid off a few years back!
Also, of they increase engineers salaries again to compete with finance they have plenty of people. Tsmc in the States doesn't like paying reasonable salaries either.
On top of everything else TSMC is not adverse to garnering process info from competitors, or god help them, partners.
It also makes plenty of sense for the US to keep manufacture of sensitive material in the US, so they need to ensure a native foundry industry as a strategic investment.
Finally, if there is foundry capacity elsewhere, then they may see lower profits at TSMC, which won't help their r&d.
I would say over 100% more. You have to include all the other cost involved for example you have to include pension/401k obligations, employee medical insurance, Workman's comp, law suits, general insurance, etc. I have few employees in California that hardly work for years because of stupid workman comp that rewards laziness, I worry I get suit for enforcing employee rules. It's just now worth it in USA litigation environment. In Taiwan, workers generally work many hours beyond their normal hours and sometimes with no overtime especially for high level workers and definitely lower cost in everything else like pensions, medical, and many others. Whereas American employees expects overtime paid or leave on time for most jobs.
We paid MBA, lawyers, and Wall street bean counters better than engineers and scientist and that's why you see fewer going for science or engineering degrees.
These are the real reason why all the tech job move else where like Taiwan, India, Singapore, South Korea, and China.
>Whereas American employees expects overtime paid or leave on time for most jobs.
Where is this version of America that you speak of? In the America I live in has a working day that's a minimum of 8 hours long and invariably includes unpaid overtime, it has minimal paid vacation and benefits like health insurance are quite expensive for the employee. This is what is at the bottom of "the great resignation" -- employers pushed that little bit too hard, people figured out that they could manage with less and they went for it.
What was hugely insulting to me was the conditions offered to overseas workers doing the same job. It may be very expensive employing people in the US but its not due to a pampered workforce.
Plenty of expertise and opportunity with current capacity to develop alternatives - Intel has fabs in Haifa and Kiryat Gat, Israel up now that can pick up the slack until US based alternatives can get up to speed. What is wrong with employing "older" i.e. slightly larger fabs, instead of focusing on "ever smaller"? Either way, manufacturing has to return to the USA as well as spreading risk around to multiple countries.
"We were extremely naive," Chang said, "in expecting comparable costs, but manufacturing chips in the US is 50 percent more expensive than in Taiwan."
As per my usually downvoted comment- I am glad the UK isnt playing the same game. Let Americans pay to provide the world cheap chips. Same with the EU.
"If there isn't conflict between China and Taiwan, Chang said the US will have set out on an expensive endeavor."
No problem! There are 17 intelligence agencies eager to provide solutions to that issue.
Even if a war might be much more expensive than the subsidies themselves.
Expensive exercise in futility? Will he still be saying that after Taiwan becomes the next Ukraine?
But he is right in that the free market is not able to factor in externalities like the benefits to the U.S. of having the supply of the most advanced microelectronics in a strategically secure location. This is why the U.S. can't process its own rare earth metals from ores that are commonly available worldwide, for example. Or produce the neon gas that is used in semiconductor production.
So it would be futile if we expected it to be economically rational in strict free market terms.
Certainly, Morris Chang may be viewed as having vested interests to protect with these remarks. Even I believe that.
But that doesnt mean his assertions are wrong. If anyone in the world knows how difficult it is to staff, fit out, and run leading edge fabs, it's him. I'm pretty sure he has hundreds if not thousands of tales he could tell of hard won learning at the school of hard knocks. Stuff rarely mentioned in academia (though perhaps hinted at for awhile in Harvard Business' Ad Prac back in the day). Stuff that is considered 'secret sauce' and will never be described in patents or papers, for example.
Similarly, much can be learned in schools to start a young Engineer on the desired path. And there will be some brilliant minds devising new methods. But the physical details need a lot of hands-on work to get the part right every time and thus robust. This type of expertise is expensive to gain, along any metric one wishes to measure.
From the 60s thru the 00s, American firms have shown they couldn't find the value of these practical lessons, and divested themselves of nearly all the stateside fabs they had. Since then American firms have not stood up new fabs unless there are government funds and government goading to do so. The firms still do not see this value if it's standing by itself.
I predict (again) that American fabs will wither away once the government funds dry up. And the funds will dry up because Congress critters dont have much longer vision than the quarterly-profit driven champions of industry.
Seems like this might be FUD directed at Intel. Intel has had a big fab in Chandler, Arizona for years; they've usually stayed ahead of TSMC in fab technology; and now that they're seriously planning on opening up their fabs to 3rd party chips, they're soon to come into direct competition with TSMC.
"Those American fabs are too expensive, and they don't have people who know what they are doing, unlike us at TSMC."
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