TSMC’s $65 billion bet still leaves US missing piece of chip puzzle
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The US government can do what ever they want. The Japanese Americans from 1942 can tell you all about it.
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Large companies that compete in one or more areas cooperating in others is not uncommon. For instance, here's a press release about Samsung putting Micron memory in their flagship smart phone. I don't think a company that will put Micron memory into a flagship consumer product, when they produce directly competing memory, is going to balk at packaging Micron memory for a third party.
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More specifically, Washington means the US government in this context. A widespread convention, at least in British journalism, used equally for other countries eg 'Tehran' meaning the Iranian regime, not the country or the city per se
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Great: so wafer fab: check.
wafer probe/test ?
wafer processing, back grind, cut/package?
post-packaging test?
I've been out of the IC industry a couple of years, having shifted to s/w test, but you need a hell of a lot of other stuff to get from a design file to a packaged die or dice on a board.
Waiting to see the article on someone like ASE setting up in Arizona... Otherwise, the wafers may get made in Arizona, but they're still going to end up on a FedEx plane back to Taiwan...
wafer probe/test ?
wafer processing, back grind, cut/package?
post-packaging test?
I've been out of the IC industry a couple of years, having shifted to s/w test, but you need a hell of a lot of other stuff to get from a design file to a packaged die or dice on a board.
Waiting to see the article on someone like ASE setting up in Arizona... Otherwise, the wafers may get made in Arizona, but they're still going to end up on a FedEx plane back to Taiwan...
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I can see advanced packaging reshoring some. There is enough value and investment available.
I'll be surprised if we reshore volume of older (legacy) packages. I didn't think anyone outside of Malaysia or India wanted to invest in those. For example TSSOP ... maybe. SOIC's ... unlikely. God forbid ... PDIP's?!
I'll be surprised if we reshore volume of older (legacy) packages. I didn't think anyone outside of Malaysia or India wanted to invest in those. For example TSSOP ... maybe. SOIC's ... unlikely. God forbid ... PDIP's?!
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It will take ongoing investment (subsidies) but the point is big steps have already been taken. I could not be happier that this particular critical infra is not:
a. in the Ring of Fire
b. next to China
c. Arguably in a rogue province of China (who wins that argument is more practical than philosophical)
d. subject to all the corp espionage and security nightmares being outside the US brings.
a. in the Ring of Fire
b. next to China
c. Arguably in a rogue province of China (who wins that argument is more practical than philosophical)
d. subject to all the corp espionage and security nightmares being outside the US brings.
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People really need to be thinking about the constraints the customers are working under. If you are Apple, you can buy from anywhere - you rarely have restrictions. But if you are doing anything under ITAR, where and who makes that matters. It may not be enough for TSMC to have a plant in Arizona, they may need to spin that off into a US held subsidiary. The US military imposes a lot of restrictions on where and who manufactures their components, but they also aren't customers for 2nm, at least for a while. Maybe the US military is shifting their expectations for more cutting edge compute in new platforms (you would imagine their 6th generation fighter concepts would have substantially more advanced compute requirements, which only Intel was really in position to provide, and you can't blame the DOD if they were a little uncertain if that was going to be the case - Intel has has their struggles).
It seems pretty clear to me the target audience for CHIPS, in the end, is the DOD. And rebuilding the US talent pool is part of that. That said, there is still no strategic effort for higher education in this country - I used to build the kinds of programs that the US needs to staff these facilities and there is no strategic effort driving that whatsoever - there's no grants for PhD semiconductor engineer or AA level technician programs or any of the other disciplines involved - industrial engineering, etc. so a lot more is needed to actually get there. So when TSMC says they need to import workers - yeah, part of my job was providing reports to the CA governors office regarding the potential for the state to meet prospective new industry needs for specific technical roles, and if it was anything at Apple's scale or at TSMCs level of expertise and involved manufacturing, the answer was almost always 'not only do we not have it, our baseline data says the entire country doesn't have it'. If it's design, etc. we're usually great. But we suck at making stuff and we suck at training people to make stuff.
But DOD isn't the only potential customer. NASA wants to go back to the moon, all their shit usually needs to be made in the US (Japan is going to make us a nice Toyota rover, though. I assume Canadas arms were all made in Canada), the new EV subsidies require half the car be made in the US - sure. California throws off a lot of money for industry that needs to be spent in California (why does every EV maker have design offices in the state), etc. How much of this is chasing cutting edge nodes, and how much of this isn't going to have a 2nm design until 2030 (at least). I think the folks arguing that 'hey, this doesn't change where Apple buys their chips' are missing the actual point of this bill. Sure, it'd be nice if it did that, but that's not the primary goal of the bill - the primary goal is to ensure that these 'must be made in the US' things can be made in the US. Having Intel as the sole supplier for any advanced process is eventually (if not already) going to run into a 'having Boeing as the sole supplier for military support aircraft' problem which doesn't look great right now.
The PCB issue is in a lot of ways more important because there's a lot of what the US wants to buy domestically that doesn't need cutting edge node, but does need modern, efficient PCBs. My son is also in this industry (he designs, and they manufacture locally control systems for the semiconductor industry and PCB capability is a real problem for them. They need a 12 layer board that can operate in this temperature range, and due to vibration issues these components need to not just be soldered but glued in place using an adhesive that can handle those temperatures, oh and this is a high radiation environment so here's a pile of other constraints we have on manufacturing - do you have the equipment and engineering experience with that kind of thing, blah, blah, blah. At least they aren't high volume, unlike say Apple. Can they go outside the US? Not usually. And they struggle. They've struggled with domestic suppliers using counterfeit parts, and struggled with domestic suppliers not modernizing. Sometimes you have a whole other set of reasons for reducing your potential pool of contractors.
But I know there's this perception that the US has the greatest higher education system in the world, and all that, and it's excellent - no question, but it's also aimless. The main reason that these plants are going down in Arizona is because ASU throws off a lot of the engineers these plants will need - but that wasn't planned, it was coincidental. There's a good education/industry synergy there. Apple has complained for well over a decade, since back when Obama asked Jobs why Apple couldn't make more of their stuff in the US, that the US didn't produce the kind and volume of engineers needed for these industries. And he's absolutely right. For years we wanted to build an industrial engineering program, but they are expensive to build and to a university, an industrial engineering degree and a sociology degree produces the same amount of tuition, secures the same amount of state tuition subsidy, and the former costs 3x as much as the latter, and 50x as much up front to build the program. Universities, left to their own devices, are never going to build that program because it makes no financial sense to do it, not until the program is sufficiently mature to start pulling in a lot of grant money - and that will take decades. If the country wants these kinds of programs - and universities are absolutely wiling to build them - there needs to be grant money earmarked to build them and after a few years they'll become self-sustaining. There's a huge structural employment problem around manufacturing in general and around high-tech manufacturing particularly that are slow and expensive to build. It's hard to get an industry that doesn't yet exist to fund that pipeline for the 10 years from hiring faculty to producing your first PhD. They're going to be reliant on H1B for a LONG time, which it also turns out becomes an excuse for why the public or some parts of government will oppose the effort entirely. You see that in these forums all the time. In the 14 years since that interaction between Jobs and Obama, a 2nd Obama term, Trump, Biden, there's been no action on that front. And Jobs was hardly the only one saying that. Congress hasn't acted either. We did this back during the Cold War - in fact, that effort played a sizable role in why CA tipped up so many public universities during that period. From 1958 to 1965, UC opened 7 campuses. The CA aerospace industry built off the back of those campuses and the tech industry after that. That was what the federal government wanted to happen, they put the money and focus in that specific direction, and it happened.
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Washington means Washington DC, the capitol of the United States. As if 'Brussels' as a substitute for 'head of the EU' is not a similar colloquialism, or 'The Hague' as a substitute for the International Criminal Court and other UN legal entities, or 'Beijing' to refer to the Chinese leadership, or 'Geneva' to refer to UN leadership, or 'Moscow' as a proxy for the Russian government aren't just as common in all reporting.
Don't seek out to be both obtuse and pedantic. It's not an anachronism to use a term to refer to a country's leadership vs their citizenry. You'd think the current conflict in Israel and how reporting works quite hard to separate criticism of the government from criticism of society would give everyone sufficient experience at this.
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Well, the US is 'allowed' to enforce this in a more draconian way, but doing so has a whole set of other repurcussions. We could block import of all goods from China in response to their export of tech to Russia, but the American public would completely lose their shit as the stores emptied out of specific categories of goods to buy. The 'non free' countries, not having an election in November, can tell the citizenry to go fuck themselves if they don't like it. Democracies don't have that.
It's not that the government lacks to the tools, it's that they lack the consent of the public to use those tools. The 'non free' countries don't need the consent of the public - that's why they're 'non free'. See why Ukraine doesn't have the tools they need to stop Russian aggression - it's not that the US lacks what Ukraine needs, it's that enough of the public don't want us to send it to them.
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Nope. We should have learned this lesson in 2016 when the GOP nearly overnight went from free-trade being a reliable long standing Republican policy for decades to being isolationist without a fight. The war hawks have no power, and most aren't even in government any more (see the Cheney family, Bolton hates him, etc.) The military will do what the civilian leadership tells them to do, so you're going to get a Mike Flynn type in those jobs whose allegiance to white christian nationalism and fealty to Trump will supersede any actual care about US strategic positioning, and a lot of Trump's reflexive 'anti China' efforts were actually pretty beneficial to China. He railed against the TPP which was a trade partnership to isolate China economically, because he doesn't give a shit about China or trade or any of that. It's all culture war machinations to generate personal allegiance to him.
He tore down every Obama initiative regardless of the impact that it had on national security, because Obama made fun of him at a dinner. That's the level of policy making we're talking about here. At least in the last term Trump was pressured to hire some vaguely competent people, but once he figured out he could put people in acting positions for years and skip the senate confirmation process entirely, a next term will be nothing but that. He will bring every lunatic in provided they are loyal to him. He promised us a reign of retribution. Believe him on that.
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For what purpose? To make them more expensive? We're not talking a lot of jobs here. The number of jobs in the manufacture of these things is pretty small. The US already does most of the design engineering, we do most of the software used for laying these out, so there's that whole secondary impact, we are the home for most of the customers of the chips (Apple, Microsoft, AMD, etc.) so all of those profits get on-shored.
So to meet your timeframe you would demand that these companies dump probably $100B into new fabs, import a lot of H1B workers who are currently trained to run these plants, and have these companies extract that $100B just out of US consumers of GPUs, CPUs, and smartphones. The US buys a bit over 100 million smartphones each year, and about 50 million PCs, which works out to a $300 premium that would need to be paid on each of those for the 2 year ROI because cutting edge nodes are really only good in those product segments for that long. Your PS5 now costs $800. Because we also have a shortage of older nodes in the US, you'll put a similar tax on cars, home appliances, televisions - pretty much anything with a button as those industries scramble to build out new 'old' capacity rather than waiting for the usual trickle down from cutting edge to legacy.
You buy a short-term burst of construction jobs, you import a LOT of workers, and you create maybe 5,000 long term jobs at a cost of $20M each.
Again, the CHIPS act and moving these fabs here is about long term strategic benefits to the US should supply chains be disrupted. It's not a jobs program, it's a national security program.
How would that help? If they stole the IP from us, how would stealing it back help - it's not like we lose the knowledge. It's not a car stereo. And TSMC didn't steal the IP from Intel. They got where they are because Intels R&D went down the wrong path and TSMCs didn't. There's nothing to steal. We have the fundamental knowledge to do these things, we lack the engineering talent to implement that knowledge. I know what a good painting looks like, but I lack the skill to make one. Our problem isn't the former, it's the latter. You can't steal that (well, you can be like North Korea and kidnap it and force it to work for you), you have to train it. It's a workforce problem.
Tip: stop watching Fox News.
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Given that this is pretty clearly an ITAR supply chain initiative, they'll realize those problems soon enough because they can't send those wafers can't go back to Taiwan.
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If this is to address of an issue of domestic resilience and redundancy, there's still multiple gaping holes in that supply chain. As someone else pointed out, PCBs and other boards are a critical element. But so are the lithography equipment that is critical to producing cutting-edge chips. And on that front, things are even more bleak -- it's practically a monopoly, with a single foreign company being pretty much the sole provider of the lithography equipment used in just about every fab producing modern chips, from Samsung and TSCM, to Intel and everyone else. That's not a good position for domestic resilience and redundancy.
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Lithography equipment isn't going to be urgent. The critical stuff comes out of Netherlands - member of NATO, US ally. Probably safe. The US is a lot more concerned about the safety of Taiwan. Japan makes a lot of the wafers - probably also fine (see yesterday's defense pact expansion with Japan, which also provides some security to Taiwan). There's chunks of the supply chain that the US already dominates.
So yeah, there are gaps, but the fabs are the really hard ones mostly due to the costs to build. The other stuff is important but also easier to get in place compared to a $40B fab.
The single source vendor is an issue, but not one that you can solve by throwing money at it. There's plenty of players that want to be in that space, but solving problems of this complexity means stacking up a lot of IP that align to solve a very narrow problem. That requires a VERY different kind of global solution.
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I am leaving out much of this long and informative and thoughtful and well written post and just commenting on one thing.
Obama had to deal with a congress that wanted at times to end the DOE. More funding for public universities wasn’t going to happen on the right scale. Biden should have made this part of his initiatives but didn’t and maybe part of that was in the senate… the current congress certainly doesn’t think in those terms. They’re too busy “starving the beast” and doing what you say has to be done would both show that government can do good things, and help the country economically when, politically, they want and need a collapse.
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Furthermore, ASML products rely on substantial contributions from their US subsidiaries.
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Instead of bribing foreign companies, perhaps a better approach would be to impose tariffs? Why cement Asian companies’ dominance in this field by giving them billions of dollars, and not just in the US but also in the EU?
These are Asians. They won’t share their tech knowhow with foreigners the way corporations managed by bonus-motivated white people do whenever there’s a short-term profit in sight. Nor would their countries ever treat foreign and domestic companies equally when it comes to doling out subsidies.
Rest assure they’ll do the absolute minimum for the subsidies. This is the way, the Asian way.
These are Asians. They won’t share their tech knowhow with foreigners the way corporations managed by bonus-motivated white people do whenever there’s a short-term profit in sight. Nor would their countries ever treat foreign and domestic companies equally when it comes to doling out subsidies.
Rest assure they’ll do the absolute minimum for the subsidies. This is the way, the Asian way.
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PCB: Boards without any mounted components.
PBA/PCBA: Boards with [soldered] components.
And while it is possible to use selective soldering and other techniques after the board has had the majority of the parts soldered in the soldering oven (e.g. press-fit), I've never heard of any case where those steps are done at different production sites. You choose the supplier that can handle all steps, and output finished boards.
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And at least traditionally, it has required a lot of nasty chemicals, so I would guess Western environmental laws make it even more expensive.
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br0wn0utD0ming0
Smack-Fu Master, in training
People might be surprised to learn that Micron for many years had high volume DRAM manufacturing in Boise and to this day produces DRAM in high volume in Manassas Virginia. It wasn't uncommon for the leading edge node of DRAM that is mass produced in Micron's FABs in Taiwan to begin it's life cycle at the R&D facility in Boise. Ramping production to high volume in Idaho faces more of a challenge based on timely procurement and customer qualifications of the newest generation of tools from suppliers like ASML, Applied Materials, Lam Research etc. than from a lack of an internal understanding of how to fabricate the wafers.
Micron has been using subcontractors for advanced packaging for quite some time and they aren't the only memory chip manufacturer doing so, their competition also depend heavily on similar and in some cases the same external assembly subcons to provide their advanced packaging needs. People want to view it as some sort of national pride and security issue when the reality is it will continue to boil down to what already customer qualified suppliers can offer the most competitive cost advantages.
Micron has been using subcontractors for advanced packaging for quite some time and they aren't the only memory chip manufacturer doing so, their competition also depend heavily on similar and in some cases the same external assembly subcons to provide their advanced packaging needs. People want to view it as some sort of national pride and security issue when the reality is it will continue to boil down to what already customer qualified suppliers can offer the most competitive cost advantages.
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but when you can email a format file to one of the various pcb fabs, along with a few dollars, get the completed bpard (1,2 3,4 layer) back in less than a week (professional quality), who needs hobby level expense and time consumed?
integration of all aspects of 'product' evolves, rapidly.
even AI can hobble together some primitive projects, probably send out a purchase order too.
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br0wn0utD0ming0
Smack-Fu Master, in training
Attaching individual components to a PCB is one thing, stacking multiple memory chips on top of an interposer and connecting all of them through the silicon to create a single functional package is a bit more challenging.
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That was my first thought, too, however there are two major reasons this is not as big of an issue it might seem: first, a lot of water is reprocessed and recycled in chipmaking, and second, there are plans to build desalination plants and water pipelines from the Gulf of California to supply more fresh water to the interior. Also, the alfalfa farming is being moved to places with more water.
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Having a good laugh at the industry analyst saying Samsung is a laggard in the memory products space. The same Samsung that has controlled the majority of global memory shipments for 30 years? The same one with the first HBM product and the highest speed current HBM product? That Samsung?
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