We’ve published several stories in recent months talking about efforts by US-based companies to boost domestic semiconductor manufacturing capabilities. Intel, in particular, is spending billions of dollars to expand your usa like this European manufacturing capacity. It is one of several US-based companies pushing for the passage of the CHIPS for America Act. Intel CEO Pat Gelsinger believes the bill is critical to protecting the future of the US semiconductor industry.
Recent comments by Morris Chang, founder and former CEO of TSMC, highlight many of the issues the US faces in rebuilding its domestic chip-making industry.
Chang was a guest of the Brookings Institution Study Center (by The register). Speaking on Tuesday, Chang said the US simply doesn’t have the manufacturing talent pool it needs to expand and succeed. He said the US has the best design talent, but its education system cannot provide the thousands of skilled manufacturing workers it needs.
There is also the issue of labor costs. Labor is cheaper in Asia, and this was highlighted by Chang when he talked about setting up TSMC’s Oregon facility. He said, “We really expected the costs to be comparable to Taiwan. And that was extremely naive… We still have about a thousand workers in that factory, and in that factory, they cost us about 50% more than the costs.” from Taiwan”. Chang went on to say, “Now you’re talking about just spending tens of billions of dollars on subsidies. Well, it won’t be enough. I think it’s going to be a very expensive exercise in futility.”
It is well known that US companies want to reduce their dependence on Asian-based chipmakers for a variety of reasons, including protecting and simplifying fragile supply chains, as well as acting as a hedge against global geopolitical instability.
In any case, assuming US efforts to increase domestic chip production capacity are successful, it will take many years to materialize. Building state-of-the-art manufacturing facilities takes years to go from a handshake to an innovation to products that appear on the shelves.
Geopolitical issues are always bubbling up and a supply-side shock if TSMC suddenly ceases production would be catastrophic for the global economy. Chang addressed the possibility of war between China and Taiwan, saying, “Frankly, if there is a war across the Taiwan Strait, I think the United States will have more than chips to worry about.”
This is true for all of us.