TSMC founder told Pelosi US chip-making efforts 'doomed to fail' during Taiwan trip

[bobsm]

TSMC founder told Pelosi US chip-making efforts 'doomed to fail' during Taiwan trip
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By Keoni Everington, Taiwan News, Staff Writer
2022/10/25 15:42
[IMG alt="TSMC Chair Morris Chang.
"]https://tnimage.s3.hicloud.net.tw/photos/2021/CNA/20211026/20211026000173.jpg[/IMG]
TSMC Chair Morris Chang. (CNA photo)

TAIPEI (Taiwan News) — Taiwan Semiconductor Manufacturing Company (TSMC) stock dropped by nearly 4% on Monday (Oct. 24) after a report revealed the firm's founder had told U.S. House Speaker Nancy Pelosi that American efforts to rebuild its chip manufacturing base will end in failure.

During Pelosi's visit to Taiwan in August, she attended a lunch with Taiwanese chip industry officials that included TSMC founder Morris Chang (張忠謀). On Monday, the Financial Times released a report saying that during the lunch Chang told Pelosi in "stark terms" that U.S. efforts to reconstitute its domestic semiconductor production are "doomed to fail."

One source familiar with the matter told the newspaper that Morris was "pretty blunt' and that the guests present were "a bit surprised."

Taiwan currently accounts for 20% of global semiconductor capacity, the most of any country, and produces 92% of the most advanced chips. Meanwhile, the U.S. share of worldwide chip production has plummeted from 37% in 1990 to 12% in 2020.

Experts interviewed by the newspaper pointed out the U.S. will indeed face many daunting challenges in trying to reshore chip production. Paul Triolo, a China and technology expert at Albright Stonebridge Group, said that American dependence on Taiwan-made advanced chips from TSMC will not abate until "TSMC, Samsung and Intel all site advanced facilities at scale in the US."

Even if the U.S. is able to ramp up the production of advanced chips, major sectors such as the auto industry and defense contractors will still be reliant on foreign manufacturers as they often use less advanced chips. Dick Thurston, former general counsel for TSMC and consultant, warned that "several multiples of the money committed over a period of 10 to 15 years" will be needed for domestic chip making to succeed.

Investors became spooked by the article, with TSMC's value on the New York Stock Exchange dropping up by as much as 6% in regular trading before closing down at 3.9% at US$61.29.

TSMC founder told Pelosi US chip-making efforts 'doomed to fail' during Taiwan trip | Taiwan News | 2022-10-25 15:42:00

TSMC stock drops after report Morris Chang doubted US plan to rebuild domestic chip manufacturing | 2022-10-25 15:42:00

www.taiwannews.com.tw

 

[nahtanbob]

Like any company TSMC does not like competition. Obviously they would tell that. US govt funds to domestic semiconductor manufacturing is a threat to TSMC
USA has access to semiconductor equipment technology, large market for semiconductors (consumer and industrial) and top chip design houses

 

[kuge]

Like any company TSMC does not like competition. Obviously they would tell that. US govt funds to domestic semiconductor manufacturing is a threat to TSMC
USA has access to semiconductor equipment technology, large market for semiconductors (consumer and industrial) and top chip design houses

please tell chang he is wrong..

 

[nahtanbob]

please tell chang he is wrong..

he probably knows

 

[FuturePAF]

Aren’t TSMC chips designed in the US? Even if it takes a decade to build the Fabs, for national security and political reasons and despite the higher production costs, it should be obvious that the US could subsidize on-shoring the production of semiconductors if it wanted.

If TSMC is no longer a world leader in semiconductors, then it makes a Chinese takeover more palatable for the US and the world.

 

[Menthol]

I'm curious.

What is the reason for being doomed to fail?

 

[casual]

I'm curious.

What is the reason for being doomed to fail?

Just look at Intel.

 

[Yongpeng Sun-Tastaufen]

The only people who can make high quality chips in the US are Chinese people. The US cannot make 7 nm chips like China can.

 

[Menthol]

Just look at Intel.

What happened with Intel?

What do you mean by look at Intel?

 

[epebble]

Like any company TSMC does not like competition. Obviously they would tell that. US govt funds to domestic semiconductor manufacturing is a threat to TSMC
USA has access to semiconductor equipment technology, large market for semiconductors (consumer and industrial) and top chip design houses

That is not the reason. What Mr. Chang is saying is that the volume of chips is so large that U.S. will be reliant on imports for a long time. One can't build so many fabs so fast. There is a limitation on equipment, skilled labor etc.,

Secondly, much of the semiconductor market is low cost, older processes we call colloquially n+2, n+3 etc., That means if n is 10 nanometer technology, state of the art, n+1 is 14 nm, n+2 is 22nm, n+3 is 32nm etc. These are 10–15-year-old technologies, fully depreciated and commoditized. This is what is used in your microwave oven, washing machine, dishwasher etc., U.S. can't make them at U.S. fabs economically. As an example, Intel's lowest cost CPU may be $100 per chip (at the high end, a moderate performance Xeon server chip may be $1,000 per chip. A very high-end Xeon may be $9,000 per chip). a microcontroller used in microwave oven will be $1 per chip. Intel and AMD have the knowhow for the most complex CPU chips but almost any small firm can design microcontrollers and any ordinary fab can make them. They are the chip industry equivalent of T-Shirt industry. Whereas a Xeon is the chip equivalent of a Gucci or Armani.

 

[casual]

What happened with Intel?

What do you mean by look at Intel?

Intel's 10nm Is Broken, Delayed Until 2019

Intel announced its financial results today, and although it posted yet another record quarter, Intel unveiled serious production problems with its 10nm process.

www.tomshardware.com

Intel's 7nm is Broken, Company Announces Delay Until 2022, 2023

From bad to worse

www.tomshardware.com

America's most advanced chip manufacture can't even make 7nm chips at scale currently despite throwing billions at it.

 

[MH.Yang]

Like any company TSMC does not like competition. Obviously they would tell that. US govt funds to domestic semiconductor manufacturing is a threat to TSMC
USA has access to semiconductor equipment technology, large market for semiconductors (consumer and industrial) and top chip design houses

A very simple economic principle: Have needs first, then own the product.

With 70% of the chips consumed by the Chinese market, the chip industry in USA is unlikely to succeed.

 

[nahtanbob]

That is not the reason. What Mr. Chang is saying is that the volume of chips is so large that U.S. will be reliant on imports for a long time. One can't build so many fabs so fast. There is a limitation on equipment, skilled labor etc.,

Secondly, much of the semiconductor market is low cost, older processes we call colloquially n+2, n+3 etc., That means if n is 10 nanometer technology, state of the art, n+1 is 14 nm, n+2 is 22nm, n+3 is 32nm etc. These are 10–15-year-old technologies, fully depreciated and commoditized. This is what is used in your microwave oven, washing machine, dishwasher etc., U.S. can't make them at U.S. fabs economically. As an example, Intel's lowest cost CPU may be $100 per chip (at the high end, a moderate performance Xeon server chip may be $1,000 per chip. A very high-end Xeon may be $9,000 per chip). a microcontroller used in microwave oven will be $1 per chip. Intel and AMD have the knowhow for the most complex CPU chips but almost any small firm can design microcontrollers and any ordinary fab can make them. They are the chip industry equivalent of T-Shirt industry. Whereas a Xeon is the chip equivalent of a Gucci or Armani.

What limitations ? USA has half of world's equipment suppliers, large pool of semiconductor design professionals, large semiconductor companies
The only thing missing is the fabrication facilities and the engineering talent to run them. It may be takes a few years to ramp up.

your point on economics is noted. It is not like Taiwan and South Korea is cheap.

A very simple economic principle: Have needs first, then own the product.

With 70% of the chips consumed by the Chinese market, the chip industry in USA is unlikely to succeed.

Quit farting ...

Does the 70% of chips include chips for Apple iphones/Macs, Dell computers and Cisco routers ?

 

[epebble]

What limitations ? USA has half of world's equipment suppliers, large pool of semiconductor design professionals, large semiconductor companies
The only thing missing is the fabrication facilities and the engineering talent to run them. It may be takes a few years to ramp up.

That is the issue. Get capital, build fabs, staff it with skilled workers - takes time. At the end of the day, what return on investment for producing microcontrollers? Hint: Ask DRAM makers - not much. That is why Intel etc., got out of DRAM in 1980's

your point on economics is noted. It is not like Taiwan and South Korea is cheap.

Their cost of capital is cheap. they are not as focused on margins. Intel's gross margins are in 40+% and Wall Street started howling when it came down to 36.5% last quarter.

If you give me lot of money and don't ask for high returns, I can produce all the chips you want in U.S.

 

[Beast]

Like any company TSMC does not like competition. Obviously they would tell that. US govt funds to domestic semiconductor manufacturing is a threat to TSMC
USA has access to semiconductor equipment technology, large market for semiconductors (consumer and industrial) and top chip design houses

And yet, they still can't produced even 7nm chips? So ashame for USA.

Now US is trying to bring down TSMC, by first trying to crash it's stock. I hope those US hedge fund operate under the wing of CIA will get burn instead. Their plan trying to shortsell TSMC stocks will not work well.

What limitations ? USA has half of world's equipment suppliers, large pool of semiconductor design professionals, large semiconductor companies
The only thing missing is the fabrication facilities and the engineering talent to run them. It may be takes a few years to ramp up.

your point on economics is noted. It is not like Taiwan and South Korea is cheap.


Quit farting ...

Does the 70% of chips include chips for Apple iphones/Macs, Dell computers and Cisco routers ?

Stop boasting about how US has access those equipment when u can't even make use of them to make the best chips. You are so useless. China is much talented and better than you.