November 21st news, the 2022 Asia-Pacific Economic Cooperation Economic Leaders Conference (APEC) hosted by Thailand ended on the 19th. TSMC founder Zhang Zhongmou , a representative of APEC corporate leader, attended the "2022 Asia-Pacific Economic Cooperation Conference (APEC) delegation's press conference to return to Taiwan" today, and confirmed for the first time that TSMC will build a 3nm process wafer factory in the United States because TSMC cannot disperse production to many places. When talking about the phenomenon of internationally wanting to "de-Taiwanize" the chip supply chain, Zhang Zhongmou said that this is actually the "envy and jealousy" of many people.
TSMC announced that it will build a 3nm wafer factory in the United States
Currently, TSMC spent US$12 billion to build a 12-inch 5nm process wafer factory in Arizona, USA, is about to complete civil engineering. It is expected to hold the first batch of machine equipment entry ceremony on December 6. Recently, a large number of American engineers who have received training in Taiwan have returned to the United States one after another. It is expected to be mass-produced on time in 2024.
Zhang Zhongmou said that he would personally attend the entry ceremony of the first batch of TSMC's Arizona machine equipment in Arizona. At that time, major U.S. customers and partners of TSMC's major alliance (that is, TSMC's customers and suppliers, and third-party smart property suppliers that take out smart properties together with TSMC) will participate. Several U.S. government officials were also invited.
"As far as I know, US Secretary of Commerce has agreed to come. This is rare. The Secretary of Commerce flew from Washington to Arizona . I heard that he would go back that day. This was a whole day's itinerary. The flight time is about 6 hours, and it takes 12 hours to go back and forth. In addition, I also invited Biden President, but I don't know if he has answered or whether he will come." Zhang Zhongmou said.
Regarding the previous Reuters report, Zhang Zhongmou gave a positive reply for the first time that TSMC plans to bring its leading N3 (3nm-class) manufacturing technology chip production to its Arizona fab.
Zhang Zhongmou said that TSMC is currently building a 5nm wafer factory in Arizona, USA, which is the most advanced process in the United States, but TSMC's most advanced process in Taiwan, China is 3nm, which means that TSMC's 5nm investment in the United States is only "N-1". There is a plan now, but it has not been completely finalized. It should be said that it is almost finalized. In Arizona, USA, "3nm is phase 2 (second stage), and 5nm is phase 1 (first stage)."
However, Zhang Zhongmou did not disclose the investment scale of of the 3nm wafer fab construction plan in the United States and when will it be launched. Currently, the capacity of TSMC's 5nm wafer fab in Arizona is 20,000 pieces per month. There are rumors that the planned capacity of 3nm wafer fab will also be 20,000 pieces per month. Why does
continue to build advanced process wafer factories in the United States?
In 2019, in the context of the Trump administration in the United States continuing to push the return of manufacturing to the United States, TSMC announced plans to invest $12 billion to build a 5nm wafer factory in , Arizona.
But for TSMC, it is obvious that the cost of making chips in the United States is higher, and this is not a decision based on the commercial cost.
Zhang Zhongmou had previously stated that TSMC's previous 25 years of manufacturing experience at its Oregon factory in the United States (8-inch wafer fab) can be proof that although the factory can make a profit, it almost gave up its expansion. "We were too naive at the time when it comes to comparative costs, but the actual cost of making chips in the United States is 50% more expensive than Taiwan," he said. He added that TSMC has arranged US and foreign personnel for its Oregon factory many times, but none of them could reduce much of the cost.
Zhang Zhongmou admitted that TSMC built a 5nm wafer fab in the United States "does this at the urging of the US government."
Although the United States passed the " chip bill " with a subsidy of more than $52 billion this year, which has also stimulated many semiconductor investment cases, in Zhang Zhongmou's view, this subsidy amount " is far lower than the amount of required to boost local chip manufacturing." Although The chip production in the United States will increase, " unit cost will increase, and it will be difficult for the United States to compete internationally."
Recently, Huang Chongren, chairman of wafer foundry Power Semiconductor, also said in an interview with the media that Taiwan Semiconductor Industry in China can lead the world mainly because of the high quality of engineers, relatively low costs, very high CP value , cheaper than the United States, and chips are sold at international price . In this way, "TSMC can always make money" and continue to invest in advanced processes with the money earned.
Huang Chongren pointed out that Taiwan, China, has these conditions that contribute to the advantages of the semiconductor industry, including the high quality of Taiwan’s engineers, the internationalization of the industry, relatively low costs, and government support for building factories. Without these conditions, “the advantage would exist without moving to the United States.”
So, why does TSMC plan to build a 3nm wafer fab after building a 5nm wafer fab in Arizona, USA?
Obviously, TSMC’s decision may also be “at the urging of the U.S. government.” Of course, building advanced process wafer fabs in the United States can indeed better serve TSMC’s American customers.
According to Digitimes data, TSMC’s top ten customers and revenue proportions in 2021 are: Apple (25.93%), MediaTek (5.8%), AMD (4.39%), Qualcomm (3.90%), blog Pass (3.77%), NVIDIA (2.83%), Sony (2.54%), Marvell (1.39%), STMicroelectronics (1.38%), ADI (1.06%), Intel (0.84%). It can be seen that among the top ten customers, American manufacturers account for 8, among which Apple alone accounts for more than 1/4d of TSMC's revenue.
According to the latest estimates, the revenue from major customers in 2022 will be Apple (25.4%), AMD (9.2%), MediaTek (8.2%), Broadcom (8.1%), Qualcomm (7.6%), Intel (7.2%), and NVIDIA (5.8%). Six of the top seven customers are American customers. According to the latest rumors, Tesla new generation FSD chips will be manufactured by TSMC. Tesla will have the opportunity to become TSMC's top seven customers next year.
Obviously, the overall proportion of U.S. customers in TSMC’s revenue is continuing to increase, which is another major factor that prompted TSMC to build advanced process wafer fabs in the United States.
In addition, TSMC’s move to the United States to build advanced process wafer fabs also meets the supply chain security needs of American customers’ decentralized supply sources to a certain extent.
It is worth mentioning that according to reports from Bloomberg, Apple plans to purchase chips from a wafer factory under construction in Arizona in the United States in the future (this factory will be opened in 2024) to reduce its dependence on the Asian supply chain. The fab under construction that Apple refers to is generally believed to be TSMC's Arizona fab.
Semiconductors "de-Taiwanized"
With the entry into force of the US "Chip Act", many semiconductor manufacturers have started plans to invest and build factories in the United States, including Taiwan Semiconductor Manufacturers such as TSMC and Global Wafer.
At the same time, some chip design manufacturers also hope to diversify chip manufacturing supply sources to avoid supply chain risks.
For example, the aforementioned Apple company plans to produce some of its chips in the United States, and will later purchase chips from European wafer manufacturing plants.
Qualcomm also announced this year the extension of its long-term agreement with GlobalFoundries , agreeing to purchase an additional US$4.2 billion worth of semiconductor chips from GF's New York factory, bringing its total purchases by 2028 to US$7.4 billion. Apple CEO Cook publicly stated that 60% of the world's processor supply comes from Taiwan. "No matter how you feel or think, 60% coming from anywhere may not be a good strategy." In addition, Tsai Lixing, CEO of MediaTek, a major customer of TSMC, also previously stated that in the context of some large equipment manufacturers requiring chip suppliers to diversify their sources, "if business needs it, we will have to find multiple sources for the same chip." Prior to this, MediaTek had reached a cooperation with Intel and planned to hand over some chips to Intel for foundry. TSMC competitor Samsung wafer foundry business enterprise planning leader Sim Sang-pil also recently said that due to the rising geopolitical crisis, the global technology industry is seeking a second source of supply for advanced semiconductors (except Taiwan), which gives Samsung more opportunities to deal with these manufacturers. On the one hand, Taiwan semiconductor manufacturers such as TSMC continue to put their production capacity outside Taiwan, and on the other hand, chip design customers have also begun to hand over chip manufacturing orders to wafer factories outside Taiwan, which has also caused some Taiwanese industry insiders to worry about the "de-Taiwanization" of semiconductors. Regarding the phenomenon of "de-Taiwanization" of semiconductors, Zhang Zhongmou said that now everyone knows that chips are an important product. Many people are jealous of Taiwan, China, and Taiwan, which has so many good chip manufacturing capabilities. There are many people who are envious and jealous, and for various reasons, such as national security, profitability, and money-making. For example, when attending APEC, several countries came to ask whether they could produce chips in their country. The media asked which countries conveyed the above message to Zhang Zhongmou. Zhang Zhongmou replied that it would not be said of which countries, "TSMC cannot produce in so many places." Editor: Xinzhixun-Longkejian
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