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Growing US chip output an 'expensive exercise in futility', warns TSMC founder
Production talent isn't here, costs are high ... so how's that multi-billion-dollar Arizona plant coming, eh?
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 1970s and 1980s that saw its manufacturing talent retraining for higher-paying jobs. Chang said that isn't necessarily bad for America, but it is a challenge for the US chip manufacturing industry, which, in his mind, simply doesn't have the fabrication talent pool needed to expand and succeed.
Taiwan, Chang said, has a large population that was integral to TSMC's manufacturing success. While the US and other countries saw professionals moving away from manufacturing, Taiwan was ripe with talent and made it an ideal location for a "pure play" chip foundry that only produced components for other companies, he proclaimed.
The US has a ready supply of design talent, "it's the best in the world," Chang said. "Taiwan has very little design talent, and TSMC has absolutely none." But to develop and grow a successful chip manufacturing industry, the US will need to address its own serious fabrication talent shortages, he opined
That's not all: Chang said that costs for manufacturing in the US are simply prohibitive, and TSMC has the data to prove it thanks to 25 years of manufacturing at its plant in Oregon. Chang said the plant is profitable, but expansion plans have all but been abandoned.
"We were extremely naive," Chang said, "in expecting comparable costs, but manufacturing chips in the US is 50 percent more expensive than in Taiwan."
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US experts seem on the same page as Chang. 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. Chang added that TSMC tried multiple arrangements of American and foreign employees to staff its Oregon plant, but without much reduction in costs.
So why is TSMC investing in Arizona?
It's perhaps hard to square Chang's position with TSMC's $12 billion investment in an Arizona fab, and news that it raised an additional $3.5 billion in bonds for the factory. Then again, he did leave in 2018 and said that the decision to build the new US fabs wasn't his.
"We did it at the urging of the US government, and TSMC felt we should do it," Chang said. Still, he believes that all the billions of subsidies being ring-fenced by the US for increased domestic semiconductor assembly will still fall far short of the necessary amount needed to boost homegrown chip manufacturers.
US production will definitely increase, he said, at least somewhat. "There will be a high per-unit cost increase, and it will be hard for the US to compete internationally."
Chang's position has one big "if" attached to it: a war between China and Taiwan, which he admits he can't account for. If there isn't conflict between China and Taiwan, Chang said the US will have set out on an expensive endeavor.
On the other hand, said Chang, if there is a war, "the US will have a lot more than chip manufacturing to worry about." ®