Why would the world’s top chip maker invest billions of dollars in the US when it’s much more expensive to produce here?

Tram Ho

On December 6, Taiwan Semiconductor Manufacturing Co. (Taiwan Semiconductor Manufacturing Corporation – TSMC), has just announced it will triple its investment in the US state of Arizona. According to the plan, TSMC’s investment will increase to 40 billion USD from 12 billion USD announced previously.

TSMC invests an additional $28 billion to build a second factory in Arizona, and this plant will start producing the group’s most advanced 3nm process chips in 2026. TSMC’s first factory is expected to be in will come into operation in 2024.

According to TSMC, this will be the group’s largest foreign direct investment in the US. This is particularly notable news because TSMC is the world’s largest chip manufacturer.

Vì sao nhà sản xuất chip lớp nhất thế giới lại đầu tư hàng tỷ USD vào Mỹ khi chi phí sản xuất ở đây đắt đỏ hơn nhiều? - Ảnh 1.

However, Business said TSMC founder Morris Chang was skeptical about making chips in the US and said it was an “unwise” investment for both the group and the US.

In April this year, Mr. Chang commented to the Brookings Institution that the US promoting domestic chip production would be “a wasteful and costly action” because the US “lack of manufacturing talent”. He also argued that “chip production in the US is 50% more expensive than in Taiwan (China).”

The US has made efforts to increase domestic chip production because it depends on TSMC’s factories in Taiwan island (China) to produce items such as cars, desktop computers, and phones. iPhone and washing machine. If something goes wrong, causing chip production in Taiwan to be halted, the economic damage to the US could run into trillions of dollars.

However, experts remain skeptical about whether factories in Arizona can help the US significantly reduce its reliance on Taiwan, and Mr. Chang’s comments suggest that TSMC’s investment is worth it. may face more challenges.

Vì sao nhà sản xuất chip lớp nhất thế giới lại đầu tư hàng tỷ USD vào Mỹ khi chi phí sản xuất ở đây đắt đỏ hơn nhiều? - Ảnh 2.

Despite the challenges, these could be the reasons why TSMC decided to invest in the US

Despite the business setbacks, there are a number of reasons why TSMC has built not just one – but two factories in Arizona, according to Business Insider.

First, the cost of making chips in the US may not be as much as 50% more expensive, as Mr. Chang argues.

The cost [of making chips in the US] will probably be only 15 to 20 percent more expensive. The US will provide the components,” said Dylan Patel, an analyst with semiconductor research and consulting firm SemiAnalysis. support, so the cost difference won’t really be that big .”

Accordingly, TSMC’s factories will be partially subsidized by the US government through the Science and CHIPS Act – a law just passed by the US government in August this year, providing $52 billion to promote domestic semiconductor chip production.

And even if it’s more expensive to manufacture in the US, Mr. Patel said TSMC customers will ” happily accept to pay a little more ” to ensure supply chain diversity, something many customers have not seen. The company is focusing towards due to the challenges of the supply chain over the past few years.

Those “customers” include Apple, TSMC’s biggest customer and accounted for 26% of its revenue last year. Apple CEO Tim Cook has confirmed that Apple will be the biggest customer of TSMC’s plants in the US when they come into operation.

Martijn Rasser, a former CIA officer and now a technology and security expert at the Center for a New American Security, commented: ” The TSMC leadership sees the benefits of having geographical diversity in its operations. activities, especially when the group is sought after by the governments of the world’s leading economies “.

In particular, according to Business Insider, the support of the United States is considered to have an important role in the context of escalating Taiwan Strait tensions, affecting the island’s chip manufacturing industry.

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Source : Genk