Adapted by:
Juan Carlos López
Senior WriterAn engineer by training. A science and tech journalist by passion, vocation, and conviction. I've been writing professionally for over two decades, and I suspect I still have a long way to go. At Xataka, I write about many topics, but I mainly enjoy covering nuclear fusion, quantum physics, quantum computers, microprocessors, and TVs.
Karen Alfaro
WriterCommunications professional with a decade of experience as a copywriter, proofreader, and editor. As a travel and science journalist, I've collaborated with several print and digital outlets around the world. I'm passionate about culture, music, food, history, and innovative technologies.
TSMC founder Morris Chang isn’t infallible. No one is. The veteran Taiwanese engineer, who studied in the U.S., ranks among the most respected experts in the global semiconductor industry. After all, when he founded TSMC in 1987, Taiwan was a minor player in the integrated circuit manufacturing market. It was a historic moment. His acumen is undeniable, and he has made sage decisions at the helm of TSMC.
However, his predictions haven’t always been accurate. On several occasions, he has publicly stated that production costs at factories outside Taiwan will double in the future, directly impacting chip prices. He attributes this increase to rising energy prices, labor costs, and inflation’s impact on key raw materials.
It Costs TSMC Less Than 10% More to Process a Wafer in Arizona Than in Taiwan
In April 2024, TSMC CEO C. C. Wei qualified Chang’s statements, predicting that the increased costs of manufacturing leading-edge integrated circuits outside Taiwan would be borne by both TSMC and its customers. “If my customer requests to be in some certain area [outside Taiwan], then definitely, TSMC and the customer had to share the incremental cost,” Wei said. “We expect our customers to share some of the higher cost with us, and we already started our discussion with our customers,” he added.
Their comments have led many analysts in the integrated circuit industry to closely follow the progress of the company’s new fab in Phoenix, Arizona. This state-of-the-art facility made headlines in October 2024 when Rick Cassidy, president of TSMC’s U.S. division, confirmed that its initial production throughput had surpassed that of TSMC’s comparable fabs in Taiwan.
The yield of a lithography node is critical because it reflects the ability to produce valid chips.
The yield of a lithography node is critical because it reflects the ability to produce valid chips, making a high yield a competitive advantage for semiconductor manufacturers. What remained unclear was whether the cost of producing these semiconductors was significantly higher than comparable chips made in Taiwan. Now, a report from TechInsights, the Canadian analyst firm that revealed Huawei and SMIC’s success in producing 7nm integrated circuits, sheds some light on the issue.
According to G. Dan Hutcheson, the TechInsights analyst who signed the article, it costs TSMC less than 10% more to produce a 300mm wafer at the Arizona facility than at a comparable Taiwan plant. Labor costs, which account for less than 2% of total production expenses, drive this slight increase.
Wages are much higher in the U.S. than in Taiwan, but chip fabs are highly automated. Lithography equipment costs remain essentially the same in both countries. One thing is certain: This is good news for TSMC’s U.S. customers, including Apple, Nvidia, AMD, and Broadcom.
Image | TSMC
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