The founder of Taiwanese chip foundry TSMC described attempts to increase manufacturing capacity in the United States as an “exercise in futility”.
speaking to Event hosted by the Brookings Institution, Morris Chang said he believes conditions in the US economy and labor market are not conducive to success in the context of semiconductor manufacturing.
Specifically, he cited the talent shortage in the country’s manufacturing sector, which has long favored alternative skills, as well as the cost of producing chips in the United States, which Chang said is 50% higher. higher than in Taiwan.
Intel in the United States
Over the past two years, the United States has become increasingly determined to outsource more semiconductor manufacturing, due to continued chip shortages, supply chain disruption and China’s aggressive stance toward Taiwan.
To help with this push, the Biden administration has pledged billions of dollars in grantsmuch of which will go to Intel, one of the few companies capable of manufacturing processors.
In early 2021, Intel released an overhaul to its Integrated Device Manufacturing (IDM) strategy, which the company called IDM 2.0. The goal is to position Intel at the forefront of chip design and manufacturing and capitalize on new revenue streams during a time of unprecedented demand. Inevitably, these plans will require significant investment.
In January, the company revealed it would pump $20 billion into a state-of-the-art manufacturing campus in Ohio. This 1,000-acre “mega-site” will house up to eight separate factories, making it one of the largest facilities in the world.
To further strengthen US manufacturing capability, Intel also announced that it will funnel an additional $3 billion in an expansion for its D1X plant in Oregon. The expansion will apparently pave the way for next-generation technologies that will underpin new chips for personal and business computers, 5G networks, cloud servers and more.
Thinly veiled reviews
In light of the billions Intel is currently raking in from projects on US soil, Chang’s comments can be read as a thinly veiled critique of the rival manufacturer’s strategy.
Based on TSMC’s experience in the country over the past two decades, Chang expects Intel to have difficulty staffing its new US facilities and says “it will be difficult for states States to be internationally competitive” due to price constraints.
Essentially, he thinks the United States has bet on a war between China and Taiwan, which would result in the only scenario in which the current level of investment in American chipmaking would make commercial sense.
However, if such a war does not materialize, Chang believes the Biden administration (and by extension, Intel) will be heavily shelled out with little to show for it.