TSMC: US facility outperforms Taiwan in chip production efficiency

The Phoenix fabrication facility of the world’s largest semiconductor chip maker is yielding more usable chips than similar plants in Taiwan, according to the Taipei Times.

Rick Cassidy, president of TSMC’s US division, said during a webinar last week that the share of usable chips from the company’s Phoenix plant exceeds that of similar Taiwanese plants by 4%. If true, the superior performance at the Phoenix fab is notable because the US government has been working to spur a return of the semiconductor manufacturing industry to US shores, where manufacturing tends to be more costly.

Better yields would help offset those higher costs.

“Four percent higher yield is certainly good news,” said Harry Moser, president of the Reshoring Initiative, a non-profit that offers companies assessments on offshoring costs. “To be competitive, we need a higher yield. It is agreed that US factory capital cost and operating cost will be 10% to 20% higher than in most other countries. The 4% will offset some of that difference.”

The COVID-19 pandemic highlighted critical gaps in the semiconductor supply chain as imports to the US and other nations ground to a halt, affecting the production of everything with electronics, from smart phones to cars. The CHIPS and Science Act, passed in 2022, earmarked more than $52 billion in funding and tax incentives for use by the US semiconductor industry to create new or expand existing manufacturing and R&D facilities.

The CHIPS Act was created to address both future possible supply chain catastrophes and to re-establish the US as a major chips manufacturer.

To date, the CHIPS Act has allocated more than $32 billion in proposed funding across 18 companies, 16 states, and 26 projects. However, no CHIPS funding has yet been disbursed to any companies, according to the US Department of Commerce.

TSMC is the main supplier of chips for both Nvidia and Apple. The CHIPS Act allocated $6.6 billion in grants and $5 billion in loans, along with a 25% tax credit, to incentivize the company to build three fabs in Arizona. TSMC’s first facility was scheduled to open this year, but the company pushed that back to next year after labor shortages surfaced.

The US reshoring efforts come at a time when the industry doesn’t have anywhere near the workforce — including technicians, computer scientists, and engineers — required to support future needs. By some estimates, the US semiconductor industry will face a worker shortfall of between 59,000 and 146,000 workers by 2029. A minimum of 50,000 trained semiconductor engineers will be needed over the next several years in the US to meet the overwhelming and rapidly growing demand, according to a study by Purdue University.

The broader US economy is set to have a gap of 1.4 million such workers, according to a 2023 study from the Semiconductor Industry Association. So the competition will be fierce over those skilled workers. Compounding the problem is an ongoing exodus of existing talent as older workers retire. A study from Deloitte found that nearly 90% of tech leaders interviewed cited recruiting as their biggest challenge.

A TSMC spokesperson shared statements regarding the Phoenix fab with Computerworld from a third quarter earnings call by CEO C.C. Wei, but declined to comment on Cassidy’s claim directly.

“Our first fab entered engineering wafer production in April with 4-nanometer process technology, and the result is a highly satisfactory, with a very good yield,” Wei said. “This is an important operational milestone for TSMC and our customers, demonstrating TSMC’s strong manufacturing capability and execution.”

Wei said he expects volume production of the company’s first Arizona fab to start in early 2025, and he is “confident” it will deliver “the same level of manufacturing quality and reliability” from our fabs in Taiwan.

TSMC is also building two other fabs in the Phoenix area that will use more advanced technologies based on its customer needs, Wei said. The second fab is scheduled to begin volume production in 2028 and the third fab will begin production by the end of the decade.

“Thus, TSMC will continue to play a critical and integral role in enabling our customers’ success, while remaining a key partner and enabler of the US semiconductor industry,” Wei said.

Reshore Now’s Moser said it would be good to know whether the Phoenix fab uses identical equipment as in Taiwan, speculating that the US plant could have been more modern. “Was it accomplished solely by US workers or significantly by Taiwanese brought over to aid the start-up?” he said.