Name: Secretive Giant TSMC’s $100 Billion Plan To Fix The Chip Shortage
Uploaded: 2021-10-17T07:28:13.000Z
Duration: 17 min 38 s
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Chips are in everything, and they've been in short supply since just a few months into the pandemic last year. That's why it's been hard to buy

everything from cars to PS5s. Turns out one company makes 24% of all the world's chips, and more than 90% of the most advanced ones, the smallest,

fastest chips used in today's iPhones, supercomputers and automotive AI.

Heck, we even have product that's landed on the last Mars launch that are taking pictures of Mars.

Taiwan Semiconductor Manufacturing Company, or TSMC, is not a household name. But it's quietly making chips for every new iPhone, U.S. fighter

jets, the highest-end processors, you name it. And now it's investing $100 billion over three years to ramp up production amid the shortage.

The combined output of what we're doing is in excess of 12 million wafers a year.

But the world's massive reliance on TSMC may also leave the global chip supply vulnerable to earthquakes, drought and geopolitical tensions with

It's become almost a monopoly at the leading edge and all of those manufacturing operations for the most part part out of Taiwan, Hsinchu.

That becomes a matter of national importance for the United States. But not only the United States, but the Western world.

TSMC almost always keeps its production sites closed to U.S. video crews. Until now.

The total floor space for this fab is around a 2.3 million square feet.

The U.S. was the birthplace of advanced silicon. But for decades now, it's been losing market share to Asia, where 75% of chip production happens now.

TSMC is now bringing the world's most advanced chipmaking back to the U.S. with a $12 billion fabrication plant, or fab, in the middle of the Arizona

It's going to be, when it gets introduced to production in 2024, the most advanced technology manufactured in the United States.

We got an exclusive tour of the fab site in northern Phoenix to get the truth about the secretive Taiwanese company and why the world's largest

contract chipmaker is bringing bleeding edge chip manufacturing back to U.S. soil.

When Morris Chang first proposed the idea for TSMC in the mid 80s, investors were skeptical. Born in China and educated at Harvard, MIT and

Stanford. Chang moved to Taiwan after 25 years at Texas Instruments. There, the government asked him to create a Taiwanese semiconductor company that

would become a world leader. His idea: focus only on manufacturing, what's known now as a pure-play foundry.

When you're just focused on one thing, you do one thing really well.

Rick Cassidy is TSMC's top executive in the U.S. He's been with the company for 23 years.

The slice we spun out was foundry. And that's what we do. And we put all of our resources into doing that one thing.

Chang bet big on a need that didn't exist in the 80s. When he founded TSMC in 1987, giants like Intel and Texas Instruments took pride in designing

and making their own chips. A legendary saying in the industry back then was, "Real men have fabs."

When Morris went out to get funding, he went to many named companies, and they told him, "Morris, your idea won't get off the ground. If you get it

But as chips got more complex, making them became an enormous undertaking. Building a fab today takes at least two years and $10 billion. It's become

nearly impossible for even the biggest chip companies - Intel, NVIDIA, Broadcom, Qualcomm, AMD - to do it all and keep up with the most advanced

tech. Intel, for example, still designs and makes its own chips. But it's fallen behind Samsung and TSMC in recent years, even relying on TSMC to

So if you were a smart designer, you didn't have to have billions of dollars and a fab behind you for the first time with the emergence of TSM.

Now each major step of chipmaking is often handled by a separate company. Some like ARM and MIPS focus on IP and architecture, providing the core

building blocks to design chips. Then there's electronic design automation, EDA companies like Cadence and Synopsis that write the software used to

design chips. Only one company, ASML makes the $180 million extreme ultraviolet light machines required to etch designs into the most advanced

chips. And then of course there are the wildly successful fabless companies designing the chips. Think Apple, Qualcomm, NVIDIA and many more. As these

fabulous companies took off, TSMC found itself on a flywheel making more and more of the world's chips.

And this has allowed TSM to not only catch up but, in my opinon, surpass Intel to become the world's greatest manufacturing technology on the

planet, and responsible for becoming one of the top 10 most valuable companies in terms of market cap in the globe.

TSMC was first listed on the Taiwan stock exchange in 1994. In 1997, it became the first Taiwan company listed on the New York Stock Exchange. By

the 2000s, it had caught up with the 20 or so other companies making the most advanced chips at the time. As the tech kept advancing, more and mor

fell behind until today, only two manufacturers remain that can make the most advanced five-nanometer chips: TSMC and Samsung. In 2013, Apple starte

relying on TSMC to make its A-series chips for the iPhone as it moved awa  from reliance on Samsung, a direct competitor in mobile phones. Toda

there's a TSMC chip inside every iPhone on the market. And Apple has mo ed away from Intel, too, now relying on TSMC to make the chips inside most

But they remain sort of in the background. So you know, Apple gets all the accolades when a new phone comes out.

We let our products speak for themselves. Their success brings all the business that we could ever hope for.

As to why TSMC hasn't allowed U.S. media into its sights before now?

Is part of the secrecy have to do with IP?

Sure because the IP protection is very important for this industry, not only for TSMC, but also for the other companies in the industry.

In 2018 at age 86, Chang retired as chairman of TSMC. His radical pure-play foundry idea continues to pay off. With the opening of a new fab in Taiwan

next year, TSMC is in a race with Samsung to make the world's first three-nanometer chips, with Intel planning to get there by 2025. Along with

cutting edge three- and five-nanometer TSMC also makes far larger chips for everything from cars to coffee makers. To understand the different kinds of

chips and why nanometers matter, let's look at how they're made. Silicon, an abundant element found in rocks and sand, is purified and melted down,

then sliced into circular wafers. These wafers are the surface on which chips are built in a grid formation. Each chip on the wafer can have

hundreds of tiny layers, each made up of transistors and electrical circuits, which determine what the chip can do. The miniscule circuitry is

printed on each layer using lithography, extremely precise rays of light. The smaller the width of the transistor gate, five nanometer, three

nanometers, the more processing power can fit in a given space with less power needed. The smallest transistors are more than 10,000 times thinner

Most of the chips are probably about the size, a large one, of my thumbnail. On there, you might have something like 50 billion-plus

transistors, and they all have to work. These are parts that are going to be used in lots of different places, CPUs, GPUs, IPUs, etc. They'll be used

Bigger chips are used in most household devices, things like a TV remote or electric toothbrush. Cars often use less advanced 28- to 40-nanometer

chips. And all types of chips have been impacted by the shortage. Car makers like GM and Toyota have paused production at some plants. And Apple

is cutting its 2021 production targets for the iPhone 13, with orders for the 13 Pro Max delayed by more than a month. Right now no fab in the U.S.

can make five-nanometer chips, but TSMC is changing that.

The F-35 Strike Fighter to these consumer products, their customer base is wide. 500-plus companies are their customers in the United States. And so

as a byproduct of that we knew they were going to need to be in the United States at some point.

Chris Camacho of the Greater Phoenix Economic Council got to visit TSMC's fabs in Taiwan during the five years he was helping negotiate the deal that

The robotics, the automation, the mechanization occurring before your eyes and so you can see how these things not only are so capital intensive, but

they're also their output is so significant.

TSMC is six months into building this massive five-nanometer fab outside Phoenix that will pump out 20,000 wafers per month starting in 2024. The

chips from the wafers will end up in iPhones, high-end processors and much more. Arizona project leader Tony Chen has led 17 other fab construction

Actually this project is designed for five-nanometers fab. It's a copy from the fab we have in Taiwan.

Just down the road Intel is in the midst of building two new fabs, spending $20 billion. These massive buildings used to make miniscule chips have

brought some of the world's largest equipment to Arizona.

This is the biggest crane that Manitowoc makes. There's only two of them in existence. And it's a 2,300 ton crane. Since we've started, our dirt

contractors moved over 3,731,000 cubic yards of dirt. We've also used over 260 million gallons of water.

Indeed, building a fab and making chips takes an incredible amount of water, something that's not easy to find in the middle of the desert.

Arizona's biggest water source is groundwater. But deep wells at big farms are using up groundwater faster than it's naturally replenished.

We do need around 4.7 million galllons per day of water to support the production.

TSMC is no stranger to water shortages. Taiwan is facing its worst drought in 56 years, something that TSMC says has not impacted production. In

Arizona, TSMC says an onsite water treatment center will recycle up to 90% of water used at the fab

And ultimately that water will be reinjected into the aquifer in partnership with the city of Phoenix after reverse osmosis and other

Another challenge of producing the most advanced chips stateside: the current specialists are all in Asia.

TSM's best engineers right now are in Taiwan. They're likely going to stay in Taiwan. The most cutting edge r&d is going to be done in Taiwan.

To solve this, recruiter Roxanna Vega says TSMC is bringing over some of its top experts from Taiwan.

They're seen as subject matter experts in what they do in our fabs over there. So it'll be a temporary assignment depending two, maybe three years.

TSMC has already sent some 300 new U.S. hires to Taiwan for 12 to 18 months to get up to speed.

And the opportunity to train in our five-nanometer gigafab in Taiwan is gonna give them that insight of how immense and how state-of-the-art our

tools, machinery and everything is going to be here in Arizona.

Taiwan is not very good when it comes to analog semiconductor design. And by moving to the United States they'd be able to tap into a much larger

This diversification is a key reason for TSMC to bring advanced manufacturing to the U.S. And then there's proximity to its huge, fabless

customers based in the U.S. like Apple, Nvidia and Qualcomm.

If you want more capacity, you have to build more fabs. And that's one of the reasons that we're moving to the U.S. Our customers want us in the