[HN Gopher] TSMC ups Arizona investment from $12B to $40B with s...
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       TSMC ups Arizona investment from $12B to $40B with second semi fab
        
       Author : totalZero
       Score  : 344 points
       Date   : 2022-12-06 13:35 UTC (9 hours ago)
        
 (HTM) web link (www.cnbc.com)
 (TXT) w3m dump (www.cnbc.com)
        
       | aresant wrote:
       | This + the recent news that Apple is planning to diversify
       | production out of China (1) is hard not to read into regarding
       | the US' view of where US/China relations are heading . . . any
       | geopolitical armchair experts have a view?
       | 
       | (1) https://www.wsj.com/articles/apple-china-factory-protests-
       | fo...
        
         | uni_rule wrote:
         | Policies like this actually move pretty slowly. This is still a
         | reaction to Ukraine in february, not planning for anything in
         | particular, just the possibility of a fucked status quo.
        
           | vinibrito wrote:
           | Or maybe even a reaction to the pandemic. Which means a
           | couple years ago at least.
        
             | hayst4ck wrote:
             | I think not being able to procure n95 masks because mask
             | production was all off-shored, particularly to China, was a
             | real wake up call that supply chain security is integral to
             | national security.
             | 
             | Ukraine was the moment that showed that: "No two countries
             | that both have a McDonald's have ever fought a war against
             | each other." is a false idea.
             | 
             | Hong Kong made it clear that the idea of increasing
             | prosperity in China will not lead to it's liberalization,
             | nor can China be relied upon to be bound by documents that
             | are "historical documents that no longer have any practical
             | significance."
        
         | markus_zhang wrote:
         | I read it as an interest exchange between US and China. US has
         | the upper hand here so managed to grab some good stuffs fron TW
         | while China probably got the permission to go in the future.
        
       | MegaSec wrote:
       | Good.
        
       | bfrog wrote:
       | It's interesting to see semi fab factories becoming a hot thing
       | here in the states with an entire campus being rolled out in Ohio
       | along with expansions and further growth in the southwest. Can
       | only mean good things for workers as more options become
       | available.
        
       | FpUser wrote:
       | I guess this is TSMCs getaway if things will get sour with China.
        
         | Rapzid wrote:
         | In a sense.. Currently western liberal democracies have a
         | monopoly on the most advanced microprocessor manufacturing
         | tech.. And they plan to keep it that way indefinitely.
         | 
         | This "sours the milk" so to speak and it makes it easier to
         | take TSMC off the board.
         | 
         | For one, if there was ever any real consideration by China of
         | forceful takeover it would be made clear TSMC would not be a
         | spoil of war. This makes a scorched earth threat even more
         | credible.
         | 
         | For two, it disincentizes playing games with Taiwan as a pawn
         | based on the wests reliance on chips flowing out. Knowing the
         | chips are flowing in large quantities from other countries
         | removes the lynchpin status.
         | 
         | Third, it stabilizes supply in the chance that something does
         | happen. Maybe a natural disaster. Maybe a blockade.
        
         | starkd wrote:
         | I think it makes it more likely that China is going to swallow
         | up Taiwan without even firing a shot. Wargame simulations are
         | giving a dim prospect for defending the island. US has removed
         | fighter jets from Japan. And public opinion in Taiwan for
         | resisting China has slightly shifted toward accomadation. I
         | hope I am wrong.
        
           | FpUser wrote:
           | >"I think it makes it more likely that China is going to
           | swallow up Taiwan without even firing a shot."
           | 
           | I am not sure about "without even firing a shot" part but
           | golden parachute type people and important staff will most
           | likely be relocated to the US right before that and the rest
           | of Taiwanese will have to suck it up. Yes very sad story and
           | I hope it does not happen.
        
           | philliphaydon wrote:
           | > And public opinion in Taiwan for resisting China has
           | slightly shifted toward accomadation.
           | 
           | Huh? No it hasn't. Taiwan doesn't want to end up like Hong
           | kong. They know the 1 country 2 systems doesn't exist. Taiwan
           | is already an independent country. They just want to keep
           | status quo so China will leave them alone.
        
           | boc wrote:
           | If China really thinks their completely untested military can
           | easily pull off the largest amphibious assault in history,
           | they deserve the results. It would be an absolute bloodbath.
           | Wargame simulations are ways for the pentagon to get more
           | money from congress... the reality is that invasions aren't
           | easy to hide and never go quite as planned.
           | 
           | If you disagree just go read up on the wargames and
           | predictions for a Russian invasion of Ukrainian. Most people
           | thought they'd reach Poland in days, if not hours. And they
           | had the second most capable military in the world, on paper.
        
             | selectodude wrote:
             | It's also important to remember that a war game that your
             | military wins isn't a very useful war game. The whole goal
             | is to find blind spots in military strategy and planning.
             | "Nah we're good everything is great" is how you end up
             | getting worked by Ukraine.
        
             | DiogenesKynikos wrote:
             | > If China really thinks their completely untested military
             | can easily pull off the largest amphibious assault in
             | history, they deserve the results. It would be an absolute
             | bloodbath.
             | 
             | For which side? No one knows.
             | 
             | There would be so many factors at play, both military and
             | economic, that it is almost impossible to predict how
             | things would play out. All anyone knows is that China's
             | capabilities have increased many times over in the last 20
             | or so years, and that they are increasing every year.
             | However, no country on Earth has fought a war on this scale
             | for decades (with the possible exception of Russia and
             | Ukraine right now), so no one knows what the outcome would
             | be.
        
           | fintechjock wrote:
           | > US has removed fighter jets from Japan.
           | 
           | They're phasing out older variants of the F-15 C. They will
           | be replaced by F-15 EXs when they are ready, and until then
           | the old F-15s will be replaced with F-22s
        
         | warinukraine wrote:
         | Remember when Warren Buffet invested into TSMC and someone said
         | he must know something we don't?
        
           | criddell wrote:
           | I keep wondering if this is different than when Foxconn
           | announced a $10b investment in Wisconsin but carried through
           | less than 10% of that?
        
             | totalZero wrote:
             | Judging by the pictures, TSMC is building a lot of
             | expensive-looking stuff out in Arizona. I know they're both
             | Taiwanese companies but this project seems a bit different.
             | 
             | https://asia.nikkei.com/Business/Tech/Semiconductors/TSMC-
             | to...
        
           | PartiallyTyped wrote:
           | TSMC has had a license to print money for a while now given
           | how huge ASML's backlog is.
        
             | chrisjc wrote:
             | Is ASML even going to be able to meet the demand created by
             | all these fabs opening up across the US (and rest of the
             | world)?
             | 
             | The stories I've heard about what it takes to build a
             | single machine would suggest to me that scaling up would be
             | a huge feat and I could only imagine take years to
             | accomplish.
             | 
             | Then again, perhaps TSMC and their peers had predicted this
             | kind of growth and already placed their orders long ago?
        
               | imhoguy wrote:
               | Maybe they will just move a chunk of existing fab?
        
               | [deleted]
        
               | tooltalk wrote:
               | ASML has now $32+B worth of backlog and they are still
               | able to make only ~40+ EUV per year.
        
           | tooltalk wrote:
           | Buffet probably knows little or nothing about the fab
           | industry and probably didn't make this investment decision.
           | 
           | TSMC is upping their investment in the US, but I agree with
           | Morris Chang that the US operation won't be as lucrative --
           | ie, thye won't be able to maintain 50+% profit margin.
           | Further, TSMC really didn't have any competition in the last
           | 2-3 nodes and Samsung was largely absent in 7/5/4nm, but
           | Samsung is going mass production with 3nm GAA pretty soon and
           | TSMC is going to have to put up a good fight to maintain
           | their dominance.
        
       | Lind5 wrote:
       | Astounding amount of semi investments. $500B in this list alone
       | https://semiengineering.com/where-all-the-semiconductor-inve...
        
       | adam_arthur wrote:
       | Onshoring is a logical result of improved automation.
       | 
       | When labor costs lessen, transportation and logistics become the
       | primary concern. Wouldn't be surprised if 100 years from now most
       | final good assembly is done locally.
       | 
       | Of course sometimes raw materials and inputs are more expensive
       | to transport than the finished good, so there will always be
       | cases where long distance transportation of finished products is
       | still preferred
        
         | conradev wrote:
         | Onshoring in this case is a logical result of improved tax
         | incentives. Almost every cost is higher in the US - not just
         | labor.
         | 
         | Improved automation does reduce costs, but those cost
         | reductions are even better in places where manufacturing is
         | already cheap.
         | 
         | Semiconductors have a very high value to weight ratio, so
         | shipping them globally makes more sense than it does for other
         | items.
        
           | rdevsrex wrote:
           | Which is driven by concerns over the safety of Taiwan's fabs.
        
           | thereddaikon wrote:
           | The highest costs in Semiconductor fabrication are the
           | specialized machines needed. Most of them are at best dual
           | sourced. Many are single sourced. The fact a technician in
           | the US can make $100k when their counterpart in China would
           | make $50k doesn't matter when the EUV Lithography machine is
           | hundreds of millions of dollars.
        
             | andrewmutz wrote:
             | Who makes those expensive machines? Are they made in-house
             | by companies like TSMC? Or are they purchased from others?
             | And whats the geopolitics of that part of the supply chain
             | (made in taiwan? made in china? made elsewhere?)
        
               | pkaye wrote:
               | The machines are made by other companies. Lithography is
               | the most expensive now and its made by ASML in
               | Netherlands is the only solution for EUV lithography. But
               | there are many steps in manufacturing and a machine for
               | each. The major equipment manufactures are spread across
               | US, Europe and Japan. In the US the three big equipment
               | manufacturers are Applied Materials and Lam Research and
               | KLA.
               | 
               | The costs are probably driven by extreme engineering
               | requirements (temperature, pressure, corrosive chemicals,
               | low contamination) and R&D costs to meet these
               | requirements. The production volumes are not high either.
               | Its not like they are building millions of these
               | machines.
               | 
               | Asianometry on YouTube is a good source for this kind of
               | topic.
               | 
               | https://www.youtube.com/watch?v=5Ge2RcvDlgw
        
               | thechao wrote:
               | In many ways, ASML:
               | 
               | https://www.asml.com/en/products/euv-lithography-systems
        
               | briffle wrote:
               | ASML is the very high end, but there are many other
               | manufacturers as well. Canon and Nikon both make
               | lithography systems used in many wafer fabs.
        
               | r00fus wrote:
               | I really doubt anyone else than ASML can do 4nm (which
               | this factory is planned to target).
        
             | brookst wrote:
             | Capex amortizable across the life of the fab and usually
             | treated beneficially for tax purposes (though these fabs
             | are so tax-special that may be meaningless). Opex is with
             | you forever and affects the economics of the business much
             | more profoundly.
        
           | fundad wrote:
           | "Tax incentives" like writing off Capex have been there for
           | the taking. So yes, the improved tax incentives with
           | bipartisan support translates to stability for investors.
        
           | ouid wrote:
           | the cost _reductions_ are necessarily worse in the places
           | where costs are lower. I think you didnt do that math right.
           | You might be right that the logistics for shipping silicon
           | are still so good that this does not reach the amdahl limit,
           | but it is not a consequence of your argument.
        
           | adam_arthur wrote:
           | The cost difference between US and China for a fully
           | automated factory is negligible. Even considering real estate
           | costs and taxes.
           | 
           | No tax incentive needed to onshore in the long run
        
             | CHY872 wrote:
             | While semiconductor fabs are highly automated, the machines
             | are complex enough and do extreme enough things that they
             | break a lot, requiring human intervention. MTBF for many of
             | the machines used can be measured in hours, it's not like
             | you can set up and go home. TSMC has around 65k employees
             | overall - a cursory search did not yield their makeup by
             | job breakdown, although from 1997 through 2003 around 50%
             | of their employees were 'factory' workers via [0].
             | 
             | I'd expect high-margin items like semiconductors to be more
             | amenable to onshoring anywhere - certainly Intel has almost
             | all of its fabs in highly developed countries, but I think
             | this is hardly a cost efficiency move - rather it's a hedge
             | against the failure of globalization and the risk of the US
             | losing access to advanced semiconductor technology in case
             | of strife in Taiwan. Russia has already lost this access.
             | TSMC took in about $56B in '21, of which about $28B was
             | 'cost of revenue', the amount they needed to spend on
             | supporting this revenue (marketing, legal, production,
             | e.g., not building factories or R&D). There's certainly
             | room for increased production costs while maintaining a
             | profit.
             | 
             | [0] - https://www.researchgate.net/figure/TSMC-personnel-
             | structure...
        
         | richardwhiuk wrote:
         | This isn't onshoring - onshoring would be moving to Taiwan -
         | this is the Taiwanese Semiconductor Manufacturing Corporation.
        
           | philwelch wrote:
           | It's onshoring from the perspective of an American company
           | that contracts out to TSMC fabs, such as Apple, AMD, nVidia,
           | Marvell, Qualcomm, or other major TSMC clients. Sony is also
           | a TSMC client so if TSMC built fabs in Japan, Sony would be
           | onshoring.
        
           | lifeisstillgood wrote:
           | This is onshoring - to the shores of a country whose national
           | sporting league called _The World Series_.
           | 
           | There is a distinctly USA centric view of the world :/)
        
             | _-david-_ wrote:
             | MLB isn't a national thing. There are two countries (US and
             | Canada) who have teams.
        
         | throwaway4good wrote:
         | This has got nothing to do with improved automation.
        
         | totalZero wrote:
         | It would make more sense to put the mega-fabs where electricity
         | is cheapest in the Americas, and that certainly isn't Arizona.
        
           | pvarangot wrote:
           | ASU has a good optical engineering program too, electricity
           | is no the only variable.
        
           | thehappypm wrote:
           | Isn't solar the cheapest energy per KwH? A sunny place like
           | Arizona with tons of empty space should be able to cheaply
           | deploy lots of energy.
        
             | zdw wrote:
             | There's also a nuclear plant nearby in AZ:
             | 
             | https://en.wikipedia.org/wiki/Palo_Verde_Nuclear_Generating
             | _...
             | 
             | Nuclear + Solar seems like it would be a pretty ideal mix
             | in a hot climate, especially given that peak demand for air
             | conditioning coincides with solar maximum output, and
             | Nuclear could handle some of the base/overnight load.
        
               | jfghi wrote:
               | Do these plants not require tons of water?
        
               | zdw wrote:
               | from the wikipedia link - they use sewage/greywater for
               | cooling:
               | 
               | > The power plant evaporates the water from the treated
               | sewage from several nearby cities and towns to provide
               | the cooling of the steam that it produces.
        
               | miguelazo wrote:
               | This treated sewage is the water that Vegas now provides
               | for general use, and what AZ will need just for its
               | people in about 5 years. Wasting it on chip production is
               | going to go over slightly better than the Saudis wasting
               | groundwater on alfalfa.
        
               | redtriumph wrote:
               | This may not be true today. But when I first arrived in
               | US in AZ, I was told Phoenix boasts highest numbers of
               | golf club concentration in entire US, despite high water
               | requirements of a golf club and being in middle of
               | desert.
               | 
               | I suspect the ongoing Western US drought would have
               | worsened the water situation.
        
               | rsj_hn wrote:
               | Arizona has the reputation of being a desert, but in
               | reality it is a state that is half-desert and half-
               | mountain, and has a tons of water. Enough to waste on
               | ubiquitous golf courses and alfalfa farms. There is a
               | canal system taking the water from the mountains to the
               | drier south where people live.
               | 
               | But the population pressures are realigning who pays what
               | for the water now, so I expect the alfalfa farms are
               | going to go, and chip fabs will take their place.
        
               | miguelazo wrote:
               | "Has tons of water"? LOL It is 5 years from rationing.
               | Vegas solved their problem 20 years ago, things in AZ
               | have gotten 10x worse.
        
               | eitally wrote:
               | The thing you don't mention is that Arizona is wasting
               | other people's water -- nearly 40% is sourced from rivers
               | originating in other mountainous states
               | 
               | https://www.arizonawaterfacts.com/water-your-facts
        
               | rsj_hn wrote:
               | I don't mention it because it's not true. The idea that
               | if a river originates in one state, then that state owns
               | all the water from the river is not how ownership of
               | river water works. And in America, rivers often form the
               | border of states, so there are always competing claims
               | about which state gets which percentage of the river.
               | These are generally settled through treaties and
               | agreements among states, and those agreements were made
               | also for the Colorado river. Arizona is only taking its
               | share of the water as per the treaty, not someone else's
               | share.
        
               | miguelazo wrote:
               | And it's share of water was already insufficient a decade
               | ago, which is why the water table has run dry in many
               | rural areas, forcing people to truck in bottled water or
               | pack up and leave.
        
               | thehappypm wrote:
               | Do you mean the Colorado River? The one that flows
               | through the Grand Canyon? The canyon in Arizona?
        
               | r00fus wrote:
               | Yes, the Colorado River whose headwaters comes from the
               | state of Colorado.
        
               | StreamBright wrote:
               | It is but you also need controllable components with the
               | ability to quickly change output performance when
               | building solar as your peak source. Usually this means
               | gas turbines, in some cases this could also mean battery.
        
             | totalZero wrote:
             | I think that depends how much build-out you have to do in
             | order to install the kind of capacity required for a $40B
             | semiconductor fab, which would hypothetically need some
             | kind of major energy storage infrastructure or backup
             | source in the event that solar is the main source of
             | electricity.
             | 
             | > Large semiconductor fabs use as much as 100 megawatt-
             | hours of power each hour, which is more than many
             | automotive plants or oil refineries do. [0]
             | 
             | If a fab is running at that consumption rate for twenty
             | hours every day for one year, it will consume approximately
             | all of Arizona's 735,000 MWh of annual utility-scale solar,
             | wind, and geothermal net electricity generation. [1]
             | 
             | Contrast that with the annual hydroelectric generation of
             | Itaipu Dam in South America, at 79,440,000 MWh in 2019. [2]
             | 
             | [0] https://www.mckinsey.com/~/media/mckinsey/dotcom/client
             | _serv... [pdf]
             | 
             | [1] https://www.eia.gov/state/print.php?sid=AZ
             | 
             | [2] https://www.power-technology.com/projects/itaipu-
             | hydroelectr...
        
               | thehappypm wrote:
               | Here is a solar plant in California, which broke ground
               | over a decade ago, that produces 550 MW of power, for
               | $2.5B. Build even a small version of one of these and its
               | 100 MW power needs are met.
               | 
               | https://en.m.wikipedia.org/wiki/Topaz_Solar_Farm
        
               | Turing_Machine wrote:
               | The 550 MW "nameplate capacity" is peak. The capacity
               | factor of 26.6% means that it actually only produces
               | about 146 MW on average. Nuclear power plants generally
               | have a capacity factor above 90%.
        
               | thehappypm wrote:
               | 146 MW on average is still more than this facility needs.
        
               | j_walter wrote:
               | Nope...once all phases are built they will be using
               | ~250MW of power.
        
               | pfortuny wrote:
               | Not during the night and not when it is cloudy. Averages
               | are vey bad numbers for something which is on 24/7.
        
               | Turing_Machine wrote:
               | And definitely not if the clouds suddenly blow in when
               | the process is at a critical stage.
        
               | HDThoreaun wrote:
               | Electricity usage is much, much lower at night in Arizona
               | because everyone turns AC off due to temperature drop.
               | Plenty of baseload generators that can be better utilized
               | at night with increased manufacturing.
        
               | wewtyflakes wrote:
               | Do the plants typically run at night? Also, doesn't the
               | capacity factor account for these variations already?
        
               | Turing_Machine wrote:
               | No, you would need a large storage facility as well.
               | 
               | A nameplate capacity of 550 MW with a capacity factor of
               | only 26% almost certainly means there are a lot of times
               | when it isn't generating any power _at all_ , or at least
               | none to speak of.
        
               | wewtyflakes wrote:
               | Right, but if those align with the times where the plant
               | is not used at all (night), does it matter? That being
               | said, I have no idea what the normal operational
               | schedules are for these types of facilities.
        
               | Turing_Machine wrote:
               | I'd wager a large sum that if you're investing $40
               | billion in a plant, you're going want it running
               | 24/7/365.
        
               | computah4eva wrote:
        
               | HDThoreaun wrote:
               | Solar farms are one of the fastest electricity generators
               | to build. AZ will have no problem stepping up production
               | in the face of demand.
        
               | CydeWeys wrote:
               | > Large semiconductor fabs use as much as 100 megawatt-
               | hours of power each hour
               | 
               | Ooof, this kind of writing where the author doesn't
               | understand units just gets my goat. Just say it uses 100
               | MW! Geez.
        
               | totalZero wrote:
               | I prefer it as written, because the additional
               | information of timeframe for measurement indicates that
               | the author is not talking about momentary/peak power.
        
               | j_walter wrote:
               | Which indicates the author knows nothing about how
               | semiconductor fabs use power. Power usage is stable with
               | a few percent...and 100MW is really on the low side for
               | this fab. If all 6 phases are completed as they are
               | expected to be...it's more like 250MW.
        
             | samcheng wrote:
             | The cheapest energy is from a hydroelectric plant built
             | generations ago.
             | 
             | Fun fact: That's why Boeing first built their planes
             | outside Seattle - the electricity needed to refine the
             | aluminum was cheap.
             | 
             | These days, you can see that effect in the large
             | datacenters that have sprung up near the Columbia River in
             | Oregon.
             | 
             | I'd guess TSMC's siting decision had a lot to do with tax
             | breaks, labor pool, and cheap land.
        
               | atlasunshrugged wrote:
               | Probably also hedging for geopolitical risk? Not sure how
               | only having facilities in a country at least somewhat
               | likely to be invaded in the next few years affects the
               | stock price but it probably doesn't hurt to put one in
               | the middle of a country very unlikely to be invaded and
               | very likely to want to purchase chips built domestically.
        
               | gct wrote:
               | Fun fact most experts consider the US uninvadable: https:
               | //en.wikipedia.org/wiki/Invasion_of_the_United_States#...
        
               | antonjs wrote:
               | Cheap, _seismically stable_ , land.
        
           | wikibob wrote:
           | Seismic activity
        
           | intrasight wrote:
           | Also, I would think that lots of water is needed, and Arizona
           | is pretty dry.
        
           | JumpCrisscross wrote:
           | > _would make more sense to put the mega-fabs where
           | electricity is cheapest in the Americas, and that certainly
           | isn 't Arizona_
           | 
           | Geologically stable. And at least for business, politically
           | stable. Same reason Walt Disney is frozen in Phoenix [1].
           | 
           | [1] https://www.alcor.org/
        
             | CamperBob2 wrote:
             | Ah, the lesser-known Pascal's Wager business plan.
        
         | WatchDog wrote:
         | Semiconductors are probably one of the lightest products
         | relative to their costs.
         | 
         | So as you alluded to, the long distance logistics of delivering
         | the finished products, have a negligent impact on it's price.
        
         | tester756 wrote:
         | People are cheap in semico in compare to building/equipment
        
       | throwaway4good wrote:
       | The geopolitical context for this is wild; and in some ways is
       | Taiwan selling its crown jewels and sacrifying its strategic
       | relevance for unclear returns.
       | 
       | https://asiatimes.com/2022/12/us-mulls-scorched-earth-strate...
       | 
       | US mulls scorched earth strategy for Taiwan
       | 
       | US strategy to blow up Taiwan's semiconductor fabs to deter China
       | might do more harm than good
       | 
       | The US is mulling disabling or destroying Taiwan's semiconductor
       | factories in the event of a Chinese invasion. This stark change
       | raises questions about its capabilities and commitment to defend
       | the island.
        
         | r00fus wrote:
         | The "mulls scorched earth strategy" part is completely solid
         | game theory.
         | 
         | Always make it clear for your opponent that your worst-case
         | scenario will result in severe blowback if at all possible.
         | Then you can a) try to ensure that scenario never happens and
         | b) mitigate the outcome or response if it does.
        
           | rsj_hn wrote:
           | But it's only solid game theory if one side doesn't have
           | escalatory dominance.
           | 
           | For example, during the cold war, the US always had far, far
           | fewer troops in Europe than the Soviet Union, and didn't have
           | anywhere near the sea-lift capacity to transport the
           | quantities of men and material necessary across the Atlantic
           | to defend Europe. But we had nukes, and so we had plans to
           | nuke Germany in case Warsaw pact forces invaded and made sure
           | the Soviets understood those plans. Nuclear weapons nullified
           | the escalatory dominance of the Soviet Union in a land war
           | against NATO.
           | 
           | Now, the question is, who has escalatory dominance in Taiwan?
           | It's clearly China. All the US can do is blow up the chip
           | fabs, but China wants Taiwan for reasons that have nothing to
           | do with the chip fabs, and would still want Taiwan even if it
           | had no chip fabs. Even if it had no industry or population
           | whatsoever. Whereas the US only wants Taiwan for the fabs,
           | which China can destroy whenever it wants.
           | 
           | Unless we actually put nukes in Taiwan or commit to defending
           | Taiwan with nukes, China will have escalatory dominance and
           | not the U.S.
           | 
           | So that leads us to the second question -- what happens when
           | you threaten to escalate but the other side has escalatory
           | dominance? Then you end up making the situation worse,
           | because you are in effect provoking the other side to begin a
           | chain of events in which you are guaranteed to lose. That is
           | _not_ solid game theory.
        
             | CamperBob2 wrote:
             | I'll confess that I don't understand Taiwan's importance to
             | China. They can put a certain amount of their resources
             | into taking Taiwan -- which will absolutely _not_ gain them
             | access to TSMC 's production capacity under any conditions,
             | due to a web of Western dependencies that runs deeper than
             | any rabbit hole -- or they can put the same resources into
             | improving their own economic strength. Why wouldn't they
             | choose the latter?
             | 
             | The reason I say I don't understand any of this is that the
             | same reasoning should have applied to Russia. If they had
             | spent a fraction of the effort and energy they've
             | historically devoted to harming other countries on
             | improving their own country instead, they would be way
             | ahead of the game... yet they didn't, and don't show any
             | indication of changing course.
             | 
             | Is the same irrational thinking present among China's
             | leadership? If so -- and their pathological obsession with
             | Taiwan certainly suggests that it is -- then things are
             | really going to suck for everyone involved.
        
               | rsj_hn wrote:
               | Really you need to understand your opponent's utility
               | function before immediately leaping to making summary
               | judgments that China is not acting in its own interest.
               | 
               | For example, knowing that mainland China and Taiwan are
               | the remnants of a civil war, in which mainland China has
               | wanted to absorb Taiwan long before it had any chip fabs,
               | as China views itself as the nation of the Chinese people
               | as a whole, with Taiwan a historical part of China. This
               | is the Chinese view. You may not _agree_ with this view,
               | but that doesn 't give you the right invent some fake
               | view and ascribe it to the Chinese, one that is easier
               | for you to understand. 600,000 Americans died in our
               | civil war and great slaughter and economic destruction
               | was committed in order to prevent a portion of the US
               | from seceding. Was that irrational? Maybe to your payoff
               | function, but not to those of the US at the time.
               | 
               | This idea that Taiwan = place where chips are made is a
               | decidedly American view but is not the Chinese view.
               | Chips wont be made in Taiwan in the future, and they
               | weren't made there in the past. Taiwan is much more than
               | this, it is a population of Chinese people living in a
               | region that was viewed as a historical part of China, and
               | thus China views Taiwan as a rogue province first, and a
               | chip maker second. Just because _you_ view Taiwan as a
               | chip producer does not mean that China does, or that
               | China even cares about the chip production nearly as much
               | as the  "rogue province" part.
               | 
               | Being able to step outside of your own values and
               | understand someone else's values is table stakes for
               | doing this game theory exercise.
               | 
               | Moreover, the assumption that the military development of
               | China which is ostensibly done to become strong enough to
               | conquer Taiwan (but which would probably happen anyway)
               | somehow comes at the expense of Chinese "development" --
               | is just not how China (or anyone else) views development.
               | Most people view development as both military and
               | economic. China's rise necessarily includes military
               | power, and it's not at all clear that their military
               | investment is so high as to cause their overall rise to
               | be slowed. Certainly the US is more than happy to spend a
               | trillion on defense each year and invade some country
               | ever few years, yet we attribute much of our development
               | to the growth of _our_ military-industrial complex.
               | 
               | > If they had spent a fraction of the effort and energy
               | they've historically devoted to harming other countries
               | on improving their own country instead, they would be way
               | ahead of the game... yet they didn't, and don't show any
               | indication of changing course.
               | 
               | That is a fantastically uninformed reading of history.
               | Either indulge in propaganda that vilifies the behavior
               | of your enemies and attributes to them irrationality, or
               | you predict your opponent's behavior, _but not both_.
               | Russia isn 't the one who invaded or attacked 125
               | countries in the last 30 years. Is America acting against
               | its own interests by doing that? No, they may be acting
               | against _your_ interests, but they are not acting against
               | their own interests. If you truly believe a nation is
               | consistently acting against its own interests, that just
               | means you are confused about the facts or about the
               | nation 's interests. And if you think one nation is out
               | to "hurt other nations" rather than defend what they view
               | as their own legitimate interests, then you aren't tall
               | enough for the ride that is geopolitics.
        
         | tooltalk wrote:
         | >> The US is mulling disabling or destroying Taiwan's
         | semiconductor factories in the event of a Chinese invasion
         | 
         | I think this completely bogus. Firstly, the geopolitical
         | tension in the region isn't about to go off anytime soon --
         | Taiwan just elected pro-China KMT party last week.
         | 
         | Second, Taiwan is one of the largest investors in China. In
         | fact, most of CCP's chip initiatives in China are spearheaded
         | by Taiwan-expats (ie, ex-TSMC/UMC engineers) dreaming of
         | striking rich in China. Take for instance Mong Sang Liang, a
         | Berkeley PhD and former head of TSMC R&D, now co-CEO of SMIC in
         | China.
         | 
         | Third, those fabs are both capex and opex intensive. These fabs
         | are not self-healing perpetual machines -- those expensive
         | equipments need constant babysitting by various foreign vendors
         | just to ensure they are running 24x7. I doubt that Taiwanese
         | would agree to such an extreme plan.
        
         | [deleted]
        
       | MrMan wrote:
       | Why Arizona why not NY state
        
       | russianGuy83829 wrote:
       | Thats why Buffet bought that stock a week ago..
        
       | brookst wrote:
       | It's good news geopolitically, and the construction will produce
       | a lot of jobs. But people should temper long-term job
       | expectations.
       | 
       | This huge of an investment in a tech where TSMC will face
       | competition from fabs in lower-cost countries almost certainly
       | means the company believes it can use extensive automation to
       | avoid having labor costs sink their ability to compete on price.
       | 
       | (Yes, there may be a window where they don't have to compete on
       | price, but you build fabs for 5-10 years of production)
        
         | bmitc wrote:
         | > It's good news geopolitically
         | 
         | I actually think the opposite. It will be good for global
         | supply chains but not geopolitics, because it reduces the
         | reliance on Taiwan thus opening it up for assimilation.
        
           | mlindner wrote:
           | I think it actually increases assimilation with the US
           | instead. One of the things that improved US relations with
           | Japan when there was fear that they would take over the US
           | was when they started building a bunch of US-based
           | manufacturing.
        
             | kibwen wrote:
             | That's describing something different. In the 80s the US
             | was worried that Japan would dominate the US economically.
             | The dynamic here is that Taiwan is worried that China will
             | dominate Taiwan militarily. The assimilation being
             | referenced above is not between the US and Taiwan, but
             | between the Taiwan and China.
        
             | kube-system wrote:
             | The US has no such fear about Taiwan. Taiwan has a fear
             | that they will be invaded by China if they do not have
             | industry that is too important to China to be interrupted
             | by war.
        
               | brookst wrote:
               | Are you saying China is more likely to invade Taiwan if
               | the destruction of TSMC's Taiwanese fabs could be
               | mitigated by buying the same products from TSMC's US-
               | based fabs?
        
               | ido wrote:
               | I believe what they are saying that the US is less likely
               | to risk war with China to protect Taiwan if they can get
               | chips sources domestically.
        
               | kube-system wrote:
               | I phrased that wrong. I meant that they want to be
               | important to the world in general (and the US), not
               | specifically China.
        
           | baybal2 wrote:
        
           | ianai wrote:
           | Nope. Chips clearly have a national security component.
           | Ensuring local supply reinforces national security. Which
           | reinforces geopolitical commitments through making those
           | commitments more credible.
           | 
           | Edit-removed a comment
        
             | SteveNuts wrote:
             | The geo in geopolitics means the whole planet, not just the
             | USA. Destabilizing Taiwan could have major effects
        
             | mlindner wrote:
             | > Nice try though.
             | 
             | I think you shouldn't use that type of wording on hacker
             | news. It's clearly against the rules.
        
           | brookst wrote:
           | Even if it were bad for Taiwan, geopolitics is about more
           | than Taiwan.
           | 
           | But I'm not sure this is bad for Taiwan: today, China can
           | wipe out TSMC overnight. With these fabs there will be
           | Taiwanese revenue streams coming from mainland US, which
           | streams can support Taiwan government and military.
           | 
           | Walk me through why it's bad for Taiwan to be more
           | economically diversified?
        
             | Animatronio wrote:
             | Well for one the US won't be so inclined to defend TW so
             | much. Sure, there will be posturing, maybe even a proxy war
             | like in Ukraine, but generally speaking the US will not be
             | sending troops anymore, now that the golden goose has
             | nested on its shores.
        
               | boc wrote:
               | Or conversely the US will commit even more resources to
               | the defense of Taiwan now that their own domestic supply
               | of chips is safe.
               | 
               | The US had no strategic interest in Ukraine yet we've all
               | seen the reaction. The US will gladly defend Taiwan and
               | create the hill for the CCP to die upon.
        
               | Animatronio wrote:
               | Now please explain why would the US send troops to defend
               | TW if there's nothing actually valuable there anymore?
               | Ukraine was hugely important for it's position next to
               | Russia, and so is TW. And still, no US troops on the
               | ground in Ukraine, and there won't be any in TW. This is
               | a smart way of giving up on TW without actually admitting
               | it, and there's nothing to be ashamed of, really.
        
               | brookst wrote:
               | You seem to be asserting a few contradictory things:
               | 
               | 1. Taiwan can only be defended with US troops on the
               | ground
               | 
               | 2. Ukraine has no US troops on the ground and is being
               | successfully defended
               | 
               | 3. The US would only put troops on the ground to protect
               | valuable things like TSMC fabs
               | 
               | 4. (by implication) if China attacks Taiwan and destroys
               | TSMC fabs tomorrow, the US would have no incentive to
               | defend Taiwan because the fabs are gone
               | 
               | I don't see it. Ukraine looks likely to survive as a
               | country without US troops on the ground. Ukraine, as you
               | note, has no fabs or similarly valuable assets. Why can't
               | those exact same conditions play out in Taiwan, which is
               | also much much much harder to invade with ground troops
               | than Ukraine was?
        
               | Animatronio wrote:
               | 1. The topic was US defense of TW. How exactly would it
               | be defended by the US without troops? 2. Ukraine is
               | defended by the Ukr army - with copious amounts of ammo
               | and weaponry yes from NATO but no troops. At the same
               | time the US never said they would send the army into
               | conflict to defend it; when it comes to TW, despite the
               | strategic ambiguity or whatever it's called, the general
               | belief is there would be US boots on the ground. 3. The
               | US would send its soldiers if there was something
               | valuable obviously - be it fabs or oil or whatever, but
               | not just to fight China for a random island in the
               | Pacific. Otherwise they would have done it already on the
               | countless atolls that are being fortified. 4. Yes, pretty
               | much that. Just that it would not be obvious, but rather
               | a long war of words would precede it... Again, nothing
               | wrong with it. As long as no lives are lost I guess it is
               | for the better.
        
               | ti00 wrote:
               | Far beyond the value of TSMC, Taiwan is the lynchpin of
               | the first island chain [1]. Taiwan remaining friendly to
               | US interests is crucial to the integrity of the first
               | island chain and thus the US island chain strategy[2]. In
               | the event of conflict with China, control of the first
               | island chain would allow the US to effectively interdict
               | all maritime trade to China by denying access through the
               | chokepoints created by the first island chain. This is
               | frankly much more valuable to the US from a strategic
               | perspective than TSMC (though TSMC is obviously very
               | important).
               | 
               | You can also note the importance that Chinese planners
               | place on this as well by looking at the Belt and Road
               | Initiative, in particular the land-based projects that
               | aim to connect China to European markets via rail [3][4].
               | 
               | 1. https://en.wikipedia.org/wiki/First_island_chain
               | 
               | 2. https://en.wikipedia.org/wiki/Island_chain_strategy
               | 
               | 3. https://en.wikipedia.org/wiki/New_Eurasian_Land_Bridge
               | 
               | 4. https://en.wikipedia.org/wiki/China%E2%80%93Central_As
               | ia%E2%...
        
               | boc wrote:
               | The US isn't giving up Taiwan- it's the perfect
               | opportunity to humiliate the CCP. China is in way over
               | their heads if they actually believe they can achieve a
               | naval landing on a fortified island without air
               | superiority. It would be an absolute massacre.
               | 
               | Additionally, the US could simply embargo Chinese supply
               | lines and dare them to engage.
        
               | anonymouslambda wrote:
               | I volunteer you to go fight in Taiwan to "humiliate the
               | CCP".
        
               | dotnet00 wrote:
               | They might do it because of the value in denying China
               | access to Taiwan. Even assuming that Taiwan blows their
               | semiconductor fabs to prevent China from getting them,
               | there's still all the know-how and all the other stuff
               | that the US wouldn't want China potentially getting its
               | hands on, like American weapons. There would also be the
               | consideration of the risk to Japan (and other friendly
               | nations in the region) created by allowing China to just
               | take Taiwan without at least Ukraine levels of backlash.
        
               | mupuff1234 wrote:
               | I'm guessing Taiwan received quite a carrot in order to
               | get their approval for the TSMC expansion.
        
               | Animatronio wrote:
               | No carrot I'm afraid :D I think this decision was 100%
               | made by TSMC and the US. Both get what they want: -
               | continuity of operations and safety for TSMC - locally
               | sourced chips for the US and most importantly - much
               | diminished importance for Taiwan, meaning they do not
               | have to defend it with troops (which is the most
               | important aspect of war - see Afghanistan, Vietnam, and
               | so on).
        
             | bmitc wrote:
             | > geopolitics is about more than Taiwan
             | 
             | That's obvious and wasn't stated otherwise.
        
           | yyyk wrote:
           | It may be a useful talking point to get the public to do the
           | right thing on Taiwan, but frankly there's no meaningful
           | economic reliance on TSMC/Taiwan and policy makers know this.
        
           | totalZero wrote:
           | Absent any form of fab redundancy in the global economy, the
           | fabs make Taiwan fragile in the eyes of the Western powers.
           | Taiwan is safer when it is not a pressure point for the
           | entire Western economy because it's easier to defend
           | territory that can withstand a few hits.
        
         | baybal2 wrote:
        
         | mlindner wrote:
         | > This huge of an investment in a tech where TSMC will face
         | competition from fabs in lower-cost countries almost certainly
         | means the company believes it can use extensive automation to
         | avoid having labor costs sink their ability to compete on
         | price.
         | 
         | What countries are you imagining that will suddenly become
         | competitive in semiconductor manufacturing? As far as I know
         | there are no up and coming companies of note. (Companies in
         | China are not of note as they have been permanently prevented
         | from further advancement.)
        
           | anonymouslambda wrote:
           | "Permanently prevented" -- semi manufacturing is an
           | engineering problem, not magic. Engineering problems can be
           | solved, unless you think Chinese people are inherently
           | inferior engineers.
        
           | sidibe wrote:
           | Yup, this isn't making the cheapest t-shirts possible. The
           | cost of labor is nothing compared to the revenues. For a fab
           | you want a stable government and environment, and good
           | tax/trade situation, and reliable, quality labor.
        
       | Jenkins2000 wrote:
       | I remember reading that making chips requires a lot of water,
       | something that Arizona is running out of, will this be a problem?
        
         | jiggyjace wrote:
         | Arizona is not running out of water. There's a lot of
         | fearmongering surrounding water levels at Lake Mead or with the
         | Colorado river, but Arizona doesn't get the majority of its
         | water from those sources. It also uses 10x less water with a
         | population of 7m as it did in 1950 with a population of 0.7m.
         | 
         | Arizona has a state-of-the-art water portfolio that uses lots
         | of reclaimed water and is not reliant on micro or even macro-
         | climate trends. A megadrought has impacted the area for the
         | last few decades and only now are Arizona cities talking about
         | the needs for conservation and possibly cuts in the next decade
         | or so, but if climate models hold up the drought will be over
         | in that time frame anyway.
        
         | nickphx wrote:
         | No, Arizona is not running out of water.
         | https://www.arizonawaterfacts.com/water-your-facts
        
           | usui wrote:
           | Is it plentiful enough that extracting highly-pure water is
           | an economically-solved problem in Arizona?
        
         | gjsman-1000 wrote:
         | If I was conspiratorial, I'd say this serves as a excuse for
         | building more pipelines for getting more water from other
         | states.
        
           | peteradio wrote:
           | What is the longest and (large enough) volume water piping
           | system in the world? From my recollection its not long enough
           | to significantly make inroads to another state.
           | 
           | edit: I think I might be wrong, looks like China has done
           | significant waterworks across their country.
        
             | Vt71fcAqt7 wrote:
             | Why isn't it the same as say an oil pipeline? Those can get
             | really long.
        
               | nickvanw wrote:
               | Oil is significantly more valuable than water - the added
               | cost per gallon of water would be astronomical.
               | 
               | 1 oil barrel is 42 gallons and costs around $75 today. I
               | pay about $6 per CCF of water which is 748 gallons. It
               | might be worth doing this with oil, but even if you
               | scaled it up, it would be hard not to have the transport
               | cost more than the actual water.
        
               | bcrosby95 wrote:
               | It would be cheaper to just desalinate it.
               | 
               | Of course Arizona doesn't really have that option. But
               | California does, and Arizona already sources water from
               | the Colorado River, which California does too.
               | 
               | Anyways. I think moving California off the Colorado River
               | would do a lot to ease the water problems in the
               | southwest.
        
               | CameronNemo wrote:
               | California has had trouble kick starting desalination. It
               | is an energy intensive process, and the California
               | electricity grid (especially in water poor SoCal) is
               | still heavily dependent on fossil fuels (even some coal
               | plants in other states feed into the LA metro).
               | Furthermore, desalination intakes can negatively impact
               | marine life, unless subsurface wells are used. Those are
               | more expensive and companies pursuing desalination are
               | not eager to foot the bill for them. Perhaps most
               | importantly, desalination (even without subsurface wells)
               | is more expensive than current sources of water in
               | Southern California. I've not even mentioned the
               | challenges in achieving safe exhaust of brine.
        
               | [deleted]
        
       | nonethewiser wrote:
       | Well that seems significant.
       | 
       | Article says the chips in the 2nd fabs will be better than the
       | first. And will meet all domestic US demand. Not sure what all
       | that includes.
       | 
       | I wonder how domestic the full supply chain is. If the US is
       | relying on China for rare earth metals or something.
        
         | akira2501 wrote:
         | > Not sure what all that includes.
         | 
         | Possibly a lot of currently obsolete military equipment that
         | can no longer be produced due to lack of domestic parts
         | suppliers.
        
         | ianai wrote:
         | The US has rare earth mines and even more deposits. They just
         | got priced out through decades of lower prices for those
         | minerals. (Which just shows that resource allocation even for
         | scarce resources, follows financial incentives similar to other
         | financial considerations. Stuff being left in the ground
         | actually makes them available for another day when they're
         | higher valued.)
        
           | kibwen wrote:
           | Indeed, but rare earth mining also has negative environmental
           | impact even above and beyond normal mining operations. The US
           | is partly paying China to outsource the environmental
           | devastation.
        
             | akiselev wrote:
             | Mitigating that environmental impact is what makes rare
             | earth mining so costly. China is quickly learning that
             | environmental remediation [1] is much more expensive and
             | their appetite for destroying their environment for profit
             | is quickly disappearing, especially as the middle class
             | grows and moves up Maslow's hierarchy.
             | 
             | From the article:
             | 
             |  _> "The rare earth industry is a pillar industry here in
             | Ganzhou and we must keep it running, but there's still more
             | to do to figure out a truly environmentally friendly method
             | to pursue sustainable growth," Zhang Guanjun, deputy
             | director of the public relations department of the Ganzhou
             | Party Committee, said in an interview. "Ironically, because
             | the prices of rare earths have been so low for a long
             | period of time, the profits from selling these resources
             | are nothing compared to the amount needed to repair the
             | damage."_
             | 
             | [1] https://e360.yale.edu/features/china-wrestles-with-the-
             | toxic...
        
             | Clent wrote:
             | No, China is absorbing the economic impact of destroying
             | their own environment.
             | 
             | There is no blame to be placed else where.
             | 
             | No one is tricking China into destroying their environment.
        
               | robertlagrant wrote:
               | I don't think previous poster said they were.
        
             | googlryas wrote:
             | China demanded it even, by basically cornering the rare
             | earth market via dumping
        
         | Varloom wrote:
         | The article is wrote for tech illiterate audience.
         | 
         | They will use EUV for the first factory (2024). And High-NA EUV
         | (next gen from ASML) for the second factory in 2026.
         | 
         | 4nm,3nm are just marketing terms, and means nothing, since they
         | stopped naming nodes according to their actual size since 16nm.
        
           | nicoburns wrote:
           | I don't think a tech illiterate audience has a clue with 4nm
           | or 3nm mean
        
             | susrev wrote:
             | i dunno, they can google it pretty easily
        
         | jason-phillips wrote:
         | > I wonder how domestic the full supply chain is.
         | 
         | The supply chain necessarily includes some Japanese and Dutch
         | companies for their specialized tooling that cannot be sourced
         | from American companies. Many of the spare parts and raw
         | materials can be sourced domestically.
         | 
         | However, it is ultimately unavoidable that many of the
         | constituents within these spare parts, repair kits and raw
         | materials would be manufactured/synthesized in China.
         | 
         | (I worked on the supply chain systems and processes at Samsung
         | Austin Semiconductor for almost a decade.)
        
           | icey wrote:
           | For at least part of this, ASML has had a large facility in
           | the Phoenix metro (Tempe) for quite a few years. Assuming
           | that's one of the Dutch companies you're referring to.
           | 
           | TSMC is going to benefit from the microchip industry that's
           | already in Phoenix thanks to Intel's enormous presence here.
        
             | fooker wrote:
             | What are some of the companies in the microchip industry
             | in/around Phoenix?
        
               | icey wrote:
               | There are a lot: https://www.chipsetc.com/semiconductor-
               | companies-in-arizona....
        
         | conradev wrote:
         | Chips primarily require silicon, which is not a rare-earth
         | metal (it is rather abundant), but it takes a lot of expensive
         | equipment and energy to purify it and slice it into wafers.
         | 
         | TSMC currently sources their wafers from Taiwan, Japan,
         | Singapore, Germany and others:
         | 
         | https://investor.tsmc.com/static/annualReports/2005/pic/E-3-...
         | 
         | (edit: that PDF is out of date, but the wafer supplier list
         | largely isn't)
        
           | j_walter wrote:
           | No...chips are made on Silicon. What is required to make them
           | into semiconductors requires a lot of special metals, gases
           | and other chemicals. They source those things from around the
           | globe...including Ukraine for things like noble gases.
        
         | pfdietz wrote:
         | How much rare earths do you imagine a semi fab uses?
        
       | Tempest1981 wrote:
       | Are the 2 plants side-by-side? Or some distance apart?
       | 
       | Edit: I found another article that says they are at the same
       | site.
        
       | badrabbit wrote:
       | Don't these fabs need like an insane amount of water? Why would
       | they build it of all places in arizona which as far as I know
       | barely meets drinking water requirements (at least at some
       | cities) and is basically mostly a desert?
        
         | jasonwatkinspdx wrote:
         | They need a lot of water initially but recycle it as they
         | operate.
         | 
         | Intel and ASML already have facilities in Arizona. I'd assume
         | TSMC chose partly based on that allowing them to hire out of
         | the local talent pool, along with incentives from the state.
        
         | duped wrote:
         | Arizona paid them more in subsidies than the other states would
        
         | adam_arthur wrote:
         | Water can be piped around cheaply. Worst case they pump it in
         | from nearby states
        
           | tony_cannistra wrote:
           | Arizona actually already does this, in profound quantities.
           | https://en.wikipedia.org/wiki/Central_Arizona_Project
           | 
           | The problem isn't the pipes, obviously.
           | 
           | It's the fact that the 1922 agreement that divided up the
           | water in the Colorado River (upon which Arizona depends)
           | incorrectly calculated the amount of water available in the
           | river every year.
           | 
           | The Colorado River Compact divides up 20 million acre-feet of
           | water. Modern analyses show that the Colorado river's average
           | flow is about 15.5 million acre feet, and has been less than
           | 13 million acre-feet during the last decade or so. These
           | reductions curtail who gets what water.
           | 
           | https://www.5280.com/how-the-100-year-old-colorado-river-
           | com...
        
             | adam_arthur wrote:
             | And the Colorado River is the only water source in North
             | America right?
             | 
             | People have a fetishization with hyping up disappearing
             | water sources as leading to mass forced desertions of
             | population centers, which is not rooted in any kind of
             | reality.
             | 
             | We can already pipe oil from texas to Canada with ease, we
             | can do the same from Canada to Arizona with water. Or
             | wherever else. The economics and viability of it is obvious
             | and clear.
             | 
             | Residents of water scarce areas would pay marginally higher
             | taxes to support this
        
               | tony_cannistra wrote:
               | > People have a fetishization with hyping up disappearing
               | water sources as leading to mass forced desertions of
               | population centers, which is not rooted in any kind of
               | reality.
               | 
               | I have never heard this. Where are you reading that?
               | 
               | Disappearing water sources are a reality. Time and time
               | again, long pipelines like what you suggest just aren't
               | viable.
               | 
               | I'd suggest you enjoy some fact-based reporting on the
               | topic: https://grist.org/agriculture/drought-water-
               | pipeline-cost-we...
               | 
               | The near- and medium-term solutions we need are solely in
               | use reduction. Period.
        
               | adam_arthur wrote:
               | Oil pipelines have already proven the economic viability.
               | 
               | The choice of abandoning trillions of real estate vs a
               | 10s of billions infrastructure project is obvious.
               | 
               | Article cites the cost as $14B which is effectively
               | nothing vs the alternative. Even $100B is nothing. These
               | two TSMC fabs are $40B alone
               | 
               | So much fearmongering from economically illiterate
               | people. Use your brain
        
               | NikolaNovak wrote:
               | >>Oil pipelines have already proven the economic
               | viability.
               | 
               | For _oil_. Water has far lower value density.
        
               | adam_arthur wrote:
               | For water. Its proven we can build many thousand miles of
               | pipeline for 10s of billions.
               | 
               | Which is vastly cheap enough and sufficient to solve this
               | problem. Much cheaper than alternatives
        
               | mikeyouse wrote:
               | I love how arm chair engineers have solved the water
               | crises in the south by suggesting people "just build
               | pipelines!".
               | 
               | Just the lack of understanding of like 15 different
               | aspects of the problem with that idea and the confidence
               | to defend regardless is kind of amazing.
        
               | adam_arthur wrote:
               | You're right, piping water from point A to B is perhaps
               | one of humanity's most challenging problems.
               | 
               | What's really sad is that so many people are brainless
               | enough to believe that this is not possible to solve, and
               | easily so, once incentives drive it forward.
               | 
               | Your comment does remind me of many of the 0.1-0.5x
               | engineers I've worked with though. We need hundreds of
               | people to maintain a mobile client, it's not possible to
               | do it with a handful!
        
               | mikeyouse wrote:
               | I'm sure those "0.1x" engineers found you a treat to work
               | with. One of the more impressive combinations of abject
               | ignorance and misplaced confidence I've seen in a long
               | time. Believe it or not, but there are indeed people
               | who've designed large volume water piping systems on
               | Hackernews..
        
               | selectodude wrote:
               | Where is the water coming from? It's not coming from the
               | Great Lakes or the Mississippi River. Where are these
               | enormous volumes of untapped water that we can pump over
               | the Rocky Mountains?
        
               | tony_cannistra wrote:
               | I hate to break it to you, but your "economically
               | illiterate people" might actually understand some
               | fundamental social and political realities that you've
               | not yet had the chance to reckon with. Not to mention the
               | physical realities of water resources.
               | 
               | Your comparison to oil pipelines is nonsense. Where to
               | start: privatization, a global commodity market, relative
               | scarcity, massive extractive capex.... Sure, we built oil
               | pipelines easily in the past. How difficult has it
               | become? Surely the capital exists. Why don't we build
               | more?
               | 
               | Nobody is talking about abandoning real estate.
               | 
               | The tragedy of people like you is that you provide a
               | half-compelling distraction. People
               | (cities/farmers/industry) need to use less water.
               | 
               | The longer it takes to get people to realize this, the
               | harder it is to fix.
        
               | achenatx wrote:
               | water problems are actually energy problems. With cheap
               | energy, you can clean all water from residential areas
               | and you can pipe water in from where it is plentiful.
               | 
               | Water is not usually created/destroyed it is moved around
               | and contaminated.
        
               | adam_arthur wrote:
               | Why would we practice conservation when we can spend
               | $30-50B in capex amortized over 50 years via marginally
               | higher taxes on the populace with minimal opex to solve
               | the problem permanently?
               | 
               | Thats why they are economically illiterate. The obvious
               | and more cost effective choice will win in the end, and
               | it doesn't involve austerity and suffering and repentance
               | for high water use
        
               | tony_cannistra wrote:
               | Because it wouldn't solve the problem permanently.
               | 
               | The folks who wrote the Colorado River Compact thought
               | they were solving the problem of dividing the river's
               | water permanently, too. They made it worse.
               | 
               | I don't disagree that economics are a critical part of
               | this conversation. But I don't understand how you're
               | making the argument that enabling more water use, not
               | less, is cost effective.
               | 
               | Even amortized across 50 years, $30B is more than the $0B
               | required if we just use less water.
               | 
               | None of this even comes anywhere near discussing the
               | potential deleterious ecological (and economic!) impacts
               | of draining water-rich ecosystems by piping their water
               | elsewhere. Look to the phase-out of leaded gasoline as a
               | great example of how externalities matter.
        
               | throwntoday wrote:
               | I don't think you appreciate just how much water the
               | northern part of the continent has.
        
               | tony_cannistra wrote:
               | Actually, I do. I've lived there.
               | 
               | Generally speaking, substantial alterations to
               | hydrological regimes can cause deleterious cascading
               | ecological effects. Just look toward the literature on
               | the hydrological (and consequential ecological) effects
               | of dams (necessary to divert water) for examples.
               | 
               | One of particular interest is dams' tendency to reduce
               | the frequency and severity of flooding events, which are
               | characteristically necessary for much of the functioning
               | of floodplain ecosystems such as those you're describing.
               | 
               | Such reductions can wreak havoc on biodiversity in these
               | regions.
        
               | kortex wrote:
               | > We can already pipe oil from texas to Canada with ease,
               | we can do the same from Canada to Arizona with water. Or
               | wherever else. The economics and viability of it is
               | obvious and clear.
               | 
               | Oil and gas are far more value dense than water. Pipeline
               | transport adds somewhere around $5-20 per barrel of oil,
               | or $0.03/L. Some quick googling suggests Phoenix
               | residents pay around $0.00022/L. That's a factor of 142x.
        
               | adam_arthur wrote:
               | If they pay $0.00022/L then its really not that scarce
               | after all huh?
               | 
               | True scarcity would drive prices up and increase cost
               | viability of transport, obviously. The reason its not
               | done right now is because its not an imminent problem
        
               | idontknowifican wrote:
               | it's an essential for life and the consumer price
               | reflects heavy subsidies
        
         | [deleted]
        
         | phpisthebest wrote:
         | >Why would they build it of all places in arizona
         | 
         | for the Cynical person: Ensuring a future crisis is a sure fire
         | way to get a nice Big Government Bailout in a few years to pay
         | off the rest of the Capital costs that were not already covered
         | by CHIPS....
        
         | king_magic wrote:
         | Access to plentiful, cheap water was a major reason why Micron
         | chose Upstate NY for their new fabs.
        
         | tony_cannistra wrote:
         | I came here for this comment. Thank you for bringing this up.
         | 
         | Although Phoenix is one of America's most progressive cities
         | with regard to minimizing per-capita water usage, the whole
         | prospect of the city of Phoenix was ill-conceived from the
         | beginning.
         | 
         | Of course that doesn't matter now -- the city is there. But I
         | hope that TSMC knows what they're getting themselves in to.
        
           | shagie wrote:
           | An article from August 2021: Water shortages loom over future
           | semiconductor fabs in Arizona
           | https://www.theverge.com/22628925/water-semiconductor-
           | shorta...
           | 
           | > Chipmakers are setting up shop in Arizona as drought
           | worsens
           | 
           | > Major semiconductor manufacturers looking to expand in
           | Arizona will likely be spared from water cuts induced by an
           | unprecedented water shortage in the Southwest, at least for
           | now. As part of the scramble to end a shortage of another
           | kind -- the global dearth in semiconductor chips -- both
           | Intel and TSMC plan to open new facilities in Arizona. But
           | they're setting up shop just as one of the worst droughts in
           | decades grows worse across the Western US.
           | 
           | > ...
           | 
           | > While Intel recycles much of its water, more fabs will mean
           | it will need to send even more water through its systems. The
           | company says that Arizona has been "vital" to Intel's
           | operations for more than four decades. The state is already
           | home to its first "mega-factory network" and its newest
           | semiconductor fab. Intel used more than 5.2 billion gallons
           | of water in Arizona in 2020 -- roughly 20 percent of which
           | was reclaimed water, according to its most recent corporate
           | responsibility report.
           | 
           | > ...
           | 
           | > TSMC said in an email to The Verge that for now it doesn't
           | expect the water shortage to have "any impact" on its plan to
           | build a new fab in Arizona, although it says it will
           | "continue to monitor the water supply situation closely."
        
             | gdilla wrote:
             | I was also wondering about the added energy needed to keep
             | the fab cool enough to work in during the punishing summer
             | months in phoenix. Seems like an odd choice.
        
               | coredog64 wrote:
               | If only there was a way to turn energetic photons into
               | electricity?
        
             | tony_cannistra wrote:
             | Thanks for sharing that. At the very least, Arizona has
             | "water budget" in the form of severely curtailing water-
             | intensive agriculture.
             | 
             | I am hopeful that the politicians there are smart enough to
             | realize that semiconductor fabs are an industry whose water
             | needs are worth prioritizing more than farming alfalfa in
             | the desert.
             | 
             | The problem is that these agricultural water rights are
             | old, and the folks who hold them are often disenfranchised.
             | Using a ton of water in the desert to farm is their whole
             | livlihood; we don't just pull people's generational careers
             | out from under them any more, like we used to. Not without
             | a chance at an alternative.
        
               | coredog64 wrote:
               | Farmers are selling their farmland to developers who then
               | turn it into housing. Everyone wins: Residential water
               | use is significantly lower than agricultural, the farmers
               | get rich, and more housing is being built.
        
               | Mistletoe wrote:
               | Should people live in an area with no water?
               | 
               | It feels like we have so many problems caused by people
               | just not living in the locations in the USA where there
               | is lots of rainfall and water. I have tons of water, my
               | state just uses lakes filled by rainwater. We make
               | electricity with it too.
               | 
               | https://commons.m.wikimedia.org/wiki/File:Average_precipi
               | tat...
               | 
               | I always find it interesting that people keep cramming
               | into the western and specifically southwestern part of
               | the USA. Like the original settlers just kept going that
               | way due to the human natural urge to keep going further
               | and hope things would be better over the horizon. I often
               | wonder what America would be like if the western US was
               | settled first. I imagine people would have noticed how
               | awful and non-conducive to human life it is and kept on
               | trucking to the promised land in the East.
        
               | khuey wrote:
               | The problem is less people living in areas with no water
               | and more people growing water-intensive food in areas
               | with no water. 80% of water usage in California, which
               | has 40 million residents, is agricultural.
        
               | scythe wrote:
               | If you live on a 20' by 50' plot that gets six inches of
               | rain per year, that's 500 cubic feet, or enough water for
               | ten people to drink all year. And that's low rainfall
               | even by Arizona standards (Phoenix gets 7 inches while
               | Tucson and the plateaus are wetter), a small plot of land
               | (1/43 acre), and ignoring any reuse or importation. The
               | Southwest has _plenty_ of water for people to live their
               | lives, as long as it 's utilized efficiently. It's
               | _agriculture_ that isn 't suitable.
               | 
               | It's also worth recognizing that the western United
               | States _was_ settled first, as people came down the
               | Pacific Coast after crossing the Beringia land bridge
               | during the previous ice age. California in particular has
               | always been quite densely populated, and the only (IIRC)
               | indigenous irrigation systems were built by the Hohokam
               | near the Colorado Plateau.
               | 
               | EDIT: https://repository.si.edu/bitstream/handle/10088/23
               | 978/SMC_8...
               | 
               | >The population [of California] cannot be tabulated by
               | tribes, but there can be no question that it was several
               | times larger than any other area north of Mexico and that
               | the destruction has been correspondingly greater.
        
               | bcrosby95 wrote:
               | Should people live in an area that needs to burn fossil
               | fuels for heating? Energy efficient heat pumps, which AC
               | is, only work on a relatively narrow band of temperature
               | differentials. You can't really use them in freezing
               | conditions.
               | 
               | There's lots of hand wringing about living in hot, dry
               | climates. It's just odd to me because where people live,
               | in general, are not particularly amenable to the number
               | of humans living there.
        
               | shagie wrote:
               | Heat pumps have come a long way.
               | https://youtu.be/MFEHFsO-XSI gets into the energy
               | efficiency of heat pumps and their temperature
               | tolerances.
        
               | Mistletoe wrote:
               | Cold can be mitigated by enhanced R-value insulation in a
               | single application. Water use is continuous.
               | 
               | https://www.energystar.gov/campaign/seal_insulate/identif
               | y_p...
               | 
               | I don't really see a hot/cold stratification in this
               | chart- https://www.statista.com/chart/12098/the-us-
               | states-with-the-...
               | 
               | And even then, the difference in costs seems quite small.
               | Alaska is $332 and Georgia is $310.
        
               | tony_cannistra wrote:
               | I hear you, but I feel like this argument is fraught. We
               | can't (shouldn't) really be telling people what they
               | can/can't do.
               | 
               | We can restructure incentives, though. (e.g.: taxes).
               | Perhaps this is just kicking the ethical quandary down
               | the road.
        
               | misterprime wrote:
               | And food still shows up in the grocery stores. Yay!
        
           | icey wrote:
           | There have been people living where Phoenix sits today for at
           | least 1,500 years. The canals in Phoenix were originally dug
           | by the Hohokam 1,400+ years ago. Dutch settlers used what
           | remained to design the canal system that's used today. Here's
           | a cool article that describes some of what they built
           | http://www.azheritagewaters.nau.edu/loc_hohokam.html
        
           | downrightmike wrote:
           | These plants will be 100% recycling on water and Phoenix
           | gives a lot of water to Tucson to store that they could pull
           | back as needed. Central Arizona Project is a good read. reply
        
         | treesknees wrote:
         | They do need a lot of water, initially, but it was pointed out
         | that it's similar to filling a swimming pool [1]. Yes you need
         | a lot of water at first, however it's not as though all that
         | water is just being dumped outside to evaporate. It's cleaned
         | and recycled, and recaptured from the air within the plant.
         | 
         | While Arizona doesn't have an abundance of excess water, they
         | do have pretty strict usage guidelines and rules in place from
         | the Department of Water Resources [2]. Assuming we can trust
         | the government's call on this (are they being objective and
         | fair, or tilting the reports to bring in Billions of dollars of
         | corporate revenue and jobs) then these fabs should have no
         | problem being supplied with water or impacting others in the
         | area.
         | 
         | [1] https://www.cnbc.com/2021/06/04/why-intel-tsmc-are-
         | building-...
         | 
         | [2] https://www.arizonawaterfacts.com/water-your-facts
        
           | Analemma_ wrote:
           | This seems wrong. Didn't TSMC have to throttle down
           | production recently because Taiwan had a drought? Why would
           | they have had to do that if the plants don't need new water
           | after the "initial fill"?
        
             | labrador wrote:
             | Apparently they've figured it out: TSMC tackles Taiwan
             | drought with plant to reuse water for chips
             | https://archive.ph/XIff9
        
               | treesknees wrote:
               | Yes, exactly. In places like Taiwan TSMC just didn't need
               | to account for recycling/treating the water - I'm sure
               | it's cheaper not to do so. In Arizona it's a requirement
               | so it's built into the cost of investment.
        
               | yellow_lead wrote:
               | It depends on how many typhoons fill the reservoirs
               | though. This year we only had a few.
        
         | dsr3 wrote:
         | Some people said because Arizona is in relatively stable
         | seismic region in the US. But I don't buy it. TSMC fab in
         | Taiwan is also located in seismic prone region. Compared to the
         | cost of the fab itself, seismic isolation system is relatively
         | affordable.
        
           | dharbin wrote:
           | I heard a story about an Intel fab in Arizona that would
           | always produce bad silicon at a certain time a day. After
           | some investigations it was determined that a train passed by
           | at that time every day causing enough seismic activity to
           | disrupt the manufacturing process.
        
           | akiselev wrote:
           | They need seismic isolation regardless of where they build.
           | Cutting edge fabs require such precision that a poorly
           | shielded USB port can cause enough noise to create problems,
           | let alone the vibrations from distant earthquakes. (Source:
           | previous work with electron microscopes)
           | 
           | Fabs are expensive because every part of building it from the
           | electrical wiring to the seismic isolation to the HVAC system
           | needs to be perfectly tuned to remove all sources of noise.
           | Most of these costs are superlinear if not exponential with
           | the magnitude of noise.
        
           | foobiekr wrote:
           | Logistics risks around the plant are not nearly as easily
           | done. There is an inherent benefit to not being exposed to
           | seismic and weather issues. AZ isn't a bad choice.
        
         | totalZero wrote:
         | Yes, but the cost of ultrapure water is essentially represented
         | by the cost of electricity used for purification.
        
         | downrightmike wrote:
         | These plants will be 100% recycling on water and Phoenix gives
         | a lot of water to Tucson to store that they could pull back as
         | needed. Central Arizona Project is a good read.
        
         | jimbob45 wrote:
         | I was curious about this a while back. My cursory research
         | showed that these facilities are actually phenomenal at
         | recycling water to the point that they're not actually guzzling
         | water at the rate you might expect.
         | 
         |  _...deputy spokesperson Nina Kao said via email that
         | "approximately 65% of the water used in the Arizona fab will
         | come from TSMC's in-house water reclamation system..._
         | 
         | https://www.azcentral.com/story/opinion/op-ed/joannaallhands...
        
         | scythe wrote:
         | While water does seem like a serious issue, it also feels very
         | Monday-morning quarterback: _of course_ the largest
         | semiconductor manufacturer in the world knows that Arizona has
         | low rainfall. What I 'm curious about is what makes Arizona
         | _preferable_ over, say, Idaho or Tennessee. Proximity to
         | California? No freeze-thaw cycle? Solar energy?
        
           | robotnikman wrote:
           | Energy might be a big one. Solar is plentiful here in a state
           | where cloudy days are rare, and there is also the Palo Verde
           | nuclear power plant
        
         | [deleted]
        
       | klelatti wrote:
       | I'm interested in the financial aspect of this. Assuming US Fabs
       | are more expensive than in Taiwan that then must mean lower
       | margins or higher prices.
       | 
       | I wonder if Apple for example has said that they are prepared to
       | pay a premium to ensure diversity of supply?
        
         | jason-phillips wrote:
         | The iPhone SoC was made by Samsung in Austin for many years, so
         | this has already happened. At the time everyone assumed that
         | Apple wanted to diversify away from Samsung for other reasons
         | which were not necessarily financial.
        
           | GeekyBear wrote:
           | > At the time everyone assumed that Apple wanted to diversify
           | away from Samsung for other reasons which were not
           | necessarily financial.
           | 
           | When Apple was dual sourcing chips from both Samsung and
           | TSMC, the Samsung version of the A9 had a ~10% reduction in
           | battery life compared to the TSMC version, although the
           | performance was nearly identical otherwise.
           | 
           | https://www.tomshardware.com/news/iphone-6s-a9-samsung-vs-
           | ts...
        
             | metadat wrote:
             | The article you linked actually reports the Samsung version
             | lasted longer than the TSMC chip (the opposite of what
             | you've stated).
             | 
             | Samsung was on a 14nm fab process.
             | 
             | TSMC was on a 16nm fab process.
        
               | GeekyBear wrote:
               | My bad. I should just say that there were the same
               | silicon lottery issues we see when we buy a chip from a
               | single vendor, eg Intel today, compounded by the fact
               | that the process nodes were different too.
               | 
               | The popular narrative at the time was that TSMC chips had
               | the better battery life, but it depended on those silicon
               | lottery results.
               | 
               | >What we know is that there isn't enough information
               | currently out there to accurately determine whether the
               | TSMC or Samsung A9 SoC has better power consumption, and
               | more importantly just how large any difference might be.
               | 1-on-1 comparisons under controlled conditions can
               | provide us with some insight in to how the TSMC and
               | Samsung A9s compare, but due to the natural variation in
               | chip quality, it's possible to end up testing two
               | atypical phones and never know it.
               | 
               | https://www.anandtech.com/show/9708/analyzing-apple-
               | statemen...
               | 
               | However, when the chips fell as they may, Apple single
               | sourced the A10 at TSMC, and they would have had the
               | largest number of performance data points.
        
             | tooltalk wrote:
             | dual sourcing? I thought TSMC's 16nm was just transitional
             | to wean off Samsung's US operation completely in favor of
             | TSMC in Taiwan. Did Apple "dual-source" at Samsung/TSMC
             | 10nm? or 7nm?
        
           | klelatti wrote:
           | I bet the Samsung SoC's were a lot cheaper though as less
           | sophisticated. Samsung -> TSMC got them away from a
           | competitor, possibly cheaper (US -> Taiwan) and onto better
           | roadmap.
           | 
           | This is quite different and possibly a further sign of Apple
           | spending to diversify supply chains.
        
             | [deleted]
        
             | tooltalk wrote:
             | It was probably a bit cheaper, but Apple was Samsung's
             | anchor customer since mid 2000's. I don't think Apple used
             | Samsung's 10nm or 7nm -- ie, there was no "dual sourcing"
             | or "diversifying" supply chains to speak of. I think
             | Apple's move to TSMC was largley driven by Apple's
             | China/Taiwan first outsourcing practices.
        
         | jupp0r wrote:
         | Apple doesn't care that much about cost of chips. Their margins
         | are wide enough that even a substantial increase in chip
         | pricing won't significantly impact their profits.
        
           | [deleted]
        
           | nicoburns wrote:
           | I don't really think this is true. Apple's margins are so
           | wide _because_ they care about the cost of all their
           | components.
        
           | mistrial9 wrote:
           | this is profoundly wrong; Apple and other hardware brands
           | have not only practiced material source cost discipline to
           | the extreme, but their internal culture promoting and
           | strengthening that resulted in a nerdy work-a-holic with no
           | life to become CEO of one of the largest companies in the
           | world, specifically because he would, and did, put whole
           | companies out of business with suffocating negotiating
           | tactics over portions of a penny. This is exactly in the
           | pattern of Dell Inc, where the saying about commercial supply
           | partners was "those who do business with Dell, go out of
           | business"
           | 
           | source- electronics recycling business in Silicon Valley for
           | a few years
        
           | tooltalk wrote:
           | Apple is known for squeezing their suppliers to last penny.
        
         | HDThoreaun wrote:
         | My understanding is the that the two biggest financial
         | advantages for building domestic fans are the CHIPS act
         | subsidies and lucrative defense department contracts that are
         | required to be sourced domestically.
         | 
         | Not unlikely that there's a significant political aspect
         | involved here too though.
        
       | KoftaBob wrote:
       | I've been trying to build a habit lately of finding the primary
       | source of news like this, especially since news agencies seem to
       | be very hit or miss with whether they link to their primary
       | source.
       | 
       | So for whoever is interested, this is the original announcement
       | by TSMC themselves: https://pr.tsmc.com/english/news/2977
        
         | sdsd wrote:
         | Thanks, that's a really cool habit! Has this lead to any
         | changes re how you perceive news? How far does news tend to
         | deviate from the sources you find?
        
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