As it turns out, the U.S. is actually a very capable manufacturer and able to deliver projects on time and within budget but media reporting focuses on all kinds of irrelevant operational friction present in all firms and the handful of projects that don’t become successful, and in this specific case, tsmc playing the government for money.
American Economics Thread
- Thread starter Bernard
- Start date
As it turns out, the U.S. is actually a very capable manufacturer and able to deliver projects on time and within budget but media reporting focuses on all kinds of irrelevant operational friction present in all firms and the handful of projects that don’t become successful, and in this specific case, tsmc playing the government for money.
TSMC’s Arizona Trials Put Plant Productivity on Par with Taiwan
- Production delays had raised concerns about US efficiency
- TSMC plans to start mass production in Arizona in 2025
TSMC achieved production yields at its Arizona facility on par with established plants back home, an early indicator that its marquee US project is on track to achieve its targets.
Yield rate, or how many usable chips a company can produce during a single manufacturing process, is a key factor that impacts profitability. While TSMC doesn’t disclose its yield rate, investors are counting on the company’s ability to maintain steady margins. The company has said it can maintain gross margin rates at 53% or higher in the long run, and has kept its net profit steady at above 36% over the past four years.
TSMC said in an email that its Arizona project is “proceeding as planned with good progression,” without commenting on the yield.
The go-to chipmaker for and originally planned to have its first Arizona plant start full production in 2024, but the target to 2025 due to a lack of skilled workers. The delay fueled concerns that the company might not be able to make chips in the US as efficiently as in Taiwan.
The US plans to TSMC $6.6 billion in grants and as much as $5 billion in loans to support the chipmaker’s $65 billion in investments at three plants in Arizona.
US workers have the highest number of working hours out of almost anywhere in the OECD, including famed manufacturer, Germany
#IYKYK
A few state department meetings
No one has ever doubt whether TSMC engineers can reproduce their success using ASML EUV tools in the US. It's not a surprise that Taiwanese engineers can reproduce the same yield rates using the same ASML EUV tools or equipment. Whether American work culture can sustain the 24/7 and 12-hour shift on-call schedule demanded by Taiwanese work culture is a separate issue, which is a productivity metric, not a defect (yield) issue.
Productivity is output per hour and in typical American fashion, technological advancements and innovation mean that the U.S. can produce substantially more per unit labor hour than anyone else. Improvements at the intensive margin of work hours are fools gold (with all kinds of other deleterious effects elsewhere); extensive margin improvements are far more desirable