2022 BRN Discussion, page-4370

	The price of chips

In early January, Floridaunveileda $9.7 million program to boost state infrastructure and train future semiconductor engineers in the hope of attracting chip manufacturers to the Sunshine State. The laudable initiative was off by a few orders of magnitude in its estimation of the cost.

Investment in chipmaking has rocketed up to the point where Taiwan Semiconductor Manufacturing Co. is set to spendover $40 billionon capex this year alone. Intel Corp., once the leading light of the industry, is also aggressively stepping up expenditures with a planned outlay of more than $25 billion in 2022. And South Korean memory maker Samsung Electronics Co. is on a multiyear spending spree totalling more than $100 billion.

The chip crunch has been a function of runaway demand as much as it’s been a product of constrained supply, so the companies responsible for serving us the most advanced silicon are spending fearlessly to expand their capacity. They’re getting a helping hand from governments too.

TSMC’s $12 billion fab under development in Arizona got aboost from Phoenix authorities, which agreed to provide about $200 million to develop roads, sewers and other infrastructure. Samsung’s $17 billion Texas plant is also likely to win some U.S. federal incentives that may net it billions. If Florida really wants in on that hotly contested action, it’ll have to be significantly more generous.

Even China's chipmaking champion Semiconductor Manufacturing International Corp. — whose access to U.S. Equipment has been hampered by Washington’sblacklisting of the company on national security grounds — has estimated its capital expenditure in 2021 would be$4.3 billion.

Governments are still waking up to the real expense of their semiconductor ambitions.

Japan isoffering$6.8 billion in incentives to lure global chipmakers to the country and India isallocating$10 billion over six years for the development of a local semiconductor industry.

The U.S. may be prepared to come up with a more bountiful $52 billion to bolster its domestic chip industry, but the Biden administration is still struggling to get thatapproved, and that amount is expected to besplitamong several companies.

And none of these countries are buying the very latest and best technology with their proposed subsidies and support. At least 70% of TSMC’s massive spending in 2022 is devoted to cutting-edge fabrication and capacity, meaning the majority of the budget will be used to improve facilities at home in Taiwan, where the company still makes the most advanced chips.

TSMC’s recent spending spree has also led foreign suppliers including Entegris Inc. and Merck KGaA to expand their presence in Taiwan to chase more business, a move that the local government hopes will help further lift Taiwan’s domestic ecosystem and consolidate the island’s standing as the global chip leader.

“In the future we will turn Taiwan into Asia’s center for advanced manufacturing and advanced chip manufacturing process technologies,” Taiwan PresidentTsai Ing-wentold a group of machinery executives on Monday. “A critical strategy is to push for foreign suppliers making equipment locally.”

Pointless having game changing tech if you can't get it manufactured.

What was Florida thinking