The founder of Taiwanese chip foundry TSMC has described attempts to increase manufacturing capacity in the United States as a “futile exercise”.
Speaking in an event Hosted by the Brookings Institution, Morris Chang said he believes conditions in the US economy and labor market are not conducive to success in the context of semiconductor manufacturing.
Specifically, he cited a shortage of manufacturing talent in the country, which has long prioritized alternative skill sets, as well as the cost of producing chips in the US, which Chang said is 50% higher. than in Taiwan.
Intel in the US
In the past two years, the US has become increasingly determined to take on a larger share of semiconductor manufacturing, fueled by ongoing chip shortages, supply chain disruption and China’s aggressive stance toward Taiwan.
To help with this momentum, the Biden administration has committed billions of dollars in subsidiesmuch of which will go to Intel, one of the few companies capable of manufacturing advanced technology processors.
In early 2021, Intel released a reworking of its integrated device manufacturing (IDM) strategy, which the company called IDM 2.0. The goal is to position Intel at the forefront of chip design and manufacturing, and capitalize on new revenue streams during a period of unprecedented demand. Inevitably, these plans will require significant investment.
In January, the company revealed that it would spend $20 billion on a state-of-the-art manufacturing campus in Ohio. This 1,000-acre “mega-site” will house up to eight separate factories, making it one of the largest facilities in the world.
To further bolster US manufacturing capacity, Intel also announced that funnel another $3 billion at an expansion of its D1X factory in Oregon. The expansion will apparently pave the way for next-generation technologies that will support new chips for personal and business computers, 5G networks, cloud servers, and more.
Thinly veiled criticism
In light of the billions Intel is currently pouring into projects on US soil, Chang’s comments can be read as thinly veiled criticism of the rival manufacturer’s strategy.
Based on TSMC’s experience in the country over the past two decades, Chang expects Intel will have a hard time staffing its new US facilities, saying “it will be difficult for the US to compete internationally” as a result of price restrictions.
Essentially, he believes the US has bet on war between China and Taiwan, which would create the only scenario in which the current level of investment in US chipmaking would make business sense.
However, if such a war does not materialize, Chang believes the Biden administration (and by extension, Intel) will be significantly out of pocket and have little to show for it.