Does anyone have any insight on how they make it economically viable?
US salaries are astronomically high compared to the rest of the world. In the tech sector that's doubly so. Everything is incredibly expensive there. Is this basically a small facility to keep some politicians happy?
Or is it used to provide some supply military gear at 50x the price?
Will it get shut down in a few years once everyone forgets about it?
Modern high-end fabs have extremely expensive equipment and are highly automated... like they are so automated that people don't actually handle wafers... it is almost all robotic.
Thus, salaries and cost of services do not factor in as heavily as you might think to fab economics.
Data suggests that TSMC's per wafer costs in Arizona are 10-30% higher than Taiwan and that Arizona fab is relatively new. It's economics will probably improve over time, narrowing the margin to 5-15%.
Looking towards the future, power costs and other global supply chain factors could very easily make TSMC's Arizona fab less expensive and more reliable to operate over time. For one, the US is completely energy independent... Taiwan is not.
Intel has a fab a few miles away, and setting aside Intel's challenges, they're producing chips just fine. Semiconductor production is massively automated and the wafers are ludicrously high revenue/margin products. This isn't like using US labor to stitch t-shirts.
US Workers while costing more do seem are still competitive at expensive high value tasks. There was some reports a year back where the TSMC labs in Arizona while employee costs were higher also had 4% higher yield [1].
I'd wager combining that with US defense contracts for US made chips would be lucrative for NVidia.
is it high value? I know a guy working at a fab in Taiwan and he makes peanuts ($2-3K a month?). It's basically a factory job. From what he said it sounded braindead. TSMC is known for overpaying and having PhDs stare at assembly lines though - so I dunno.
sorry, I should have thought about it a bit more. It's likely closer to 2K than 3K. A professor at Taiwan University makes ~3K. My only other point of reference is another friend's husband who works as an electric engineer at a LED manufacturer - making 2K a month. Minimum wage is $1K. Point being.. they're miserable jobs and the salaries are low low low. I get fabs sound fancy, but I'm not super sure anyone should be stoked these kinds of jobs are "coming back" to the US.
While I am more of the belief that these people are wanting a time with less income equality and conflating that with factory work.
There's going to be a bunch of people wanting any job [1] and more in the coming years. So they'd probably cheer a local walmart as much as a local tsmc.
In terms of Labour, the number one cost of a node is R&D. And that is happening in Taiwan not in US.
And if US could somehow provide lower electricity cost to Fabs, which is the number one cost in production, it will offset a lot of expensive items on the list. The actual labour cost for running the Fab is comparatively small.
Some hardware any superpower should be able to produce on home soil almost no matter the cost. That's why even Russia keeps domestic fabs making chips at some ancient process node - not to sell them for profit, but to maintain an ability to produce chips for the military and their own economy should things go down as they say.
Salaries aren't a huge part of manufacturing like people think. Once the factory is built, accounting for logistics of shipping and remote management, it's not a huge difference financially.
Getting the factory built, however, takes significantly more time and costs more in both actual dollars but, more importantly, the opportunity cost lost to not producing products in that extra build time.
What I find weird is that a year ago there were reports in the NYT and elsewhere that TSMC was unable to make the AZ plant work because of lazy / dumb Americans. And then 6 months later, poof, 180, the reports were that they were right on track???
Just print more money, it's a matter of national security. If the US is in a distrustful state, it's a good investment for the government, military or non-military (e.g. global trade getting more expensive for various reasons).
The EU was funding fab lines, several levels back up the chain IIRC? The idea being that the chips doing car comms, engine management, cruder FPGA, old ARM cores, can be done fast, and stop supply chain weaknesses for things Europe needs chips in, like cars (and tanks, and UAVs and ...)
I'm not saying tiny lines aren't cool. I'm just saying the idea you can't be successful if you make cruder, older resolution chips is probably wrong: Your printer and your car don't care if the Dice is 10mm not 5mm, and the track lines are 5x wider. MILSPEC stuff probably runs cruder for other reasons. Resiliency? Verilog proofs?
I also have no idea how many dice you get off a single ingot these days. 300mm wide, but how long?
>The EU was funding fab lines, several levels back up the chain IIRC?
Yeah but much larger(16-12nm) and much less profitable nodes than what Taiwan, the US or even Japan and China have now.
> I'm just saying the idea you can't be successful if you make cruder, older resolution chips is probably wrong
Define success. Smallest nodes are bringing in the most profits and every country prefers more profits versus less profits, especially Europe given it's budget deficits and welfare spending.
Larger nodes that aren't very profitable are good for national security but Russia and even North Korea are proof you don't need much domestic semiconductor industry to completely terrorize neighboring countries and level entire cities. WW1-style artillery shells and rifle rounds will do just fine.
Well yeah, but the current administration hates the prior administration and loves having its ass kissed.
If they credited Biden, they would get their funding pulled, and possibly some ICE folks to black bag employees on their way in to let the courts sort out later.
Or they blow hot air up Trump's butt and make him feel like a big man and they get more funding without getting harrassed.
It is a few generations behind: Blackwell is still on N4, which is an N5 variant. Meanwhile TSMC has been shipping N3 family processes in large volume products (Apple) for more than 2 years already, and is starting to ramp the next major node family (N2) for Apple et al. next year.
NVIDIA has often lagged on process, since they drive such large dies, but having the first major project demo wafer on N4 now is literally 2 generations behind Taiwan.
Forgot about AMD's brief GPU flirtation with glofo. ATI used TSMC. I think it was only Polaris that ever shipped anything from NY. That's admittedly a couple of legendary value cards though.
Wow. This is a big deal. I had placed a bet that this will never work out and the folks on the ground thought the same too. This probably is going to be the lasting legacy of Biden administration.
Background: The CHIPS and Science Act, which is the key legislation behind the major incentives and on-shoring of semiconductor manufacturing in general and this achievement specifically, was signed into law by Biden on August 9, 2022.
What other options are there for Nvidia? EU as a whole is largely non-viable due to the schizophrenic nature of EU regulations. AI development has been made de-facto illegal in EU, auto industry is being ran to the ground, so there are hardly any customers for GPU's. Now mainland China certainly would be an interesting option, but State Department would throw a shitfit.
I mean, like having to hire hundreds of lawyers and assessors to just MAYBE get a construction permit within 2 or 3 years, if you want to build a gigafactory. Or any factory for that matter.
The problem they are alluding to is environmental regulations - it's outright impossible or very very expensive to do certain manufacturing processes, especially silicon and medicine, due to the substances involved. And that is valid for both the US and EU actually, there's a reason Silicon Valley is the densest concentration of Superfund sites in the US, and there is a reason why most of SV production has left for China and Taiwan.
An additional problem is, both the US and EU have been pretty happy to just ship off the environmental damage to Asia to the tune of "out of sight out of mind". We got cheaper products (especially in medicine, our healthcare systems would outright collapse if it weren't for Chinese and Indian generics and precursors), but the total amount of environmental damage in the world hasn't shrunk, it has grown.
> it's outright impossible or very very expensive to do certain manufacturing processes, especially silicon and medicine, due to the substances involved.
I think you're, er, exaggerating this a little; Intel and GlobalFoundries both have large fabs in Europe. Given that Intel is going to be fabbing some nVidia chips, some of those will quite likely be made in their "Intel 4" (ie 7nm) fab in Ireland. And GlobalFoundries has a big (albeit older-tech) fab in Germany. Bosch also has a big 40nm fab in Germany for car stuff; old process, but high volume.
It's only fairly recently that the most advanced fabs have been outside the US or Europe; until late last decade the most advanced process was usually either made at Intel's Irish plant, or one of their US ones. And GlobalFoundries was also competitive at one time.
As for medicine, the world's largest drug exporting countries are Germany, Switzerland, the US, and Ireland, more or less in that order, though it shifts around a bit. Besides the US, _all_ of the top ten exporters are in the EU or EFTA. Germany is also one of the largest, if not the largest, exporters of medical _equipment_.
> I think you're, er, exaggerating this a little; Intel and GlobalFoundries both have large fabs in Europe. Given that Intel is going to be fabbing some nVidia chips, some of those will quite likely be made in their "Intel 4" (ie 7nm) fab in Ireland. And GlobalFoundries has a big (albeit older-tech) fab in Germany. Bosch also has a big 40nm fab in Germany for car stuff; old process, but high volume.
The thing is, the old GlobalFoundries fab has been constructed decades ago. Building something like this from scratch nowadays involves so much more paperwork than back then, it's a massive hurdle to overcome.
> As for medicine, the world's largest drug exporting countries are Germany, Switzerland, the US, and Ireland, more or less in that order
Finished medicine yes. But the precursors and "active pharmaceutical ingredients" (APIs)? 40% China, 20% India... and that's the total market share. For some ingredients, you got 95% (vit B) to 98% (Chloramphenicol) of the entire world's supply being made in China [1]. And of the APIs made in the EU or US, quite a lot depend on precursors made in India and China, or filler materials.
Medicine isn't about curing patients any more, it is about making money first and foremost, and that's why everyone and their dog went to India and China - India first because India is more cooperative with international audit teams than China is. And even then, there have been quite the amount of scandals [2][3][4].
(Side note re [4]: wtf is that banner "Democrats have shut down the government"?! Yes, everyone knows about the government shutdown, but ... isn't it illegal to blatantly engage in partisanship for government agencies?!)
> The thing is, the old GlobalFoundries fab has been constructed decades ago. Building something like this from scratch nowadays involves so much more paperwork than back then, it's a massive hurdle to overcome.
The big Bosch fab was built in 2021 (they previously had a smaller one, I think). The latest Intel fab in Ireland was finished in 2023.
You can't pack up a chemical factory and ship it overseas in a matter of weeks... in any case, BASF has let go hundreds of people last year and shut down part of said plant [1], partially due to staff cost but also due to a move to China planned to be finalized in 2030 [2]. They're aiming for 50% of gross income to come from China... utter madness if you ask me.
Most of the monopolies in the GPU supply chain (ASML, Zeiss etc.) are European companies. The “EU has no AI” narrative is mostly pushed by VCs so they can keep raising funds from European investors.
Just adding to the other commenters pointing out the unstable genius:
What do you think would have been the reaction of the angry TACO-lord if NVIDIA had announced that they're investing in the EU and not the US?
We know by now how weak his self-esteem is. He'd probably send some ICE agents in there and stopped all government contracts or something stupid like that.
At this point, decisions in this mafia country are not following (economical) logic anymore. It's utter, unstable madness.
This is the culmination of years of work, not months, as the article suggests. I prefer the actual press release.
Official source press release: https://blogs.nvidia.com/blog/tsmc-blackwell-manufacturing/
Does anyone have any insight on how they make it economically viable?
US salaries are astronomically high compared to the rest of the world. In the tech sector that's doubly so. Everything is incredibly expensive there. Is this basically a small facility to keep some politicians happy?
Or is it used to provide some supply military gear at 50x the price?
Will it get shut down in a few years once everyone forgets about it?
Modern high-end fabs have extremely expensive equipment and are highly automated... like they are so automated that people don't actually handle wafers... it is almost all robotic.
Thus, salaries and cost of services do not factor in as heavily as you might think to fab economics.
Data suggests that TSMC's per wafer costs in Arizona are 10-30% higher than Taiwan and that Arizona fab is relatively new. It's economics will probably improve over time, narrowing the margin to 5-15%.
Looking towards the future, power costs and other global supply chain factors could very easily make TSMC's Arizona fab less expensive and more reliable to operate over time. For one, the US is completely energy independent... Taiwan is not.
Aren’t TSM fabs in the US little islands of Taiwanese workers? How is this domestic knowledge and manufacturing not exactly?
Intel has a fab a few miles away, and setting aside Intel's challenges, they're producing chips just fine. Semiconductor production is massively automated and the wafers are ludicrously high revenue/margin products. This isn't like using US labor to stitch t-shirts.
US Workers while costing more do seem are still competitive at expensive high value tasks. There was some reports a year back where the TSMC labs in Arizona while employee costs were higher also had 4% higher yield [1].
I'd wager combining that with US defense contracts for US made chips would be lucrative for NVidia.
1: https://news.ycombinator.com/item?id=41952534
is it high value? I know a guy working at a fab in Taiwan and he makes peanuts ($2-3K a month?). It's basically a factory job. From what he said it sounded braindead. TSMC is known for overpaying and having PhDs stare at assembly lines though - so I dunno.
The average salary in Taiwan is about $1,500, though.
sorry, I should have thought about it a bit more. It's likely closer to 2K than 3K. A professor at Taiwan University makes ~3K. My only other point of reference is another friend's husband who works as an electric engineer at a LED manufacturer - making 2K a month. Minimum wage is $1K. Point being.. they're miserable jobs and the salaries are low low low. I get fabs sound fancy, but I'm not super sure anyone should be stoked these kinds of jobs are "coming back" to the US.
While I am more of the belief that these people are wanting a time with less income equality and conflating that with factory work.
There's going to be a bunch of people wanting any job [1] and more in the coming years. So they'd probably cheer a local walmart as much as a local tsmc.
[1]: https://www.bls.gov/web/empsit/cpseea10.htm
Well.. considering the mark up for the H100's is like 80 grand. I think there is a little wiggle room.
semi manufacturing is highly automated, and not much of the cost is labor.
In terms of Labour, the number one cost of a node is R&D. And that is happening in Taiwan not in US.
And if US could somehow provide lower electricity cost to Fabs, which is the number one cost in production, it will offset a lot of expensive items on the list. The actual labour cost for running the Fab is comparatively small.
Some hardware any superpower should be able to produce on home soil almost no matter the cost. That's why even Russia keeps domestic fabs making chips at some ancient process node - not to sell them for profit, but to maintain an ability to produce chips for the military and their own economy should things go down as they say.
Salaries aren't a huge part of manufacturing like people think. Once the factory is built, accounting for logistics of shipping and remote management, it's not a huge difference financially.
Getting the factory built, however, takes significantly more time and costs more in both actual dollars but, more importantly, the opportunity cost lost to not producing products in that extra build time.
And they got subsidies to set up the factory I guess?
Yes.
What I find weird is that a year ago there were reports in the NYT and elsewhere that TSMC was unable to make the AZ plant work because of lazy / dumb Americans. And then 6 months later, poof, 180, the reports were that they were right on track???
Just print more money, it's a matter of national security. If the US is in a distrustful state, it's a good investment for the government, military or non-military (e.g. global trade getting more expensive for various reasons).
The EU was funding fab lines, several levels back up the chain IIRC? The idea being that the chips doing car comms, engine management, cruder FPGA, old ARM cores, can be done fast, and stop supply chain weaknesses for things Europe needs chips in, like cars (and tanks, and UAVs and ...)
I'm not saying tiny lines aren't cool. I'm just saying the idea you can't be successful if you make cruder, older resolution chips is probably wrong: Your printer and your car don't care if the Dice is 10mm not 5mm, and the track lines are 5x wider. MILSPEC stuff probably runs cruder for other reasons. Resiliency? Verilog proofs?
I also have no idea how many dice you get off a single ingot these days. 300mm wide, but how long?
>The EU was funding fab lines, several levels back up the chain IIRC?
Yeah but much larger(16-12nm) and much less profitable nodes than what Taiwan, the US or even Japan and China have now.
> I'm just saying the idea you can't be successful if you make cruder, older resolution chips is probably wrong
Define success. Smallest nodes are bringing in the most profits and every country prefers more profits versus less profits, especially Europe given it's budget deficits and welfare spending.
Larger nodes that aren't very profitable are good for national security but Russia and even North Korea are proof you don't need much domestic semiconductor industry to completely terrorize neighboring countries and level entire cities. WW1-style artillery shells and rifle rounds will do just fine.
So "This is the vision of President Trump of reindustrialization" but it's been in the works for "a few short years"?
Yes, the Phoenix fab plant was indeed kickstarted under Trump's first term.
Thanks for the heads-up.
Well yeah, but the current administration hates the prior administration and loves having its ass kissed.
If they credited Biden, they would get their funding pulled, and possibly some ICE folks to black bag employees on their way in to let the courts sort out later.
Or they blow hot air up Trump's butt and make him feel like a big man and they get more funding without getting harrassed.
Obvious choice to make.
This is a great place for a bit of both sidesism.
The Biden admin could have given Trump credit for operation warpspeed and hailed the vaccine as a great achievement for him.
Biden publicly praised the Trump administration for Operation Warpspeed at the time.
Joe Biden himself did exactly that
> Biden receives Covid-19 vaccine, praises Trump's 'Operation Warp Speed'
https://www.nbcnews.com/news/amp/ncna1251890
This is incredible news!
I never thought this would happen, or that if it did, we'd be a few generations behind.
Now let's onshore or friendshore everything else we need! Rare earths, mid-tier processors, chemical precursors, pharmaceuticals, steel, robotics/mechatronics, solar, drones, ...
Why even stop there? Kill the Jones Act, get back to building naval drones and ships of all kinds, ...
It is a few generations behind: Blackwell is still on N4, which is an N5 variant. Meanwhile TSMC has been shipping N3 family processes in large volume products (Apple) for more than 2 years already, and is starting to ramp the next major node family (N2) for Apple et al. next year.
NVIDIA has often lagged on process, since they drive such large dies, but having the first major project demo wafer on N4 now is literally 2 generations behind Taiwan.
It's a couple process generations behind, but Blackwell is literally nvidia's most current generation. They don't ship N3 until the next generation.
When was the last time current gen, competitive GPUs were fabbed outside Asia?
Can't be _that_ long ago; AMD were still using GlobalFoundries (Germany and New York) for most stuff until 2018 or so IIRC.
Forgot about AMD's brief GPU flirtation with glofo. ATI used TSMC. I think it was only Polaris that ever shipped anything from NY. That's admittedly a couple of legendary value cards though.
If only Kim Il Sung were still alive to hear you
Wow. This is a big deal. I had placed a bet that this will never work out and the folks on the ground thought the same too. This probably is going to be the lasting legacy of Biden administration.
Background: The CHIPS and Science Act, which is the key legislation behind the major incentives and on-shoring of semiconductor manufacturing in general and this achievement specifically, was signed into law by Biden on August 9, 2022.
https://en.wikipedia.org/wiki/CHIPS_and_Science_Act
Background: TSMC Arizona was announced in May 2020.
https://web.archive.org/web/20201020184623/https://www.anand...
This was announced in 2020 under Trump's administration.
Meanwhile the rest of the world:
"Wow...great. Moved from one unstable part of the planet to another..."
What other options are there for Nvidia? EU as a whole is largely non-viable due to the schizophrenic nature of EU regulations. AI development has been made de-facto illegal in EU, auto industry is being ran to the ground, so there are hardly any customers for GPU's. Now mainland China certainly would be an interesting option, but State Department would throw a shitfit.
> due to the schizophrenic nature of EU regulations.
You mean like having to read the new tariffs you're subjected to every monday?
I mean, like having to hire hundreds of lawyers and assessors to just MAYBE get a construction permit within 2 or 3 years, if you want to build a gigafactory. Or any factory for that matter.
The problem they are alluding to is environmental regulations - it's outright impossible or very very expensive to do certain manufacturing processes, especially silicon and medicine, due to the substances involved. And that is valid for both the US and EU actually, there's a reason Silicon Valley is the densest concentration of Superfund sites in the US, and there is a reason why most of SV production has left for China and Taiwan.
An additional problem is, both the US and EU have been pretty happy to just ship off the environmental damage to Asia to the tune of "out of sight out of mind". We got cheaper products (especially in medicine, our healthcare systems would outright collapse if it weren't for Chinese and Indian generics and precursors), but the total amount of environmental damage in the world hasn't shrunk, it has grown.
> it's outright impossible or very very expensive to do certain manufacturing processes, especially silicon and medicine, due to the substances involved.
I think you're, er, exaggerating this a little; Intel and GlobalFoundries both have large fabs in Europe. Given that Intel is going to be fabbing some nVidia chips, some of those will quite likely be made in their "Intel 4" (ie 7nm) fab in Ireland. And GlobalFoundries has a big (albeit older-tech) fab in Germany. Bosch also has a big 40nm fab in Germany for car stuff; old process, but high volume.
It's only fairly recently that the most advanced fabs have been outside the US or Europe; until late last decade the most advanced process was usually either made at Intel's Irish plant, or one of their US ones. And GlobalFoundries was also competitive at one time.
As for medicine, the world's largest drug exporting countries are Germany, Switzerland, the US, and Ireland, more or less in that order, though it shifts around a bit. Besides the US, _all_ of the top ten exporters are in the EU or EFTA. Germany is also one of the largest, if not the largest, exporters of medical _equipment_.
> I think you're, er, exaggerating this a little; Intel and GlobalFoundries both have large fabs in Europe. Given that Intel is going to be fabbing some nVidia chips, some of those will quite likely be made in their "Intel 4" (ie 7nm) fab in Ireland. And GlobalFoundries has a big (albeit older-tech) fab in Germany. Bosch also has a big 40nm fab in Germany for car stuff; old process, but high volume.
The thing is, the old GlobalFoundries fab has been constructed decades ago. Building something like this from scratch nowadays involves so much more paperwork than back then, it's a massive hurdle to overcome.
> As for medicine, the world's largest drug exporting countries are Germany, Switzerland, the US, and Ireland, more or less in that order
Finished medicine yes. But the precursors and "active pharmaceutical ingredients" (APIs)? 40% China, 20% India... and that's the total market share. For some ingredients, you got 95% (vit B) to 98% (Chloramphenicol) of the entire world's supply being made in China [1]. And of the APIs made in the EU or US, quite a lot depend on precursors made in India and China, or filler materials.
Medicine isn't about curing patients any more, it is about making money first and foremost, and that's why everyone and their dog went to India and China - India first because India is more cooperative with international audit teams than China is. And even then, there have been quite the amount of scandals [2][3][4].
(Side note re [4]: wtf is that banner "Democrats have shut down the government"?! Yes, everyone knows about the government shutdown, but ... isn't it illegal to blatantly engage in partisanship for government agencies?!)
[1] https://chinaobservers.eu/how-to-address-europes-dependence-...
[2] https://edition.cnn.com/2025/06/20/health/fda-medications-pr...
[3] https://www.statnews.com/2024/08/12/fda-withdraw-approval-40...
[4] https://www.justice.gov/archives/opa/pr/indian-cancer-drug-m...
> The thing is, the old GlobalFoundries fab has been constructed decades ago. Building something like this from scratch nowadays involves so much more paperwork than back then, it's a massive hurdle to overcome.
The big Bosch fab was built in 2021 (they previously had a smaller one, I think). The latest Intel fab in Ireland was finished in 2023.
Meanwhile the BASF complex exists, which is basically Mordor-on-the-Rhine.
You can't pack up a chemical factory and ship it overseas in a matter of weeks... in any case, BASF has let go hundreds of people last year and shut down part of said plant [1], partially due to staff cost but also due to a move to China planned to be finalized in 2030 [2]. They're aiming for 50% of gross income to come from China... utter madness if you ask me.
[1] https://www.swr.de/swraktuell/rheinland-pfalz/ludwigshafen/w...
[2] https://www.wiwo.de/technologie/wirtschaft-von-oben/wirtscha...
Most of the monopolies in the GPU supply chain (ASML, Zeiss etc.) are European companies. The “EU has no AI” narrative is mostly pushed by VCs so they can keep raising funds from European investors.
ASML and Zeiss however are by far not reflecting being part of the "AI shovel sellers" in their stonk market charts as is NVDA.
We may have a lot of exposure via our "hidden champions" but we don't even come close in actually getting financial share out of that bubble.
> the schizophrenic nature of EU regulations
Wait until you hear about US regulations. Are tariffs on or off again in the last five minutes?
Just adding to the other commenters pointing out the unstable genius:
What do you think would have been the reaction of the angry TACO-lord if NVIDIA had announced that they're investing in the EU and not the US?
We know by now how weak his self-esteem is. He'd probably send some ICE agents in there and stopped all government contracts or something stupid like that.
At this point, decisions in this mafia country are not following (economical) logic anymore. It's utter, unstable madness.