TSMC has repeatedly complained that building a fab outside Taiwan is much more expensive than building a fab inside Taiwan. As it turns out, foundries are prepared to pass on those extra costs to their customers. That means U.S. customers will have to pay up to 30% more for U.S.-made chips than for Taiwan-made chips. Digi Times Story.
TSMC has begun discussions with customers about ordering and pricing for both overseas factories, which are expected to begin commercial production in the second half of 2024. Industry insiders believe that chips made on TSMC’s N4 and N5 process technology will cost 20% to 30% more in the US. Older process chips produced at the Kumamoto facility in Japan at the N28/N22 and N16/N12 nodes can cost 10%-15% more than similar chips made in Taiwan.
US chip designers certainly won’t admit to higher chip manufacturing costs in the US, but they’re more likely to make chips in Arizona for government and less price sensitive applications. , should be able to pass on these additional costs to their customers without jeopardizing their competitive position.
Given the high construction and operating costs of its Japanese and U.S. fabs, TSMC plans to pass on these extra costs to its customers in order to maintain its 53% gross margin target. His TSMC negotiations with Japanese customers went smoothly, thanks in large part to the large amount of financial support from the local government for the Kumamoto facility. However, many US customers are still negotiating prices with TSMC. In fact, some of them are considering shifting some orders to his Samsung Foundry to handle costs more flexibly.
For example, AMD and Qualcomm are said to be considering the Samsung Foundry, while Nvidia is looking to build chips in one of Intel’s gate-all-around transistor-based technologies, such as Intel’s 18A and 20A. You may resort to Services. Despite these rumors, TSMC is still sticking to the principle of increasing the foundry’s quotes, not decreasing them, due to the high cost of manufacturing. Additionally, as the cost of chip design increases, it becomes problematic for AMD, Qualcomm, and Nvidia to adopt a dual-sourcing strategy, with both TSMC and Samsung Foundry or Intel producing similar chips. So TSMC’s fab will be fully utilized even if its rival gets some orders from its loyal customers.
Meanwhile, TSMC maintains a 20%-30% discount to its largest customer, Apple, which reportedly contributes 25% of its revenue. This is because Apple tends to adopt his TSMC cutting-edge nodes first and is willing to pay extra and take additional risks in moving the process and technological breakthroughs forward. is due to the close partnership of
Information comes from unofficial sources and should be considered carefully. Moreover, the cost makes it nearly impossible for him to speculate about possible production shifts from TSMC, as actual production conditions are confidential, depend on multiple factors, and vary from customer to customer.
