Apple Chip Supplier TSMC Looking to Build Plant in Singapore to Tackle Shortages

[SlaveToSwift]

I have a feeling the "chip manufacturers" and those that provide the raw materials to them are all playing a bit of a "COVID" squeeze game. Yes there have been disruptions, yes some raw materials have been hard to get, however the pipeline should be back up to pre-scandemic levels by now. Especially in the silicon segment. Contract manufacturers have much larger inventories to control, and they seem to be doing a decent job of getting in plastics, machined parts, stampings, etc., but have problems getting "the chips". Why is that?

It's the adhesives and silicon industries causing most of the problems. My theory, they're tired of getting squeezed over the last decade or so and now they're getting their revenge with price hikes and supply constraints. There's a limited number of silicon fab plants out there and the industry knows it. Right now they have the world by the {gender neutral body part}. Manufacturers are sitting on millions of dollars of work in progress they can't ship. This has got to end soon.

Semiconductors are a very cyclical business because of the multi-year timelines it takes to get new capacity online. When there are shortages prices and profits surge to high levels and lots of capital is invested in new plants, but it takes years to have effect. When most of the new plants come online they massively increase production capacity. This then leads to competitive free for alls where chip prices are slashed to allow for little to no profit margins. Then future investment is curtailed, until guess what happens?

This is all why Intel is being really dumb about trying to compete with TSMC. There are hundreds of billions being spent on new fabs right now, its not going to end well for anyone other than Apple, because they'll be getting chips at cost in about three years.

 

[SlaveToSwift]

TSMC should open manufacturing facilities in the US and Europe. Concentrating all manufacturing power in a single region only create risks, as geopolitical factors such as wars or armed conflicts, or natural disasters or pandemics can adversely impact the whole worldwide supply chain. It appears that we haven't learned anything from Covid19. For example, an earthquake in South China Sea can create tsunami that can impact both Singapore and Taiwan. If there is an armed conflict between China and Taiwan in the future, the current chip shortage would seems like a joke in comparison to what we would face. European and American politics should wake up and act fast.

There is little risk of China attacking Taiwan. Chinas military history has been mostly benign the last few hundred years, they are a huge country with plenty to do internally.

More specifically, China knows amphibious assaults are brutally costly. In our invasion of Okinawa the japanese defenders had no air support and no naval support and still inflicted 80,000 casualties. Taiwan is 12 times larger with 50 times the population that Okinawa had, and with modern anti-ship, anti-tank and anti-air missiles they would put up a hell of a fight, and be constantly resupplied by the US and Japan. China has 3 million troops and about a third of them would be dead or in the hospital before all of Taiwan fell.

And what would they win? All the TSMC plants would be smoking ruins and their engineers long fled to other countries. They would win nothing but a bloody insurgency that would last years.

Almost all of the people running around publicly saying China is a huge military threat to Taiwan are selling military equipment to the Pentagon.

 

[Axemantitan]

What will the 7-28 nm chips be used for? Embedded systems?

 

[theorist9]

According to this report at least, the Arizona Fab 21 will be for 5 and 4 nm, with Apple being one of the customers.

"According to industry sources, TSMC's Fab 21 will initially produce N5P and N4 processes in the N5 family. TSMC's N5P process has started mass production last year, and the performance is 5% higher than that of the N5 process, and the power consumption can be reduced by another 10% under the same computing performance. TSMC's N4 process is optimized and upgraded from the N5 process, which can further improve performance, power consumption, and density. Major customers including Apple, Qualcomm, Supermicro, and Huida all plan to cast wafers at Fab 21."

But as you said, the Taiwan fabs are more advanced, with the 3nm processes there to be used for the much-awaited M2 chips. It sounds like the Japan fab is for automotive and imaging chips.

The info. that it will be used for 5 and 4 nm could be more recent than the 5 nm reported earlier. But the key big-picture point remains the same: In 2024, when this plant is open and producing with 5 nm & 4 nm processes, Apple's M-series and A-series chips should be on 3 nm, so it seems unlikely this plant is intended for those devices. When it says Apple is a customer, I wonder if it's for Apple's work on self-driving cars, since it was mentioned that assisted driving would be one of the markets for this plant's production.

But as you said, the Taiwan fabs are more advanced, with the 3nm processes there to be used for the much-awaited M2 chips. It sounds like the Japan fab is for automotive and imaging chips.

The M2 is (mostly likely) going to be launched this year, and 3 nm won't be available that soon. Thus the M2 is rumored to be using TSMC's 4 nm process. 3 nm will probably need to wait for the M3 (or M4, if there are delays in getting 3 nm running at scale).

Yes, I think I recall Sony's imaging business as one of the customers for the Japanese 28 nm chips.

First M2 Macs Expected to Launch Later This Year Using TSMC's 4nm Chip Process

Apple plans to launch a series of Macs with M2 chips based on TSMC's 4nm process later this year, according to Taiwanese publication DigiTimes....

www.macrumors.com

 

[ian87w]

Almost all of the people running around publicly saying China is a huge military threat to Taiwan are selling military equipment to the Pentagon.

Nailed it.

 

[svish]

Good seeing more factories coming up outside China!

 

[Joeasy]

I agree with your comments about tsunami and earthquake risks being very low, but then you lost me. Especially this comment: "Aparantly most of the ships have to bypass singapore." ?? The Port of Singapore is literally the busiest transshipment container port in the world, and 2nd busiest overall.

Yes by pass means they need to use our port lol

 

[theorist9]

I agree with your comments about tsunami and earthquake risks being very low, but then you lost me. Especially this comment: "Aparantly most of the ships have to bypass singapore." ?? The Port of Singapore is literally the busiest transshipment container port in the world, and 2nd busiest overall.

Yes by pass means they need to use our port lol

Nope, "bypass" means to detour around without stopping. You're laughing at the guy, but in fact he's the one that understands the word.

 

[Jumpthesnark]

The M2 is (mostly likely) going to be launched this year, and 3 nm won't be available that soon. Thus the M2 is rumored to be using TSMC's 4 nm process. 3 nm will probably need to wait for the M3 (or M4, if there are delays in getting 3 nm running at scale).

From the same article:

"As for the progress of TSMC's 3nm N3 process, it will enter mass production as scheduled in the second half of the year, but it will not have significant revenue contribution until the first quarter of next year. Equipment manufacturers pointed out that TSMC N3 will be produced in the fourth to sixth phases of Fab 18. The monthly production capacity of the first phase is about 30,000 pieces, which is expected to be used to produce M2 series processors for Apple. As for the enhanced N3E process, it is expected to enter mass production in the second half of next year, and will be used to produce the A17 application processor on the iPhone 15 and outsourced orders for Intel's central processing unit (CPU) chip blocks."

The article is from last month, so when they say the 3 nm process will enter production in the second half of the year, that means this year.

But as we all should know by now, stories that predict the future by saying X will happen by X date should be taken with a large grain of salt. Even on a rumors site. Believe it when it happens, and not a moment before.

 

[theorist9]

From the same article:

"As for the progress of TSMC's 3nm N3 process, it will enter mass production as scheduled in the second half of the year, but it will not have significant revenue contribution until the first quarter of next year. Equipment manufacturers pointed out that TSMC N3 will be produced in the fourth to sixth phases of Fab 18. The monthly production capacity of the first phase is about 30,000 pieces, which is expected to be used to produce M2 series processors for Apple. As for the enhanced N3E process, it is expected to enter mass production in the second half of next year, and will be used to produce the A17 application processor on the iPhone 15 and outsourced orders for Intel's central processing unit (CPU) chip blocks."

The article is from last month, so when they say the 3 nm process will enter production in the second half of the year, that means this year.

But as we all should know by now, stories that predict the future by saying X will happen by X date should be taken with a large grain of salt. Even on a rumors site. Believe it when it happens, and not a moment before.

The language is a little confusing, which may be due to the Google Translate autotranslation you appear to have used. For instance,c I believe the "phases" refer not to temporal phases, but to different facilities at Fab 18. I.e., at Fab 18, there is a Phase 1 facility, Phase 2 facility, etc. See: https://pr.tsmc.com/english/news/1951

Having said that, when they say "it will enter mass production as scheduled in the second half of the year," they might mean low-volume mass production to test the production—particularly since they say "it will not have significant revenue contribution until the first quarter of next year." So it may be they're saying that 30k/month production won't be until next year. If so, that reference to M2 might be a typo—they might mean M3.

See, for instance:

TSMC on Track to Start 3nm Chip Production in Second Half of This Year

Apple chipmaking partner TSMC says it will be ready to move its 3nm chip process to volume production in the second half of this year, putting it on...

www.macrumors.com

"Whether or not it goes down the same adoption route, Apple is expected to release the majority of its devices with 3nm chips fabricated by TSMC in 2023, including Macs with M3 chips and iPhone 15 models with A17 chips."

So before we discuss whether their predictions are right, we need to understand what they actually mean to be saying!

And we can also revisit this when the M2 chips are actually released .

 

[CarlJ]

TSMC should open manufacturing facilities in the US and Europe.

Agreed that they should not concentrate all their facilities in one place, but the article literally says they have a manufacturing plant in Washington, design centers in California and Texas, and they're building a new plant in Arizona that can manufacture the latest 5nm chips. You did read the article, right?

 

[theorist9]

Agreed that they should not concentrate all their facilities in one place, but the article literally says they have a manufacturing plant in Washington, design centers in California and Texas, and they're building a new plant in Arizona that can manufacture the latest 5nm chips. You did read the article, right?

The new plant is AZ is not for their most advanced process. It's slated to open in 2024, and will be for 4 or 5 nm chips for the auto industry. Their most advanced fabs should <= 3 nm in 2024. They don't open any of their most advanced fabs in the US. Those are probably (and not surprisingly) confined to Taiwan

 

[jav6454]

The new plant is AZ will not be for the latest chips at the time it opens. It's slated to open in 2024, and will be for 4 or 5 nm chips for the auto industry. Their most advanced fabs should <= 3 nm in 2024. They don't open any of their most advanced fabs in the US. Those are probably (and not surprisingly) confined to Taiwan

Well, there is an issue with that. A fab requires lots of water to operate due to facility cooling and fab/wafer cleaning cycles.

Taiwan is undergoing a drought similar to what the Southwest is undergoing. TSMC most likely will develop <3 nm and 4-5 nm fab processes in both areas to try to keep options in manufacturing.

 

[theorist9]

Well, there is an issue with that. A fab requires lots of water to operate due to facility cooling and fab/wafer cleaning cycles.

Taiwan is undergoing a drought similar to what the Southwest is undergoing. TSMC most likely will develop <3 nm and 4-5 nm fab processes in both areas to try to keep options in manufacturing.

What would water usage have to do with TSMC's decision to confine their most advanced fabs to Taiwan? I suppose that smaller processes might require a higher purity of water, which could mean more rejected water from an additional filtration step, but is that really what's going on here?

 

[jav6454]

What would water usage have to do with TSMC's decision to confine their most advanced fabs to Taiwan? I suppose that smaller processes might require a higher purity of water, which could mean more rejected water from an additional filtration step, but is that really what's going on here?

You said it. To reach the purity levels, fabs consume excessive amounts of water. If TSMC can't ensure their water demand will be fulfilled in Taiwan to ensure production of wafers, then they have to diversify their manufacturing sites. Otherwise, they'll end up cause a whole mess for the tech world in general and not to mention contractual penalties.

It seems crazy how water right now is the one thing no one is paying attention to when it comes to electronics and the manufacturing process when it's the most critical of it all.

 

[theorist9]

You said it. To reach the purity levels, fabs consume excessive amounts of water. If TSMC can't ensure their water demand will be fulfilled in Taiwan to ensure production of wafers, then they have to diversify their manufacturing sites. Otherwise, they'll end up cause a whole mess for the tech world in general and not to mention contractual penalties.

It seems crazy how water right now is the one thing no one is paying attention to when it comes to electronics and the manufacturing process when it's the most critical of it all.

Ah, but I thought you were responding to my comment that TSMC hasn't chosen to open up any of their most advanced fabs here—only those using larger processes. I don't think that's because of water usage differentials between, say, a 3 nm and a 4/5 nm plant. Certainly, the fact that they're opening up a plant in Arizona, of all places, means water usage didn't factor heavily into their decision—though it seems it should have:

Water shortages loom over future semiconductor fabs in Arizona

Water and semiconductor shortages come to a head in Arizona.

www.theverge.com

 

[jav6454]

Ah, but I thought you were responding to my comment that TSMC hasn't chosen to open up any of their most advanced fabs here—only those using larger processes. I don't think that's because of water usage differentials between, say, a 3 nm and a 4/5 nm plant. Certainly, the fact that they're opening up a plant in Arizona, of all places, means water usage didn't factor heavily into their decision—though it seems it should have:

Water shortages loom over future semiconductor fabs in Arizona

Water and semiconductor shortages come to a head in Arizona.

www.theverge.com

Just to reiterate, I meant TSMC will likely diversify their manufacturing of node processes across several sites, not just Taiwan.

Yes, it's crazy so many tech manufacturing is opening in AZ given the water shortages on the Colorado river and how AZ is the first one in line to get their water supply cut down. However, if TSMC can play a balancing act between sites, they could come out unscathed.

That said, another option would be to have waste water reclamation systems installed (expensive) to use as little water from the tap as possible. I believe San Antonio has a waste water grid for stuff like irrigation and watering parks/gulf courses.

 

[theorist9]

Just to reiterate, I meant TSMC will likely diversify their manufacturing of node processes across several sites, not just Taiwan.

Yes, it's crazy so many tech manufacturing is opening in AZ given the water shortages on the Colorado river and how AZ is the first one in line to get their water supply cut down. However, if TSMC can play a balancing act between sites, they could come out unscathed.

That said, another option would be to have waste water reclamation systems installed (expensive) to use as little water from the tap as possible. I believe San Antonio has a waste water grid for stuff like irrigation and watering parks/gulf courses.

Ah, you meant that the water shortages in Taiwan would force them to start to site some of their most advanced facilities outside of Taiwan. My guess is no. Of the 16 fabs they now have in Taiwan, only 2-3 at a time produce the most advanced chips. So if water is an issue, they have the flexibility to move the older processes offshore, keeping the few cutting edge plants in Taiwan, and thus keep their water use approximately unchanged. I think that, if they do decide to open up a cutting-edge plant offshore, it won't be for water use reasons.

 

[jav6454]

Ah, you meant that the water shortages in Taiwan would force them to start to site some of their most advanced facilities outside of Taiwan. My guess is no. Of the 16 fabs they now have in Taiwan, only 2-3 at a time produce the most advanced chips. So if water is an issue, they have the flexibility to move the older processes offshore, keeping the few cutting edge plants in Taiwan, and thus keep their water use approximately unchanged. I think that, if they do decide to open up a cutting-edge plant offshore, it won't be for water use reasons.

Agreed as that is one way to look at it.

 

[chengengaun]

How is there possibly any room in Singapore for a manufacturing plant? It's ~280 sq miles, that's as big as Lexington, KY in the US, which is the 30th largest city by size. However, Singapore has 5.6MM people (between NYC and LA's population), and it's full up to its borders.

There is plenty of room to build plants in Singapore - through urban planning, land reclamation, stacking, going underground, etc. The two oil refineries of ExxonMobil and Shell are among the largest in the world; the Tuas sea port is reclaimed from the sea and will also be among the largest in the world when completed in 2040 (that's the kind of time horizon when it comes to planning); Changi Airport can handle 90 million passengers annually and has three 4,000m runways; Rolls-Royce builds its Trent engines in its Singapore plant; and Singapore does have a thriving semiconductor industry going back decades.

Singapore is already a major manufacturer of integrated circuits. Not the leading-edge very small scale circuits (e.g., 5 nanometre), but less compact devices that are used in their billions in domestic appliances, cars, industrial machinery, and so on. As the article suggests, moving TSMC’s production of this type of IC to Singapore would free capacity in Taiwan for other types of device.

Singapore is an extraordinary success story. It wasn’t quite a 3rd-world city in 1965 - more ”2.5”, if you like - but today it is decisively 1st world. It’s ranked as an ‘Alpha+’ Global city, along with Beijing, Hong Kong, Shanghai, Dubai, Paris and Tokyo; only New York and London are ranked higher (‘Alpha++’). Nor is it an oil state, although petroleum refining is one of its key industries. In fact, it has no natural resources at all, other than its location; it imports everything, including 98% of its food and >50% of its water. Its key resource is its people, and that’s been enough to propel it into the top tier of cities and states in the world.

Singapore went into the second phase of industrialisation manufacturing integrated circuits in the late 1970s/early 1980s, which was quite remarkable considering that it is an entrepôt economy with no industrial tradition like Germany and the UK. The severe lack of water supply prompted the development of NEWater, which was wastewater treated using reverse osmosis and filtration; the purity of the water is desired by semiconductor fabs. Apple used to manufacture its Macs in Singapore, and still has a major presence here.