Intel, TSMC agree: CHIPS Act needs more subsidies to cover losses. The engineering supply problem.
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- Опубліковано 14 кві 2024
- While most US semiconductor companies design chips to be built by foundries such as TSMC, Intel has its own foundries in the US. But these fabs are causing huge losses for Intel.
The CHIPS Act is a lifeline Intel, and offered huge subsidies to companies like TSMC and others to build semiconductor manufacturing centers in the United States. But the CEO's and industry insiders all know that their losses will begin anew the day after the subsidies end. And these companies are already backing off their ambitious growth plans begun under CHIPS, delaying them, or walking away.
The key flaw is manpower. Semiconductor manufacturing demands top talent in electrical and materials engineering, process design, and project management, and a score of other top-paying fields. We simply do not have enough of these graduates to go around to satisfy the human resources demands of the industries we've already got, and Asia does.
This reality will always ensure that US-made semiconductors will stay expensive, relative to Asian foundries, and drive up engineering shortages in our other industries.
Resources and links:
Addressing the engineering talent shortage
www.bcg.com/publications/2023...
Intel and Industrial Policy in Action: The U.S. chip maker now says it will need even more subsidies, as it loses money on its foundry business.
www.wsj.com/articles/intel-ch...
Demographics of electrical engineering jobs
www.zippia.com/field-electric...
Shortage of electrical engineers to power labor market growth: Kiplinger Economic Forecasts
www.kiplinger.com/business/sh...
US-made chips cost 50% more
www.citigroup.com/global/insi...
TSMC delays second Arizona chip factory
www.manufacturingdive.com/new... - Наука та технологія
US capitalism is drowning in the mire of its own contradictions
Gov’t managed Lassiez faire, the contradiction that is American centrally planned “capitalism.”
This is a bottomless pit.
They are going to milk the govt to all its worth.
Subsidies, I can, you cannot 😂
Another stunning hypocrisy of the US. 😂
The US has long subsidized its industry. But as before they will try to play on words. Like derisking and decoupling then overcapacity.
They are the best word smith. For example: They take pride in “ strategic ambiguity” which is a euphemism for bad faith dealing.
Yes all acts are equal some more equal than others. It all boils down to who's side are you on really. The chip act and all that precedes it are subsidies by another name. Hypocrites and bully boys.
The US subsidy money comes from China purchasing Fed bonds. If not enough money, Janet Yellen will go to see Xi Jinping for a loan
It gets worse when they start blaming others for own problems.
If TSMC's factories employ US workers, then no amount of subsidies will be enough.
China can’t subsidise their industries
But EU and USA can
What kind of world are we living in 😅
The same world we have always lived in. It’s neo colonialism, colonialism while denying colonialism
the us govt has no problem subsidizing arms manufacturers , but hesitates at this. Stupid.
No subsidy for arms industries. No elected officials. No money from Aipac for your election.
Stupid politicians knew nuts on business !!!
The US is subsidising the chips industry. The issue is the industry wants more.
@@Zerpentsa6598 more the industry is so incompetent or lack of chain supply that its not enough
Chips Act is like putting sand bags after the flood water entered your house. 😂😂
also shifting the sand from the poor folks to give to the wealthier Capitalists
What is the use of high end chips if we don't have the capacity to absorb the supply of these chips? Sell chips at a huge mark-up so they can survive. But for how long? Once China makes their own chips, China will never buy from them again!
That’s their own medicine
It's ok the us administration will buy them from the allies manufacturers and store them away. For money they will keep the printing press running overtime. They only need ink and the paper to print the dollars needed, easy.
Chinese have a saying “ when you hurt others you are only hurting yourself in end”, some people never learn and never change. 🥺
China is sanctioned so will not repeat dependency on USA
Your engineers are in the weapons manufacture/ bioweapon labs at Fort Dietrich or
It's like renting a top notch kitchen or a simple practical one to make the same exact soup
The difference is in sweet grapes and sour grapes.
And you forgot to add that about 70% of chips are used by China, and so will not be selling to that market. I guess could put massive tariffs on imported chips, but then how do you tax everything that used chips like washing machines. And then everything in the US will not be competitive on the world market.
The US wants to make chips in the US but won't sell them to the country that uses most of the global chips. So, who are they making the chips for? You cannot make them cheaply enough if you don't have the volumes. The usa is stuck between a rock and hard place.
Rightly deserved for their own doing.@@woodworking406
I like to put ketchup on chips. Yummy
@@herryso6238😮 gravy is better
China actually makes most legacy chips used in consumer electronics, and some advanced ones. By 2027, the government intends to wean China from most western made chips.
Safety comes first, its not safe in the US anymore.
With US feeling so insecure with a rising China and citing “security reasons” to restrict China of buying US chips, I am wondering who will be the buyers once those plants are being set up eventually.
I'm also curious. If they tried to sell it outside of US and EU they need to reduce the price for it to stay competitive with China own Chip, if China starting to sell it outside it's own country.
Intel is having problems producing chips with nodes smaller than 7nm. I bought a I7-10700k cpu back in 2021, it was a 14 nm node based cpu, and I can tell you that it runs hot. When I use it to play games or CAD, the temperatures go up to 90 ° C to 100 ° C. Operating under such temperatures can reduce the lifespan on the processor. The I7-4790k processor I purchased in 2014 is a 22 nm node based CPU, and it heat is manageable on it.
AMD uses TSMC to produce their chips, and their latest CPU is based on the 5nm node, while Intel's latest I7-14700K uses a 7nm node with multi patterning. The I7-14700K cpu has heat issues. AMD's chips has smaller transistors, so they emit less heat, and they are more powerful. They can put in smaller computers, and thinner laptops.
Intel is losing money, because they can't produce good processors.
Over time, both Intel and AMD is in trouble. There is a concerted effort to move home computing to RISC platforms. And China is derisking as well and creating their own tech ecosystem.
@@olderchin1558 X86 is reaching its limit. The problem RISC processors had in the past due to expensive RAM chips. Today, that is not a problem. RISC processors have less transistors, but they require more ram. This is why RISC processors generate less heat, and they are used in mobile devices/microcontrollers/SBCs.
RISC-V looks promising. China is developing RISC-V, and there are many applications for it. It can do everything ARM based RISC processors can do. Plus, it isn't proprietary, so there will be no licensing fees.
@@Ace1000ks19751982 I have a slightly different view. Both CISC and RISC uses the same chip tech and both have no less the number of switches/gates. CISC processors will have slightly more redundant circuits.
Even x86 can be used in low power devices, most of the power saving is in the standby state implemented by the processors. Because of legacy design elements needed to maintain compatibility, x86 will have some power burden.
RISV is still under development and is good for mainly IOT applications today. It still lacks industry support in terms of developers and development tools. Software development depends a lot on the work done before it. What would push it further along is China banning US chip ecosystems like the US and EU banning Huawei equipment. China has a number of indigenous CPU architecture but lack the confidence to make a change, the private sector still drives the ecosystem. Processor types or architecture don't really make much difference in systems development except the time penalties for developing a novel one.
I grew up working on the first microprocessors, specializing in assembler programming and OS troubleshooting. So I am kind of familiar with computer architecture and systems.
@@olderchin1558 CISC has more instruction sets, RISC has less but highly optimized instruction sets. CISC requires a much more complicated on chip architecture than RISC. CISC does have its advantages of being able to execute more instructions than RISC.
I never programmed any computer using assembly language. The only programming languages I used were high level programming languages, like BASIC, Turbo Pascal, Batch Programming, C++, Javascript, and C#. Before they had high level programming languages.
Assembly language is a low level computer programming language, and it requires you to know machine code instructions. That must be very difficult to learn.
Developing a new CPU instruction set is going to be a daunting task. I am sure China can achieve these goals. They produce about 4.7 million STEM graduates per year. If enough money and talented people are funneled into it then those goals can be achieved in the future.
The 14900K could easily reach 450W, which is the TDP power of 4090
It isn't only cost of engineers that drives up cost of manufacturing in the US. It is the labour laws, insurance, cost of water and electricity, transportation, taxes, litigation.......
The government money is necessary to help the company to start the business, but eventually the company needs to sustain its operation in the future. Without a large market, it seems to be difficult to do so.
Competition from China can crash them if they don’t work with Chinese.
Not seems, definitely so.
SMIC produced 7nm for Huawei Mate 60Pro. So foreign chipmakers will lose 7nm and beyond forever.
the sanctions on Russia cleared the market for Chinese EV and auto makers. Chinese automaker moved in partner with Russian counterparts. German, Japanese, and SK will have a difficult to re-enter Russian market again.
@@willengel2458the west will lose more market in the long run american sanctions
State-subsidized TSMC and Intel 😅
TSMC has them by the balls, they should ask for a blank check
it is the other way around. you heard about TSMC, but not Samsung. it was puppet Gov. Tsai handed TSMC on a platter to US with engineers and everything. it was the younger Chang who asked Morris Chang to come back to Taiwan to setup the foundry with government funds. it won't end well for TSMC.
Intel got the bulk of subsidies. TSMC received some but with conditions attached, share in the profit.
things aren't what you think.
the work ethics and values are different too.Asian attitudes towards work are probably better.
Better? is an underrated word...
Americans enjoy higher human rights.
Americans will not give up their human rights because of a salary that is not very high (although it is high for Taiwan people).
@@jogana6909 Americans enjoy higher human rights, like racial segregation, like the lynching of minorities, like the Japanese camps etc etc? So much so that if I cited others I would be censored.
@@jogana6909 And we all see how Americans enjoy higher human rights in Gaza.
Unions are are already disputing with the TSMC factory in Arizona, before a single chip has been made. 😂
Union represents the voters. Don't forget that Biden also supports Union.
Keep it up !!!
Good stuff. Watching that subscriber count climb. I found you when you were at 3K.
Also the challenge is finding the engineers that excel in these highly specific fields. The talent pool goes down even further. And is difficult to turn instant gratification craving social media kids into future engineers. Being doctors, lawyers, engineers and other highly skilled professions have long been engrained into the Asian culture is being a good thing to strive for. My mom was so worry about me going into design for my post secondary study. She thought I'll never be able to make a living. This is an economic challenge as much as a cultural one.
TSMC is successful because it leaves no stones unturned in upping its yields in chips. For instance, It went out of its way to filter the most purest water you can find on earth, with purity down to 1 part per million, or something like that! Dedications like this i must say, can only be found in Confucius countries such as China, Taiwan, which is part of China, Japan, South Korea, etc. In other cultures, engineers will probably give up half way through as they see no immediate ROI. Confucius cultures always consider the big picture first, process ideas from the top down and then build from the ground up. There is a Chinese saying that goes: 10年磨劍 or 10 years to polish a sword. Most cultures will see it as a waste time, but not to the Confucius cultures.
Americans believe that human rights are the most important.
Americans can give up any manufacturing industry for human rights.
The Americans and Europeans do not have the stomach for this kind of work. Their work culture and ethnic is not the same as those in East Asia. They want work life balance. Working in Semicon Fabs is hard and grueling work. So it isn't just an issue with the lack of Engineers. If you look at Americans, a lot of them aspire to be celebrities or tiktok content creators than wanting to go into STEM fields.
china is beating the American hedgemony without firing a shot...
It just amazes me that “The Great Leap Forward “ is happening in the US wrt chips manufacturing. Nothing good is going to come out of it
This is like trying to grow trees on a boulder without any idea of how to grow weeds on the ground sanction is the only thing we are good at today 😢😢😢
Interesting. So Russia is #4 (right behind the US) and Iran is #5 in STEM graduates (almost double Japan). Russia I can understand, but Iran is a surprise.
U$ is still #1 in TRANS graduates
Why is Iran a surprise?? Oh, right, you are a believer of Western propaganda... my bad.
you probably still believe USA is the greatest country in earth ever
Why the surprize? Persia was always a reference in science since ancient times. They put great emphasis on it culturaly.
Fab work is also considered niche within engineering circles in the sense that it takes a certain type of personality to do the work well. The number of individuals with the right amount of discipline is probably very few
You have a great channel and the real deal, I was wrong...thank you for the accurate content!
He is telling the truth, he loves his country and sees the reality as it is. I would have done the same in his situation.
I dumped my INTC when it hit $50 several months back. It had been trading sideways to down on me since I bought it in 2019. Gelsinger is a nozzle IMO, and to me the fab business makes no sense. Especially when you consider DEI focused American workforce, energy prices in Europe and hostilities in Israel. YMMV
Semiconductor chip is not the end product, the business model is B2B which means there are system companies use the chips to make things customers buy or use, like control chips in electric cars or on missiles. So America ask TSMC/Intel to make chip in USA, seems can not guarantee the national security. Even USA brings the chip manufacturer back, it still does NOT have the system companies who assemble things together to make things work.
TSMC has a labor intensive 24/7 testing and packaging in Taiwan, 1st shift is Taiwanese, 2nd and 3rd shift are import labor. they also have such operations in Penang, Malaysia.
the best Intel can come up with is 7nm, whereas TSMC and Samsung are at 3nm.
Japan was at one time top dog in semi-conductor. the empire took it away and that in no small part contributed to Japan's lost decades among other things.
Cost 8-10 times more? 1.5 to 2 times is about right. Reality is that productivity.
If the bleeding cannot be stopped and the patient cannot make his own blood, transfusion could still not be able to save the patient.
Excellent and precise comments, avoiding any unnecessary phrases to prolong the time.
There are more young and talented scholars realized that engineering career is hard and speculative investment make more easy money, moving up the social ladder. Forgetting how and why their own country became prosper and strong in the first place.
Great breakdown...Thanks for your time and energy in making these talks.
Great segment. Thanks
i love this channel
Decade ago I enrolled in electrical engineering after move to Australia, my friend moved to US and do finance degree. The first response I tell him I was doing EE he claim the future for EE is no good.
What is good depend on perspective.
Your friend probably into his first ten millions nest whereas you probably still struggling to figure out the solid batteries for EV.
because he went to America
On top of the shortage of engineers, wonder how TSMC going to tackle the labor union monster when it launches production 😂
Lazy American workforce. TSMC should have built their US based manufacturing plant in Mexico.
TSMC will cry to the US government to get more subsidies to pay US workers.
Or the water source problem. Don't see much details about it. This industry is water hungry.
When China is on par with other semiconductor manufacturers, which is only a matter of time, China will also use subsidies and their cost will be 50% of the US subsidized price...🤣
You really believe in the nonsense about "China subsidy" keeps Chinese manufacturers going😂😂. Where the heck does China get the money from.. issuing debts like the USA? Please engage brain.
@@hclau218 There's nothing wrong with subsidizing nascent technologies to promote certain industries for economic growth, environmental concerns, or even self-reliance. The problem with the US is that they're giving subsidies to mature profitable companies to move production to the US, which completely distorts the semiconductor market.
@@hclau218 China already subsidized the semiconductor industry from a 1.2 trillion technology budget allocation over the next 10 years. This information is readily available from the Chinese government. They're called government guidance funds [政府引导基金]. I've engaged my brain...🤣
@@DailyBeatings Chinese Govt is not handing over money to the tech companies, unlike the USA - straight up handing money to large corporations. The so called "China subsidy" is a twisted display of Western Spin machine. Please examine the form and expense of the so called " subsidies". Every Govt has the responsibility to provide strategic development plans for the country. That is the function of Govts, unlike the USA that thinks Govt is for the rich and for waging wars. Yes, please engage brain and look at the details. (The devil is in the details)
Volume is a bit low in your videos. Hope u can boost the volume a bit thanks!
Bravo...again. Helping America to wake up.
'Overcapacity' of Intel and TSMC
i dont hear other countries crying about this US subsidies 🤣🤣🤣
Wasting time !!?
Thanks
If everything is a national security issue, then nothing is.
Best American talents prefer to work in Silicon Valley and Wall Street rather than get stuck in a desert in Arizona for a lot less money. I don't blame them. Who would? That's what comparative advantage in the global economy means. Asia is good at certain thing and America is good at other things. Now their politicians want to artificially change economics.
Wait arizona desert? Doesn't chip industries requires billions of gallons of water?
To get to the required purity one already waste tons and tons of water... is there a source big enough?
Wouldn't that put pressure on potable water sources used for human consumption?
Nothing screams "free market dynamics" like sanctions and susbsidies.
🇺🇸 needs better internal politrix.
Subsidy-Dependent in America....green-energy schemes, hi-tech, weapons, MIC, EV's. etc etc etc
Obviously we will never hear such information from DC and why should the lucky companies voice a complaint as the $$$ will just go - well, I assume stockholders (??) or a bunch of CEOs and associates for doing such a fantastic job in helping DC tell lies.
Europe is whining about Chinese government subsidy to Chinese EVs. But Europe is so quiet when the United States government heavily subsidizes its semiconductor chips. A stark example of Hypocrisy.
US companies keep making mistakes after mistake. Intel had the original opportunity to buy EUV lithography machines from ASML at the onset, as TSMC and Samsung did. By not starting this manufacturing process, it got severely left behind by the Asian companies and now can’t catch up without massive amounts of capital.
I'd like some perspective on how much these chips cost. Are we talking 20 bucks or 200 bucks?
The new plant buil the better chips 4-7 nanometer. So hundreds of dollars, not $10's of dollars.
@@misty671 that's manageable. build em, raise the price. The problem we have in this country is that we think we need to export all this shit.
@@theprofessorfate6184LoL, in order to make these chips at hundreds of dollars, it needs 3x the volume. If not, let's say the company will never make a penny before the equipment needs replacement and repairs.
Oh, and the point of not selling them chips is so they can't have it.
They can make them at the price point the US makes them at the volume you are suggesting without US technology.
So go ahead with your plan
Huawei building own
Lithography factory.
“Huawei is reportedly building a semiconductor equipment R&D center in Shanghai. According to a report from Nikkei Asia, the center's main focus will be building lithography machines, the equipment necessary to produce the most advanced 3nm and 5nm chips.”
What they should do is create a special economic zone for certain inductries where red tape, taxes, labor costs etc are excessively reduced or eliminated. Any one living in that zone can only be in that zone. People living out of that zone can not live there. If they want to work and live there they have to follow its rules and accept their lower wages.
The billion-dollar question is: who do those Arizona factories sell their chips to? If not China, then who?
Nah. tSMC already knew this. They went because Vito made them an offer they cannot refuse.
How much does it cost for an engeneer to get an engeneering degree in the USA. How much does it cost for a student to get a degree in Asia? How come studying in the US has become more expensive over the years?
Colorado river is drying so the chips mfg who needs lot of water need to fight with residential and farming use.
This is why having free or cheap government-funded higher education, which allows the government to decide where to add extra slots, is such a strategical asset.
If the US wants more electric engineers five years from now it has to pray that its privately-owned universities will expand their engineering courses.
If China wants those extra engineers it just needs to ask the universities it controls to add slots for Chinese students, and perhaps expand scholarship funding a bit.
Unfortunately companies never primed the pump at engineering colleges because it was cheaper to bring in Indians and train them on H1Bs than to hire USA new grad engineers and now we are paying the price for their short sightedness and the government’s violation of the law of unintended consequences by allowing the offshoring of manufacturing to China and elsewhere.
Heeey, I thought US said China subsidies China company to have unfair advantages! How come they can have 50+ B subsidies??
Does US population demographic need to be 70-80% Chinese to be able to reach and keep reigning on semiconductor manufacturing and design? Chinese love studying and doing STEM.
Really enjoy your commentary, we in the West have a warped view of what’s going on world wide. Even with a new administration next year, I am doubtful it can be turned around.
Built Chips plants in USA- but cannot sell to the largest chip market in the world- there is no profit
Why can't the Americans borrow more money from the Chinese?
to boost their domestic Semi conductor research and development, as well as manufacturing off shores, i.e. China.
to offset the cost of R&D and manufacturing Chinese designed chips?
wouldn't that be a win, win for both TSMC American and China?!
Not ever. China continues to rise in production of chips and eroding the high end . Last year, China produced almost a trillion chips and production keeps rising as China increases the number of foundries and expands existing ones. Exports accounted for about a third of that production. China is said to be testing their own version of EUV class lithography machine which will be open for production at the end of 2024. If true and China can produce chips easily below 5nm, the game is over for US fabs. Today, without China in the picture, as you have stated from TSMC experience in their fab in Oregon, costs are 50% higher than in Taiwan. If China is able to compete directly below 5nm, even Taiwan will be squeezed and so will South Korea. China is not only working on expanding fabs, but it is also expanding their ability to produce the production equipment and chemicals needed to produce these semiconductor chips. At the end of last year, Huawei announced that they had produced a dominantly domestic supply chain up to 14nm and were chipping away at increasing its high end production.
I like your Chanel.
I was an anti-globalization protestor back when that was a thing. When I was about to drop out of school my parents convinced me to study economics, where I had to listen for hours and hours to rationales for how free trade is good for the world and subsidies only cause inefficiencies. Now reading the news is so frustrating for me. So much youth and money i spent studying crap I always thought was propaganda, and now the official story has completely changed but nobody admits that it's changed.
Currently most of the best semiconductor foundaries are in Asia. Taiwan, Korea, Japan and mainland China.
How about 1nd!a, the global super power of Asia??
Nice joke of the day. They can't even build a steel foundry with the Koreans due to all sorts of bureaucratic hurdles and problems. Search POSCO India for the details.
" 1nd!a, the global super power of Asia" -- it would never be by the time when this planet is no longer inhabitable for any living creatures, while all non-1nd!an humans have successfully relocated themselves along with all other plants and creatures to another planet.
Well done, the US. Anyway, with 34 trillion debt, a number of billions lost in chipact is a small drop in the ocean. But it manages to draw Americans' attention to the wrong place.
There have to be more reasons why they can't make money in the US besides the cost of engineers. Cost of CEO's and VP's? Minimum return to stockholders? Cost of healthcare? Why doesn't the US regime start looking into the details and start addressing the root cause of the issues if these chips are so important? Oh yeah, forgot, Ukraine and Gaza.
Intel is gonna need an attritional $20 billion to have a legitimate chance of catching up to 2nd place. The chips act started with $50 billion. A thousand fingers in that pie cut Intel down to what’s now inadequate funding to get the job done. ☑️
Lol murica's sanction needs bailing out. Own goal!! 😅😅 problem is that its a short term fix. Stupidity redefined by Murica.
But “the trade war is so easy to win”. One thing you can absolutely count on is how stupid our government politicians are.
Let Sora generate enough engineers for them!
Add to that mix that intel is actually fabricating its most high end CPU cores on order from TSMC. What we are talking about here is the fabrication part of intel, which it is trying to offer as a service to 3-rd parties as much as TSMC and others are. However it should be noted that this isn't exactly the first time intel is attempting that. At least since over 10 years they try that and can't succeed.
In 2001, congress blocked ASML from buying the last US company, Silicon Valley group, that owned some lithography technologies, Intel lobbied congress to have the sale go through.
Now our govt keeps giving more incentive to Intel to bring the mfg back.
Isn't that subsidizing the us manufacturers ? Same thing they have accused china of doing ?
Where's the skilled labor force coming from to work in these foundries? The U.S doesn't have the educated youth to work in these technical fields, including the trades. The U.S simply cannot reindustrialize.
US should stop subsiding things like sugar or countries that hate them and focus on things that help society...
😱🇺🇲 have failed to contain 🇨🇳‼️✌️🙏🙏🙏🙏🙏🙏🙏✌️
LOL U$ contained itself, without China needing to do very much!
But but but... Good old Uncle Sammy can print money out of things air and solve everything... Right?
I haven't heard of this new Texas Semiconductor Manufacturing Company. . . . Is that the rebrand of Texas Semiconductor Tech?
Taiwan not Texas
@@chestnutridge4187you can't read sarcasm?😂
Intel can’t find enough competent graduate engineers to design their chips.
Shared
👍
Samsung needing US $40 billion, what are they building
🇺🇸Kevin, We suck at strategic planning.. driven by our “election cycle” and “quarterly” imperative. We should re examine our core principles and revise these.💰
But, of course, they do. Gotta milk that cow till it's dry.
American prefer Arts subjects than STEM subjects.
Not everyone is cut out for STEM.
The southern border invasion is most important issue
Revolution begins with Resistance
#WEFResistance
#MSMResistance
#WallStreetBigPharmaResistance
Free money..got 10% each com sub..politicans extra incomes..
Doritos should ask US for funding from CHIPS Act. Doritos need less funding to be profitable,
Subsidy = A recipe for disaster…..
By 2028, Chinese chips might cost less than half of that of American made.🤑🤑🤑🤑
Wait so the chip act is going to way of build back better? 🤣😂
subsidies are not sustainable and america has to borrow money to give money - wow!
Just get more potatoes from McDonald's. Cheap Chips, yum yum
I want to open a microchip company in Germany, my invention comes from German language.
Story of America , too little too late . But it's still No .1 in Propaganda and starting conflicts .
The US can't compete with the Asian countries. How long can the US government keep up with the subsidies?
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