US Government Approaches the Big Three—TSMC, Intel, Samsung—to Build US Chip FactoriesMay 12, 2020 by Gary Elinoff
Intel enthusiastically agreed; TSMC—not so much.
The Wall Street Journal recently reported that the US government is in talks with three chipmaker giants—Intel, TSMC, and Samsung—about building more chip factories in the US. These talks come at a time when the government is increasingly pushing for self-sufficiency in critical semiconductor technology.
In a Reuters article on the topic, Bob Swan, Intel’s Chief Executive, expressed interest in building a specialized factory—a foundry—in partnership with the Pentagon. A foundry is the factory facility where silicon wafers are transformed into hundreds of identical copies of a given chip design.
Intel spokesman William Moss stated that to achieve this end, the company is now in discussions with the United States Department of Defense to improve domestic sources for microelectronics and related technology. According to Swan, “This is more important than ever, given the uncertainty created by the current geopolitical environment.”
Intel facility. Image used courtesy of Reuters
Taiwan Semiconductor Manufacturing Co. (TSMC) is lukewarm with the notion of more US-based foundries. As TSMC spokeswoman Nina Kao explains, “We are actively evaluating all the suitable locations, including in the U.S., but there is no concrete plan yet.” TSMC has, however, been in discussions about building a US factory with Apple, its biggest customer.
The administration also reached out to Samsung about opening more "contract-manufacturing operations" in the US; Samsung has declined to comment on their communication with the administration. Currently, Samsung only has one US-based chip factory in Austin, Texas.
Where Do TSMC, Samsung, and Intel Currently Fabricate Chips?
TSMC runs the world's largest semiconductor foundry operation. The majority of its facilities are in Taiwan, with two facilities in mainland China, and one in the US.
Samsung runs four facilities in South Korea, two in China, and the aforementioned facility in Austin.
Samsung manufacturing centers. Image used courtesy of Samsung
Intel has four US foundries (fabs), two in Israel, one in Ireland, and one in China.
The Process of Building a Chip
There's power in a manufacturing process that happens on home soil. Intel recently released a video on its chipmaking process, outlined in six steps:
- Design. Chip architecture, logic designers, and circuit designers create the circuitry that makes up a chip.
- Mask ops. A master copy of the circuit is put on a plate from which the intricacies of the circuit can be impressed on a blank silicon wafer.
- Fabrication. Hundreds of copies of the mask’s information are impressed permanently on the silicon.
- Die sort and prep. The wafer is broken apart, yielding hundreds of copies of the chip.
- Assembly and test. The chips are meticulously attached to their individual packages and tested.
- Warehousing. Logistics specialists send chips to a system manufacturer or to distribution hubs, where they'll be sent to OEMs or retail sites.
Intel's chipmaking process. Screenshot used courtesy of Intel
The first two research and development steps require specialized, advanced manufacturing; the last two steps are low-tech operations, which are traditionally completed outside the US. The actual fabrication—the very heart of the manufacturing process—must be completed in specialized, expensive facilities that run high volumes in order to be profitable.
The Foundry Business Model
In a Forbes article on Intel's US foundry expansion, Harvard business professor Willy Shih explains that the present COVID-19 pandemic has elevated concerns about supply chain disruptions. The government also has concerns about dependency on Asian factories given rising geopolitical tensions.
He reports that most of the major chip providers, even giants like Apple and Qualcomm, have essentially “outsourced” fabrication to companies like TSMC who specialize in it.
TSMC currently only has one US-based facility. Image used courtesy of Reuters
Even Intel, which “fabs” many of its own microprocessors, basically dropped out of the race when fabrication geometries reached 14 mm with the world now embracing 7 mm and even smaller lithographic processes.
Shih recounts how IBM, which ran its own foundries in the 1990s, started to offer its service to others. But the business model of a foundry is different than that of a generalized tech business, and IBM’s foundries ended up being subsumed by the company’s internal needs. If Intel truly wants to get in the foundry business, Shih argues, it must avoid that pitfall.
The final stages of the foundry process—test and packaging—is growing to be far more amenable to automation. The government's talks with Samsung, Intel, and TSMC seem to be an effort to avoid supply chain interruptions by "insourcing" the final steps of the manufacturing process here in the US.
If you are an engineer involved in IC design and manufacture, what effects do you think the re-establishment foundries here in the US will have on your ability to produce advanced chips? Share your thoughts in the comments below.