Discussion in 'Article Discussion' started by bit-tech, 18 Jun 2018.
I think the best we can hope for is that Americans see sense and don't give The Idiot Trump a second term and, that his successor is not also an idiot.
The curse of The Orange Man strikes again...
If Trump really wanted to annoy China he would treat Taiwan as an independent nation and exclude them from tariffs against China...
Well maybe those chip makers should invest in US based chip assembling facilities. AMD uses mostly Malaysia, and Intel has that massive plant in Vietnam so why would they be affected?
It's not cost effective to just up roots and open a facility like that, it would take years for it to be productive and financially viable - be it just because Trump is throwing his toys out of his pram.
With any luck he will have been assassinated, impeached or not elected for a second term before the fallout bites American consumers.
Yes, because it's just that simple, isn't it?
Oh, wait, no, it's not. Samsung, the world's largest chip-maker and thus someone quite used to opening new fabs and funding said projects, announced it had broken ground on one in February this year after a couple of years of planning. It can start producing chips there immediately, right? Well, no: the facility won't actually be ready to make chips until the second half of 2019, and it'll likely be 2020 before it's at volume production levels.
But hey, at least opening a new fab is cheap, right? Well, no: here's TSMC telling you it's going to cost £12.5 billion to open its new fab - and that's in a country where everything costs significantly less than in the US. To put that into perspective, AMD's last financial report showed it had £800 million cash and cash equivalents to hand. So, guess AMD ain't going to be opening any US plants any time soon, eh?
But, still, if you can afford it, and you can wait two to five years to actually start producing chips out of it, opening a US plant is the answer, yes? Well, no: unfortunately, the US doesn't actually have any of the rare-earth metals required during semiconductor manufacturing. Do you know who does? China. So, you spend £12.5 billion and two to five years to open your US-based combined fab, packaging plant, and testing facility, spend considerably more running it than if it were abroad, and you're still having to import your materials. Guess the punchline. G'wan, guess. Give up? Those materials will also be hit by the tariffs. Whoops.
AMD currently uses GlobalFoundries, its once-and-former manufacturing arm spun out when it was desperate for cash. Of GF's 14 current and planned fabrication facilities, only one - in Chengdu, currently under planning - is located in China, with the remaining located in Singapore (5), Germany (technically 3, but they're all modules of one giant Fab 1), the US (4, but one is a small-scale tech development centre), and Abu Dhabi (1). None are located in Malaysia (well, not since Singapore separated from Malaysia in 1965); AMD does, however, assemble and test some of its chips there - but not all. In fact, AMD only has one location in Malaysia and another in Singapore, while it has five in China and another two in Taiwan. Add to that the fact that AMD is looking to move manufacturing away from GlobalFoundries, with whom it has long had an absolutely terrible deal thanks to being desperate for cash when the deal was first inked, and its reliance on China is only likely to increase over time. In short: AMD is most definitely heavily affected by the tariffs.
But there's still Intel, right? Not counting the closed Fab 8 and Fab 17 (Israel and the US respectively), but counting fabs publicly announced as planned or awaiting full volume production, Intel has 16 fabs of which one (Fab 42, built, mothballed, then pulled out of retirement but still not ready for volume production until at least 2020 because opening fabs is hard even when they're already built) isn't yet open and one is a module of an existing fab. Of these, nine (well, eight plus an additional module) are in the US (hooray!), two are in Israel, three are in Ireland, one is in Costa Rica, and only one - Fab 68 - is in China. Sounds like good news for Intel, right?
Nup: while its fabs are primarily located in the US, guess where Intel sends the chips to be packaged and tested? That's right: China! So the wafers it produces in the US are shipped to China to be turned into chips, which are then shipped back to the US. Guess what happens when they come back? Oh, never mind, I'll just tell you: they're hit with the tariff!
It's true that both AMD and Intel could move assembly and test elsewhere - maybe even into the US - to dodge the tariff, but short-term it would likely cost more than they'd save. In AMD's case, it'd cost more than they could possibly afford to pay - meaning AMD only has the choice in abstract, not concrete, terms. Even then, though, they'd still be importing rare-earth metals from China - there's no real way around that if you need them in bulk: we're talking China controlling 85-95 percent of the world's rare-earth elements supply. The US does have a single rare-earth mine of its own - outside Las Vegas - but guess who owns it? A government-tied Chinese investment group.
The final nail in the coffin is that even if everyone moved manufacturing, assembly, and test out of China - let's say to the US - immediately: there wouldn't be enough capacity. We're already seeing the retail price of products like graphics cards and DRAM shoot up owing to demand outstripping supply; now imagine what that's going to be like when everyone has to cut their supply in half 'cos they're not allowed to use Chinese facilities (and whatever countries The Trumpster decides to target next, because you know that's what he'll do as soon as the Chinese tariffs fail to revitalise US manufacturing). Hope you've got deep pockets for your next build!
Plus even if you had enough cash in hand to replicate your entire global Fabs in America and solved the issues surrounding the supply of materials you still couldn't do it fast.
Want to build a new Semi conductor fab? Enjoy years of waiting lists for the equipment to go in the fab (and as chips edge ever closer to the absolute limits of what is physically possible that problem is going to get exponentially worse).
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