When labor costs lessen, transportation and logistics become the primary concern. Wouldn’t be surprised if 100 years from now most final good assembly is done locally.
Of course sometimes raw materials and inputs are more expensive to transport than the finished good, so there will always be cases where long distance transportation of finished products is still preferred
Improved automation does reduce costs, but those cost reductions are even better in places where manufacturing is already cheap.
Semiconductors have a very high value to weight ratio, so shipping them globally makes more sense than it does for other items.
This is not a problem for players who have dropped out of the race like GloFlo. But its definitely the case for TSMC, Intel and Samsung. Your last three serious players who aren't working for the PRC.
The costs are probably driven by extreme engineering requirements (temperature, pressure, corrosive chemicals, low contamination) and R&D costs to meet these requirements. The production volumes are not high either. Its not like they are building millions of these machines.
Asianometry on YouTube is a good source for this kind of topic.
No tax incentive needed to onshore in the long run
I'd expect high-margin items like semiconductors to be more amenable to onshoring anywhere - certainly Intel has almost all of its fabs in highly developed countries, but I think this is hardly a cost efficiency move - rather it's a hedge against the failure of globalization and the risk of the US losing access to advanced semiconductor technology in case of strife in Taiwan. Russia has already lost this access. TSMC took in about $56B in '21, of which about $28B was 'cost of revenue', the amount they needed to spend on supporting this revenue (marketing, legal, production, e.g., not building factories or R&D). There's certainly room for increased production costs while maintaining a profit.
[0] - https://www.researchgate.net/figure/TSMC-personnel-structure...
There is a distinctly USA centric view of the world :/)
Hsinchu, Taiwan, R.O.C., Nov. 9, 2021 - TSMC (TWSE: 2330, NYSE: TSM) and Sony Semiconductor Solutions Corporation (“SSS”) today jointly announced that TSMC will establish a subsidiary, Japan Advanced Semiconductor Manufacturing, Inc. (“JASM”), in Kumamoto, Japan to provide foundry service with initial technology of 22/28-nanometer processes to address strong global market demand for specialty technologies, with SSS participating as a minority shareholder.
[1]: https://www.anandtech.com/show/16483/samsung-in-the-usa-a-17...
So as you alluded to, the long distance logistics of delivering the finished products, have a negligent impact on it's price.
Geologically stable. And at least for business, politically stable. Same reason Walt Disney is frozen in Phoenix [1].
I’ve heard the claim repeated by an Alcor employee. But they may have been repeating a myth. (Alcor definitely exists, and claims it chose Phoenix for the aforementioned reasons.)
It's right there on the death certificate: https://findadeath.com/wp-content/uploads/directory/w/Walt_D...
Fun fact: That's why Boeing first built their planes outside Seattle - the electricity needed to refine the aluminum was cheap.
These days, you can see that effect in the large datacenters that have sprung up near the Columbia River in Oregon.
I'd guess TSMC's siting decision had a lot to do with tax breaks, labor pool, and cheap land.
Long Island, Florida, and Maine invasion by nazi spies swimming to shore from German submarines: https://www.fbi.gov/history/famous-cases/nazi-saboteurs-and-....
Japanese in Attu and Kiska islands in Alaska: https://www.history.com/.amp/topics/world-war-ii/battle-of-t...
https://en.wikipedia.org/wiki/Palo_Verde_Nuclear_Generating_...
Nuclear + Solar seems like it would be a pretty ideal mix in a hot climate, especially given that peak demand for air conditioning coincides with solar maximum output, and Nuclear could handle some of the base/overnight load.
But the population pressures are realigning who pays what for the water now, so I expect the alfalfa farms are going to go, and chip fabs will take their place.
The mountainous areas are 'high deserts'. Most of Arizona's water is underground. It's being pumped out faster than it's replaced. Old wells go dry all the time, because newer wells are deeper.
"The Sonoran Desert's bi-seasonal rainfall pattern results in more plant species than any other desert in the world. The Sonoran Desert includes plant genera and species from the agave family, palm family, cactus family, legume family, and numerous others." - https://en.wikipedia.org/wiki/Sonoran_Desert#Flora
> There is a canal system taking the water from the mountains to the drier south where people live.
The Central Arizona Project pumps water straight east from Lake Havasu (738 ft elevation) to Phoenix (1086 ft elevation), then south to Tucson (2388 ft elevation).
https://en.wikipedia.org/wiki/Central_Arizona_Project / https://www.cap-az.com/water/cap-system/water-operations/sys...
The Salt River Project [SRP] buffers water from the rivers that run through the Phoenix area, and diverts the rivers into canals for delivery to the Phoenix area. Before the dams, the Salt and Verde rivers ran year-round. SRP modernized/expanded the Hohokam's ancient canals.
I suspect the ongoing Western US drought would have worsened the water situation.
> The power plant evaporates the water from the treated sewage from several nearby cities and towns to provide the cooling of the steam that it produces.
If you’re referring to the Palo Verde Nuclear Generating Station, it’s downstream of water treatment plants and is effectively evaporating the water from the effluent stream [1], in other words it’s cooled by 100% recycled water. Probably a significant amount of the evaporated water returns to the local area.
[1] https://en.wikipedia.org/wiki/Palo_Verde_Nuclear_Generating_...
> Large semiconductor fabs use as much as 100 megawatt-hours of power each hour, which is more than many automotive plants or oil refineries do. [0]
If a fab is running at that consumption rate for twenty hours every day for one year, it will consume approximately all of Arizona's 735,000 MWh of annual utility-scale solar, wind, and geothermal net electricity generation. [1]
Contrast that with the annual hydroelectric generation of Itaipu Dam in South America, at 79,440,000 MWh in 2019. [2]
[0] https://www.mckinsey.com/~/media/mckinsey/dotcom/client_serv... [pdf]
[1] https://www.eia.gov/state/print.php?sid=AZ
[2] https://www.power-technology.com/projects/itaipu-hydroelectr...
Ooof, this kind of writing where the author doesn't understand units just gets my goat. Just say it uses 100 MW! Geez.
How does power usage remain stable in a fab? Please say more about how that works.
https://en.wikipedia.org/wiki/Solar_power_in_Arizona
All fabs have battery backup regardless of power source, although with solar you would need a much larger one indeed. Either way, the scale of solar power generation easily supports these new fabs.
https://www.eia.gov/electricity/generatorcosts/ Cost is ~1,65B per GW of solar. 30% subsidy from government = ~1.1B per GW to generate ~ 1,500,000 mwh. They’re dirt cheap. Unfortunately battery storage, while it exists at this level, is more in the range of 800M to be safe (1600 mwh of storage). https://www.tesla.com/megapack/design
So all power infrastructure would be less than 5% of the cost of the plant, and that’s overbuilding solar needs by 4x (meaning even on the crappiest day power wise you’ll have more than enough) and having 16 hours of backup power which is also overkill.
A nameplate capacity of 550 MW with a capacity factor of only 26% almost certainly means there are a lot of times when it isn't generating any power at all, or at least none to speak of.