In recent years, there have been efforts to bring semiconductor manufacturing to more places in the world. Take the poll and in the Comments section, let us know if you think semiconductors will successfully be manufactured in more areas globally.
Encouraging the construction of semiconductor fabs (fabrication facilities) is a strategic priority for many governments globally. These facilities are essential for the production of microchips and semiconductors, which are the backbone of modern technology. By supporting fab construction, governments aim to:
1. **Boost Technological Independence:** Fostering domestic semiconductor manufacturing reduces reliance on foreign suppliers, thereby enhancing a country's technological independence and national security.
2. **Economic Growth:** Fabs create jobs, drive innovation, and contribute significantly to a nation's economic growth, making them an attractive investment.
3. **Supply Chain Resilience:** Having local fabs helps mitigate supply chain disruptions, such as those experienced during the COVID-19 pandemic, ensuring a steady supply of critical components.
4. **Technological Advancement:** Encouraging fabs promotes research and development, fostering technological advancements in areas like AI, 5G, and IoT.
5. **Competitive Advantage:** It positions a country to compete globally in the technology sector and maintain a competitive edge.
This trend highlights the increasing importance of semiconductor manufacturing in our interconnected world.
Implementing a state-of-the-art chip fab facility is a colossal undertaking. To set one up that is also competitive with TSMC is highly problematic. It would be great to see more startups, and more competition but the costs and the risks are way beyond what most companies and most countries are willing to take on. You could count on a cost of 3 to 10 billion dollars and maybe it would start to return an operating profit in 10 years, but it is anybody's guess when there would be a an ROI.
Governments are rarely good arbiters of investment. Rather they steer tax money toward politically connected recipients, often depriving the most advanced and profitable sectors of their economies of needed funding by increased taxation for their current project du jure. We should instead ask ourselves if global production is even desirable, given the supply chain costs and environmental impact, and that distribution of expertise is not even. Free trade is usually the better option.
I took the optimistic view and said "yes, governments around the world will encourage fab construction." The way that only a few geographic regions specialize in IC production today is very much the result of capitalism and its tendency towards high profits and low costs. The recent pandemic showed us that many countries that previously had robust in house manufacturing capabilities were now ill prepared to manufacture even the most basic commodities once supply chain issues started to take hold. I think this was a wake up call and I believe you will see government investments in things like IC foundries, pharmaceuticals and defense.
The extra competition will see prices fall. So far, so good. But it will go too far. As prices go lower, quality will also reduce. My camera comes from one of the best companies in the world, and it is very good. The ones that came before it were very good too. But - although the company is based in Japan, the cameras are made in China. And I am beginning to wonder if the camera I have got will be the last I will buy because the newer ones are either far too expensive or not well made.
The new fabs will have to sell cheap just to get a foot on the ladder. The world of semiconductors will end up like a company we all know, they use the same name as a big river in South America. They used to sell some good stuff, but all that seems to have been priced out and only the poor quality stuff remains.
Is that what we want? Or should we just leave the present 'fabbers' to get on with it? They seem to be doing a good job.
The cost of building a meaningful number of fabs is huge, and I don't see Governments outside of China having the appetite to invest the money needed. So inevitably you'll see public/private partnerships, which will just reward the incumbent manufacturers.
