The world runs on electronics and semiconductor chips. Many of these chips are made in massive,
multi-billion facilities run by foundries like TSMC, Samsung, and GlobalFoundries.
Right now the world is going through a protracted shortage of these semiconductors.
Especially in the case of TSMC, the most advanced foundry out there,
there is only a limited amount of capacity available for all of its hundreds of customers.
So why can't TSMC just build another factory?
Obviously more factories need to be brought online.
Just how hard can it be?
In this video I want to talk about the logistical and financial challenges that foundries tackle
when building and running a new fab. What are the thorny construction issues
and financial tradeoffs involved?
I have done these engineering and construction videos before for the Hong Kong Airport and the
Taipei MRT. I will link them in the description below. Super fun but they are always complicated
and so much is left on the cutting room floor. Please forgive me for any errors.
Let us begin with the basics.
A fab is shorthand for a semiconductor fabrication facility. It houses offices,
locker rooms, storage facilities, test and packaging rooms, and the cleanroom.
These are massive facilities - aircraft carriers on land. Take for example, TSMC's Fab 14,
a Giga-Fab located in my hometown of Tainan. Completed in 2008 over the span of two years,
the multi-story building has over 114,000 square meters in floor space.
And like an aircraft carrier, Fab 14 houses its own cafes, cafeterias, convenience stores,
bakeries and bookstores. Unlike an aircraft carrier, it has car parking. Everything needed to
manufacture wafers at scale. At full capacity, Fab 14 churns out 30,000 pizza-sized wafers a month.
This is an amazing, spare-no-expense facility. How does a company create such a thing?
Imagine that you want to build and rent out rooms in a 1,000 room resort hotel to take advantage of
a hot tourist region. Constructing the whole thing all at once would take years. You are also not
sure how long the tourist boom is going to last and if it will still be around when you are done.
So ... what if you build and complete just part of the resort first? You tell your construction
crews to start and finish, say, 300 rooms. That gets done in a year and you can start
making money on those rooms right away. Once the money is in hand you build the rest.
This is, in short, how TSMC and other foundries build a fab. Fab construction in its entirety
takes about 3 years from start to end. This is a long time no matter how you spin it.
Semiconductor chips and the process nodes that made them become outdated extremely quickly.
The profitable economic life of a process flow is about 3-4 years.
Afterwards, the unit cost of a chip drastically declines.
Considering their staggering cost and the nature of the business, you want to be able to get paid
back as soon as you can on your multi-billion dollar investment. No company can have its $20
billion fab sitting idle at the site. TSMC needs to get it up and running as soon as possible.
So the company breaks down the entire construction into separate and parallel packages or "phases".
Construction begins long before the whole design is complete.
The process gets to production much faster, but as a result, gets fantastically more complex.
You start by figuring out where to put your new fab. You are considering a variety of factors
when trying to decide on a site. What are the tax incentives? How much land is
available to build on? Are there enough qualified, well-educated workers around that you can hire?
Available infrastructure like constant water and power is especially critical. When AMD (now
GlobalFoundries) announced that it would build a fab in New York's Luther Forest Technology Center,
local officials said that it would take two years to get the necessary water,
sewage and road connections completed. It ended up taking seven years.
For that particular project, water was the biggest obstacle. The local,
state and federal governments as well as various private entities
pitched in over $65 million to build a 28 mile pipeline and a purification plant
on the Hudson river capable of purifying 14 million gallons of water a day. And that is in
New York, which for practical purposes has an unlimited amount of water for industrial use.
TSMC's fabs use a stunning amount of water.
In 2013, those fabs by themselves generated 19 million tons of wastewater.
It is undoubtedly higher today. Tainan the entire city that same year generated 29 million tons.
Taiwan gets a lot of rain but it suffers from its own water supply issues.
As a result, Tainan has requested that TSMC's fabs try to recover 85% of the water it uses.
To meet those goals, the company built a large rain collection system to
capture rainwater and store it in 700 ton tanks. Wastewater generated from industry
is treated for 25 different chemicals and can be reused.
If not reusable, then it is put into the cooling tower to help maintain temperatures.
Geographic and geological concerns also play a role in placing the site. Taiwan happens to be
a very earthquake-prone location. I have another video about the earthquake risk to TSMC's fabs
but to summarize, the company builds dampers into the facility to reduce tremors by up to 40%.
These of course all cost money and need to be done right and on time.
With all of these considerations, the cooperation (and tax incentives) of local
government is critical. California's Silicon Valley no longer has fabs for a good reason.
They all had to leave for environmental and resource constraint reasons.
I did a video previously about TSMC's move to Taiwan's south. There is also another regarding
its decision to enter the China market. Both are worth checking out and are in the TSMC playlist.
At the heart of a semiconductor fab is the cleanroom. The cleanroom is where the chip
fabrication happens. Because a single piece of dust can render a chip useless,
pure air is constantly pumped in and anyone entering needs to wear bunny suits.
The size of these rooms - TSMC's Fab 14 cleanroom is 31,000 square meters large
or over five and a half soccer fields - combined with increasing demands on
air purity make clean room construction pricier than ever. Their cost skyrocketing
as expensive HVAC machines have to be brought in to maintain purity throughout such larger spaces.
Fab cleanrooms have three types of configurations: A ballroom style,
tunnel style and mini-environment style. The ballroom allows for the maximum flexibility.
The tunnel, less so, but is also cheaper.
The mini-environment, which is what TSMC uses, comprises of compartments segmented
by the level of cleanliness. So you have one compartment with class 1, another with class 10,
and class 1000. This helps keep costs down as HVAC machines only need to maintain
strict levels of cleanliness in a fraction of the overall room. It also allows TSMC to
start production in one environment while crews simultaneously fill out the other environments.
Speaking of filling out ...
The equipment inside the fab typically makes up to 75%
of the cost of the entire facility. So selecting and acquiring the right equipment
is critical in making sure that the whole fab is delivered on time and within budget.
Tradeoffs need to be made everywhere throughout the process. Here is one small example.
You are bringing in your equipment and need to place it inside your cleanroom.
Where do you locate it? At the time of cleanroom design, this might not be clear.
So you decide to expand the range of your piping,
HVAC and utilities throughout all your micro-environments.
This offers you maximum future flexibility to deal with any unforeseen issues, but at the same
time bloats the budget. But if you don’t do this right and mess up the placements then there’s the
potential of an even more expensive work stoppage. So it is all about making the right trade-off.
A cutting-edge ASML EUV machine can cost over $150 million by itself.
The company only makes 50 a year. Making sure that it is properly brought over
and installed in the cleanroom without defects must be a nerve-wracking process.
Accidents can happen. In one anonymous insurance report,
I read about a $5 million piece of equipment that got dropped as it was unloaded from an elevator.
The device looked fine on the outside but inside it had suffered trauma and needed
to be returned to Japan for recalibration at a cost of $200,000 and incalculable lost time.
Generally, almost all semiconductor foundries run their fabs on top of
precise data management and tracking. They want to know how well their processes are
yielding and whether or not there can be room for improvement. You want to get to
a good place as soon as possible so that the fab can start making money for the company.
And there’s always room for improvement. The equipment is brand new. The process steps are
brand new. There is a lot of fat to cut within the thousand or so steps that go into making a chip.
So teams on the ground should have both the technical competence
and the leeway to make changes whenever they recognize the opportunity. The engineers work
together with the operators and the technicians to recognize, diagnose and solve such problems.
Internal foundry teams also work very closely with the vendors that make the
equipment they are using. The vendors know the equipment best, after all. They made it.
They also work with the customer to make sure that the product they get
is the one that they want. This means that for the most advanced nodes you want to make
sure that you are working with customers you really trust. Newer, more unfamiliar
customers might start with more mature nodes first before progressing to the hot stuff.
As TSMC embarks on building its fab in Arizona - its first advanced construction project situated
on the other side of an ocean - it is hard to appreciate just how rough and unforgiving of
a task the whole thing is. I suppose it is like what they say about ducks: You see a
duck floating on the water, but have no idea how frantically it is paddling beneath the surface.
To construct, equip and optimize a fab so that it can start making on-time deliveries
of a fantastically advanced product is hard. You are building a boat,
launching it into the sea, and setting sail before you have finished installing half the engines.
And now they got to do it 11,400 kilometers away from home.