The supply chain necessarily includes some Japanese and Dutch companies for their specialized tooling that cannot be sourced from American companies. Many of the spare parts and raw materials can be sourced domestically.
However, it is ultimately unavoidable that many of the constituents within these spare parts, repair kits and raw materials would be manufactured/synthesized in China.
(I worked on the supply chain systems and processes at Samsung Austin Semiconductor for almost a decade.)
For at least part of this, ASML has had a large facility in the Phoenix metro (Tempe) for quite a few years. Assuming that's one of the Dutch companies you're referring to.
TSMC is going to benefit from the microchip industry that's already in Phoenix thanks to Intel's enormous presence here.
I recall reading that modern chips use argon-neon-flourine lasers, (roughly 75% of the world's neon goes into the semiconductor industry) and ~50% of the world's neon comes from Ukraine.
This is because the Haber process, necessary for fertilizer, involves industrial quantities of forced air, and the USSR put adapters on their Haber process plants for gathering inert gases for titanium welding back in the 1970's, and those are now used to gather materials for semiconductors around the world. I don't know enough whether US or other Haber plants could also be adapted to gather up these noble gases, but presumably it would be more expensive than using what the Ukraine provided, or else it would have been done before.
That is one issue among many, obviously, but it suggests the scale of the problem for making all domestic supply chains.
If 50% of the world's neon comes from Ukraine, then 50% comes from outside Ukraine.
According to [1] 50.1% comes from the top 3 countries. And the worldwide market size is about $220 MM/year.
Let's say that these TSMC plants will consume fully 5% of one year's worth of worldwide production (this is an ultraconservative estimate, as the whole computer industry's share of the neon gas market is 50%). That would be about $10 MM. Even if the neon gas price spikes up by a factor of 10 or 20, it wouldn't move the needle when it comes to a $40 BN investment.
I've had to look this up because everyone also brings up this point without any proper details.
The exact numbers are not known. It's supposedly 45%-55% (at the beginning people were claiming 70%). It's limited to 2 factories. One in Odessa and one in Mariupol.
Both of them shut down somewhere at the start of this whole endeavour. The Mariupol one is already in the hands of Russians. It wasn't that close to Azovstal, so it's due to reopen. The one in Odessa will not reopen until the Russians either take it or Ukraine agrees to the deal judging by all the missile strikes. But for the short term future its out of commission.
The fundamental part here is this:
If this is really such a big deal as everyone claims it is, then people will inevitably have to find a compromise with Russia.
But I will repeat again one thing that people don't seem to grasp. Arounds 30% of the worlds commodities are exported by Russia, another ~30% are exported by the US. The difference between these two is that Russia exports its own commodities and the US exports not only its own, but also its "little colonies" like Trinidad and Tobago commodities. You cannot just turn off the tap on 30% of the worlds commodities.
> If this is really such a big deal as everyone claims it is, then people will inevitably have to find a compromise with Russia.
Why? Better to defeat them militarily and solve the problem once and for all - even if the world has to get by with slightly less advanced chips for a while.
Solving problems once and for all is very hard. Our track record with that is less than stellar. I agree with you, Russia needs to be defeated. But that is for moral reasons, not because it is overall the best economic solution for the world. Rather in spite of the economic consequences.
Oh, but you can. You see, there's this mechanism called price. If there's not enough of something, prices go up, and sources that were uneconomical become all of a sudden profitable.
The US has rare earth mines and even more deposits. They just got priced out through decades of lower prices for those minerals. (Which just shows that resource allocation even for scarce resources, follows financial incentives similar to other financial considerations. Stuff being left in the ground actually makes them available for another day when they’re higher valued.)
Indeed, but rare earth mining also has negative environmental impact even above and beyond normal mining operations. The US is partly paying China to outsource the environmental devastation.
Mitigating that environmental impact is what makes rare earth mining so costly. China is quickly learning that environmental remediation [1] is much more expensive and their appetite for destroying their environment for profit is quickly disappearing, especially as the middle class grows and moves up Maslow’s hierarchy.
From the article:
> “The rare earth industry is a pillar industry here in Ganzhou and we must keep it running, but there’s still more to do to figure out a truly environmentally friendly method to pursue sustainable growth,” Zhang Guanjun, deputy director of the public relations department of the Ganzhou Party Committee, said in an interview. “Ironically, because the prices of rare earths have been so low for a long period of time, the profits from selling these resources are nothing compared to the amount needed to repair the damage.”
Is the environmental impact actually significant enough to warrant consideration in this circumstance? I see environmental impact talked about a lot when it comes to mining operations but I don't think anyone outside activists cares if the area around a mining operation is impacted as long as a town isn't poisoned or something else with human impact and usually the "environmental impact" is just the local ecology and the emissions involved. People expect the area around a mine to not be very nice.
> Is the environmental impact actually significant enough to warrant consideration in this circumstance?
Abso-fucking-lutely! *Smack* The answer to that question is always a resounding yes when we're talking about massive industrial processes. The qualification "as long as a town isn't poisoned" is fantasy at these scales. Most mining facilities require tons of water so they're built near waterways and those are almost always populated downstream.
The tailing ponds contain very toxic waste that, if breached, will basically salt the earth around them and anything downstream. The tailings from a much less toxic processes like iron mining, for example, caused a massive ecological disaster in Brazil when the Mariana dam holding back millions of tons of mining waste broke [1]. It followed the Rio Doce to the Atlantic polluting over 600 kilometers of waterways along the way, affecting over a million people. Five years later people are still getting sick, fish stocks are way down, and farming along the river is crippled [2].
A few years later another dam in Brazil broke, once again contaminating hundreds of kilometers of waterways [3]. The Ok Tedi disaster in Papau New Guniea [4]. The Marcopper disaster in the Phillipines that still hasn't really been cleaned up decades later [5]. Aberfan in the UK [6]. History is full of these kinds of tailing disasters effecting millions of people, often the poorest with the least recourse.
Edit, forgot to add final point: Those Ganzhou tailing ponds are much more toxic than those above from lesser metals and coal. They're dangerous to approach without full PPE and much of the surrounding area has been polluted to the point where nothing will grow without remediation. Even assuming there's no accident, the environmental damage is already significant enough to cause political pressure in an authoritarian regime.
Chips primarily require silicon, which is not a rare-earth metal (it is rather abundant), but it takes a lot of expensive equipment and energy to purify it and slice it into wafers.
TSMC currently sources their wafers from Taiwan, Japan, Singapore, Germany and others:
No...chips are made on Silicon. What is required to make them into semiconductors requires a lot of special metals, gases and other chemicals. They source those things from around the globe...including Ukraine for things like noble gases.
The biggest semiconductor equipment manufacturers in the US are Applied Materials, LAM Research and KLA. AMAT is a pretty big company with a wide portfolio of products but it doesn't do lithography which the Dutch company ASML has the only EUV product.
Article says the chips in the 2nd fabs will be better than the first. And will meet all domestic US demand. Not sure what all that includes.
I wonder how domestic the full supply chain is. If the US is relying on China for rare earth metals or something.