Challenges of Fab Construction

In this newsletter, we'll explore the fascinating but complex world of semiconductor fabrication facilities, commonly known as "fabs." In light of the current chip shortage, we'll specifically focus on TSMC, the leading chip foundry, and the challenges it faces in building new fabs.

What is a Fab?

A fab is a colossal facility—akin to an "aircraft carrier on land"—that includes clean rooms, offices, and various amenities. Take TSMC's Fab 14, for example. It spans 114,000 square meters and houses its own cafes and bookstores, all aimed at producing 30,000 wafers each month.

Building a Fab: The Resort Analogy

Think of building a fab like constructing a 1,000-room resort. You can't build it all at once; it would take years and by then the demand might be gone. So, you build in phases. TSMC employs this phased approach to avoid having a $20 billion investment sitting idle.

Site Selection: Infrastructure and Workforce

Choosing a location involves numerous variables, from the skill of the local workforce to tax incentives and essential infrastructure. AMD, now GlobalFoundries, took seven years just to secure water supply in New York. Similarly, TSMC had to build a rainwater collection system and wastewater treatment facility due to Taiwan's water issues.

Clean Room Complexity

Clean rooms are the epicenter of fabs, where air purity is critical. These rooms alone can cost a fortune, and their design varies based on the level of cleanliness required. Managing this complex environment while also accommodating expensive machinery, like ASML's $150 million EUV machine, adds another layer of difficulty.

Geographic Concerns

The location must also factor in natural disasters. In earthquake-prone Taiwan, TSMC has to include dampers to mitigate tremors, adding more complexity and costs.

Financial and Operational Trade-offs

About 75% of a fab's cost goes into the equipment. Deciding where to place this equipment in the clean room involves intricate trade-offs. A small misstep, like dropping a $5 million piece of machinery, can result in both financial loss and delays.

Continuous Improvement and Collaboration

Once operational, the fab is a living ecosystem. Engineers, operators, and vendors work closely to make incremental improvements to the process. This collaboration is vital to ensure the facility starts turning a profit as soon as possible.

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