The geopolitics of chips: Chips in the USA
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Most of people buy forebear room, some people by the bear room. For bear room.

real estate agent jane houton .

is .

showing me around a bungalow the outskirts of phoenix in the U. S. State of arizona. House holton is taiwanese american, and she's just solved this house to a new taiwanese arrival. She's been selling a lot of houses like this recently.

They always say we watch T, V. They do the bob in the back yard. They get a yard to get to play with, but they bother this kind style because they want to. A live american house .

business is booming ing for Hilton. We step out into the backyard and we can clearly see why Jenny points into the distance towards a new factory being built by T S. M C, taiwan semiconductor manufacturing company, maker of the most advanced computer chips in the world.

P, A, since right over there, seven minute is fun here. Very fast, because most of people work long hours. So very long out, they don't get home. Maybe eight, ten, so they wanna be home rait away. go.

They are tired. Why they to .

work so long? What you know is your responsibility to get the things done. That's why they have been learned almost year in taiwan that that's the nature of the job.

The new T S M C factory here in arizona is part of A U. S. Effort to rebuild america's chip manufacturing industry, and there's a lot riding on its success, not least america's ability to stay ahead of china in the global race for tex supremacy. It's a rivalry sharpened by china's incendiary claim that t sm c's home turf of taiwan is part of its own territory but IT turns out that recreating taiwan's world beating chip production in the heart of amErica is well complicated in this episode. America's dream of bringing chip making back home.

This is tectonic from the financial times. I'm James king, a long time china correspondent at the F. T. There's a battle going on for control of the global semiconductor industry. The chips that are in virtually every piece of electronics we use, from our phones to our cars to the latest A I software that's changing our lives for the past half century, chips have powered the technological revolution in this series. I'm going deep into the miracle of modern ship manufacturing and the struggle over who controls the industry's future.

One of america's main strategies to bring semiconductor manufacturing back to the us is called the chips act. IT pledges tens of billions of dollars in taxpayer funded subsidies. And the idea is to persuade semiconductor companies, including T, S, M.

C, to make chips in america. But the initiatives is now facing political turbulence. The chips act was passed by president joe biden, and now Donald trump is heading to the White house.

That ship. That's an extract of an interview trumped with the popular joe rogan experience podcast in october. It's not that trump doesn't want to bring manufacturing back to the us.

He clearly does. What he objects to is taxpayers money being used to do IT. Instead, trump says putting tarifa on chip imports to the us would force those chip companies to relocate to U.

S. soil. To me, the most beautiful word, i've said this from last couple of weeks in the dictionary today, and any is the word tariff is more beautiful than love, is more beautiful than IT.

And he lashed about a taiwan, in particular taiwan. They stole our chip business. They want us to protect and they won't protection, and they don't pay us money for the protection.

It's hard to know how seriously to take trumps reMarks on the chips act. We just don't know to what extent they will be implemented after he becomes president. But to understand the current geopolitical male storm, we have to reach back a little into america.

Ais industrial pass right here in phoenix, arizona. There was a time long ago when the global semiconductor industry was centered in amErica with chips being manufactured in this corner of the america's southwest. We're standing on a parking lot next to A A main road in phoenix and is blazing hot, the temperatures over a hundred degrees far height.

We're looking for the sight of the motor roller factory that used to make semiconductors dating way back to one thousand nine hundred and forty nine. That was the first semiconductor uv turek here in pinions, arizona. We are now trying to find where he used to be, but there's not much here, apart from a car park and a flower bed with desert flowers and cactus.

Uh, in IT is a big area of like a sand and concrete could IT be over there. Maybe today there's not much left of motorola's chip making glory here in arizona. This site apparently is what's called a super fund s site, which means that it's toxic underneath.

And so that seems to be the legacy of phoenix is first semiconductor tive factory motor roller closed its site in arizona for good in the early two thousands as most of america's chip making was offshore to asia. But now washington wants to bring you back to U. S. soil.

In in high insight, the right people in access security should have said, you know, we're gonna a want to have this kind of leading its capability in the united states.

a chmidd is a former chairman and CEO of google. And these days he advises the U. S.

Government and tech industry. Schmied was influential in the drafting of the chips act. He's currently chair of a washington pink tank called the special competitive studies project.

One of the important historical decisions was that in the nineties, us. Let those industries, which were invented largely in the U. S, go initially to europe, but especially to asia, started in singapore and in other places like that.

And I can tell you, when I was doing this, he didn't occur to me that this was that important. I figured that he was sort of a commodity like everything else. I'm sure the ages will do well and our future was in software. And I think it's only recently that amErica has come to understand the importance of having our own domestic chip manufacturing.

So today, the us. Is playing catch shop. This is important because chips are absolutely crucial for new technologies, for economic growth and for national security. But the way chips are being manufactured today, he is very different to america's chip making hay day.

During that time, the fbs and the architectures were completely integrated. So in other words, the the semester or buildings, the supply, the photography, phy machines and sofa through all vertically integrated with the designers.

Several decades ago, the industry began a shift towards what's called the foundry model. American companies sold their manufacturing businesses and focused on designing chips rather than making them, and they sent the manufacturing to founders ies overseas, which make all sorts of chips on a contract basis for companies like apple and in video.

And the key decision that was made, which was essentially the split where you had founders ies that worked in secret with specific companies and they didn't leak the technology from one to the other, they were highly, highly intellectually property protected, was a model that would give .

the foundry scale. With that scale, the fountain del drives in asia, where labor was cheap. And the company that really won out was T.

S. M C. To be clear, T S M C doesn't design its own chips.

Instead, IT makes other people's chips in its fabrication sites or fabs as their known. T S M C has benefit from massive taiwan's state support. And today the us. Is trying to replicate taiwan success with the tips that we're standing .

on the north side of the ground building um we call the ground building because this is where our workers in the clean room get ground up being called bunny suits.

They're very cute. Rose customers is head of T S M C, arizona. T S. MC factory is still under construction, but the bunny suits are already being worn. We're standing outside a gleaming glass structure that's risen out of the dusty desert landscape. Workers are streaming by a new buildings are being raised around us.

You might want to try our boba tea shop.

You ve got .

a verty shop, yes. And I in here, across from the starbuck.

surrounded by nothing but actis and desert scrub, the factory stands like a marriage in the desert, a marriage that even sells taiwanese bubble. A this T, S, M, C factory is the largest foreign Greenfield investment in U. S. history.

Were scheduled to be in production in first half of twenty twenty five. We are running wafers to be able to make sure that the quality is good, that the yield is good before we go into full production.

When it's complete, this factory will be making chips that are close to the cutting edge, putting the U. S. Generations ahead of its rival china. But some doubts linger over T, S, M, C longer term commitment, particularly in light of a trump presidency. The plan is for six phases of development at this site, but T, S, M, C has so far only committed to three.

The chips act was six point six billion, and a our initial investment for fab one and fab two was forty billion. Then we increase that to three fabs for total sixty five. So, you know, you can say that without the U.

S. Government wanting us to be here and helping us wouldn't be here. The money itself is a fraction of what we need to be able to to run the fab. IT certainly helps.

So U. S. Government money helps. But casters says that's not the full picture.

We had a major customer that requested that T S, M, C build in the united states, and we took that into consideration. We also asked our other customers if they felt like they wanted us to be here.

T sm c wouldn't tell us which customers had asked them to set up shop in phoenix, but you might be able to take a guest from who attended a recent ceremony at the factory.

As many of you know, we work with T S N C to manufacturers the chips that help power our products .

all over the year that apple chief executive tim cook speaking at the ceremony.

And we look forward to expanding this work in the years to come. S, T, S, M, C forms new and .

deeper roots in america, but putting down deeper roots in amErica is no easy feat. Costs in the U. S, are much higher than they are in taiwan. That hits T, S, M, C, S.

Bottom line, the level of consumer demand for these expensive chips may end up dictating whether T, S, M, C, build further capacity in when we ask them about the election results, T, S, M C said, and I quote, the most important factor in our decision to expand in the U. S. Was consumer demand, adding that they were committed to their arizona investment and investment, which in any case had actually been agreed during president trumps first term.

But there's another issue that might pose a problem for the company, a skills gap in the united states. Where is T, S, M, C. Going to find all the specialized technicians? IT needs to Operate this plant. This problem already caused a delay in the building of the factory last year.

The delay was IT was really just a matter of experience, and there were so many. First, we have been building fabs in taiwan for many years, so you very, very, very used to IT. And there has not been a advanced some I conductor fab built in the us. For a long time.

All of which explains why T S M C is bringing over skilled engineers from taiwan. Another expense that the company will have to contend with, perhaps x google CEO, who we heard from earlier, put IT best IT is .

much harder than people think in taiwan when they get up a physics P, H, D. And they put them in one of the sector, fabs. The first thing that that physicists does is they work the night shift managing the machines.

Can you imagine doing that to american physicist? Another example is that if you look at the experience in T S M C N, arizona, the labor or costs, the permitting costs, and this is with the most willing state and federal guarantees, have resulted in costs that are multiple times higher. And the cost in .

taiwan making semiconductors requires the most sophisticated manufacturing industry in the world. And it's not just about bringing the taiwanese over to azz ona. The united states will also need to figure out how you can build up its home grown chip industry.

What's two of a security on cracking? Let's say i'm captaing my soccer team and we're up by a goal against the soda springs fc. Do we relax no way time to create an extra line of events and protect that lead?

That's like to a, they on cracking a fire way to keep what you already save. Go crack m and see. Do you VS prosings.

The U. S, is trying to revive its homegrown semiconductor manufacturing industry. President budd's chips act offered lavish funding and policy support. It's been enough to tempt T, S, M, C to amErica shows. But now incoming president trump has signalled that he'd be willing to tear up the chip sec and use terrorists to strong ARM companies into setting up in the united states, regardless of what policy leva is used. If amErica wants to produce the best chips, IT will need a large, highly skilled workforce.

We have to have you put .

boots on heaven. Ryan heart is executive director in research management at the arizona state university or A S. U. IT runs a state of the art training site for the chip industry.

Now there's a secret to this. Yeah.

sit down. We put on some protective gear and Kevin shoulders around the facility. We're looking through a kind of wire mesh window here at the full clean room, and it's bid in the kind of rather mysterious looking orange light, lots of machines there, events in the floor, events in the ceiling, so that the air can circulate extremely cleaner. The losses that are incurred if a single speck of dust gets into those wafers is enormous.

What you're standing on is a raised floor that is up being in a three fat race floor. So all of your gas piping, chilled water, all that stuff is under floor. So there's all this infrastructure that's built around that clean space so that you don't have particulates on IT.

Running a clean room like this is expensive. And the actual process for making semiconductors can be dingy, complicated. So working at a chip fab requires a highly specialized skill set.

And A S, S job is to quickly train up a new generation of american workers who appeal to the likes of T. S. M. C.

It's an all of nation approach. We're certainly doing what we can. And I think from the workforce development site, they want these students coming out and immediately be able to make an impact the estimates today or like takes eighteen months for a student once they are out of college before they're fully up and running in, in a fab environment.

that's pretty good.

You can train up a lot. So faster your productive, the Better your profit margins are, the more your competitors.

Looking at the numbers, it's clear why the industry is pushing for faster turnaround. s. At A, S, U.

There are currently about seven thousand students enrolled across semiconductor related engineering programs, but the us. Is expected to need about one hundred thousand new chip workers over the next five years. The american efforts to result the chip making industry isn't just about bringing over asian companies.

The U. S. Wants american companies to stop making more advanced chips again as well. Companies like intel. Intel used to be a big chip maker, and IT wants to scale up its production.

Once IT is, let me go put my dog .

in the basement, okay? Bruce Andrews is corporate vice .

president. intel.

He was at home in D. C. When I spooked to him via video link. But intel also has a long history in phoenix. They've had facilities there since the nineteen eighties and are currently expanding their arizona site. Thanks to the chips act, there was a period when intel supplied virtually all of the chips for the personal computer market, but its business started to flounder after IT missed out on a deal to supply chips for apple's iphone.

There's no sugar coating that several years ago, we stumbled and allowed ourselves to fall behind. You know, l he basically been responsible for every major innovation. So I conduct industry for fifty years, uh, but low ourselves to fall below several years ago.

Several years ago is what made to expand back into the foundry business, manufacturing chips for other companies, just like T, S, M. C. does.

But more recently, intel has struggled to make that business profitable. We've now tied their fortunes to a new chip, the eighteen a, which they say will be able to compete with those from S. M. C.

We feel actually very good about where we are with, and we call eighty, which is a sub new to anomie technology. We are very excited about that, and we think that we will both bring us back to technological leadership but also allow us to make the most advanced chips in the intel fab.

Intel is set to receive billions in chips act funding, which could be a real lifeline for the company. But that money hasn't actually been dispensed by the government yet, and trump second term could put that funding at risk. On the other hand, intel could actually benefit from a trump presidency, focus on american self sufficiency.

The U. S. Need help to be successful, both from the standpoint of having A U. S.

Manufacturing option, but also for the brazilian of supply chains and building up the U. S. industry.

Back in phoenix, real estate agent Jenny Hilton is feeling the weight of expectations. SHE took me on a drive around the gated community where she's been selling homes to taiwanese chip engineers. Do you think this whole move to bring T S M C over here for amErica to reassure its some conductor industry, you think that's onna work out?

Everybody wanted to work up. Everybody would do their best to make IT work out, but they allow the fact to in play, we think is is looking good.

So Jenny is hopeful that T, S, M C will expand here. He also said there's another reason that people want T, S, M, C. To move manufacturing capacity to the us.

So what's your feeling about china? You know, the rivalry with america. Does that sare you or concern you at all?

He does concern in a bit. Some people think, I, china, my in the taiwan, my family, all in taiwan, they are. Worried about as well.

So lot of people, they here they might able to stay here long term. It's it's very bad. Yes, we'll discuss .

the vulnerability of taiwan to an attack from china later in this series. But for now, former google chief executive eric hmt, who you heard from earlier, says subsidies may be the only way to build up a robust american semiconductor industry.

You have to be globally competitive, or cost, or IT has to be a subsidy out of the american taxpayer. IT looks to me like we can be global and competitive. IT will therefore require a subsidy from the american taxpayer. You can think of the chips act the fifty billion or so as essentially that subsidy is an example where amErica must spend A A higher fee, if you will, a security fee.

But whether it's the carrot of biden subsidies or the stick of trumps, the question of chip reassuring isn't going anywhere. The next superpower will be a tech super power. And to be that superpower, you need the most advanced chip industry in the world.

I remember a contact telling me to think of IT as the manhattan project of our time. That project was undertaken during world war two. The aim was to produce the world's first nuclear weapons.

It's a slightly alarming analogy, but IT gives a sense of how pivotal this chip project is to the security and prosperity of the U. S, particularly as IT competes with china for global tax supremacy. In the next episode, we go deeper into the scientific and technological miracle of modern ship making.

This is the inside machine. wow. So this is essentially the most advanced chip making machine .

in the world. Is absolutely huge. I find out how mos law has shaped the global chip industry, putting IT at the center of U. S. China tech rivalry.

If you can't produce cutting edge ships, at least something very, very close, your ability to develop expensive products or to train cutting edge AI systems is going to be extraordinary, limited. And so the us. And its allies are betting that they'll be able to stay meaningful ly ahead of china.

Tech tonic is presented by me. James king, our senior producer is Edwin lane, and our producer is josh gabbert. Dial executive producer is manua sara gosa sound, designed by brain Turner and sam geo vin kle music by metaphor music, a global head of audio is shero bromly.

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