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One company shouldn't make every chip
What each company brings
Each company brings something different. TSMC raised its ambitions: it was producing leading-edge chips in the United States by January 2024, and its commitment grew from three fabs to six. Its core process technology R&D is still in Taiwan. Intel has an incredible R&D ecosystem in Oregon. As part of its deal, Samsung committed to do R&D in the United States for the first time outside of Korea.
Working on customers
The office also worked on the customers: Apple, Nvidia, AMD, and Qualcomm. It encouraged them to show a willingness to pay a premium for American-made chips and to diversify their supply toward Intel and Samsung, though its tools for doing so were inherently limited.
A diversified portfolio
Behind all of it sits the idea of a diversified portfolio. Nobody knows where risk will come from, so seeding several investments while the future is uncertain was the prudent way to do it.
Why does it matter where R&D happens?
New manufacturing processes are developed at one site and then copied to other fabs. The location of that work decides where the engineers who know the process are concentrated. Intel has formalized this copying since the late 1980s with a method it calls Copy Exactly, which replicates a proven process at each new fab down to the tool settings.
How does diversifying reduce risk?
Risks that hit one investment seldom hit all at once, so spreading across several lowers the chance of losing everything. Harry Markowitz formalized this in a 1952 paper on portfolio selection. He shared the 1990 Nobel Memorial Prize in Economic Sciences for the work.
Why would customers pay a premium?
A customer who pays more for chips made in another country buys protection against disruption at a single site. Earthquakes, power failures, and conflicts can interrupt production. Taiwan lies on a seismically active boundary between tectonic plates. A magnitude 7.4 earthquake struck Taiwan in April 2024.
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