It takes twice as long and money to build a chip factory in the US than in Taiwan, analysts find

Building modern chip factories requires billions of dollars in capital expenditure. On average, a large factory requires 30-40 million man-hours, 83,000 tons of steel reinforcement, 9,000 kilometers of cables, and 600,000 cubic meters of concrete. According to SEMI World Fab Forecast, 18 new such projects will begin construction in 2025, with costs and construction times varying dramatically around the world.

Image source: Micron

According to the latest SEMI World Fab Forecast report, the semiconductor industry will start construction on 18 new fab projects in 2025. Three of these will be 200mm wafer production sites, and 15 will be 300mm wafer production sites. These sites are scheduled to start up between 2026 and 2027. In total, the report identifies 98 new high-volume fab projects, including 48 projects scheduled to start up in 2024 and 32 projects scheduled to start up in 2025, that will handle wafer sizes from 50mm to 300mm.

Many of the new factories are truly gigantic in size – according to Exyte Executive Vice President Herbert Blaschitz, each such factory requires more than $20 billion in capital expenditures, of which $4-6 billion goes to the construction of the facility itself. There is little doubt that his estimate is correct – over its 30-year history, Exyte has participated in the construction of about 300 factories.

Such fabs may include a 40,000 m² clean room housing 2,000 process nodes used for lithography, deposition, etching, cleaning, and other operations. Each node requires about 50 separate engineering and process connections, for a total of more than 50,000 connections.

One of the challenges facing fab builders in the U.S. and Europe is competition from Taiwan, China, and other Southeast Asian countries, where semiconductor fabs are much cheaper to build and have much shorter construction times. As an example, Blaschitz cited a fab that was built in Taiwan in about 19 to 20 months. He noted that a similar fab would take 38 months to build in the U.S. and 34 months in Europe.

The cost of building such facilities in the US is roughly twice as high as in Taiwan, with comparable equipment costs. “Building a wafer fabrication plant in the West costs twice as much and takes twice as long as building one in Taiwan,” Blaschitz concluded.

Image source: Exyte

Blaschitz cited supply chain efficiency as one of the main reasons for the difference: “Their supply chain is just incredibly good. And a lot of times it’s not that they’re much more precise, it’s that they know what they’re doing. If you look at a blueprint in Taiwan, half of what the Western world has is missing. They don’t need that detailed information; they do it every day, and that makes them very efficient.”

Blaschitz believes that the best solution is to use “virtual commissioning” directly during the planning and design phase. In his opinion, “with a digital twin, we can actually commission a factory without building it” – this will help identify obstacles, reduce operating costs and minimize carbon emissions.