Currently a $57B market cap company. Not sure they can afford this, even with the NY incentives....and spread over 20 years. Its value will be less than their book value in a few more months if rates keep hiking.
Probably better to think of this as a defense project than a commercial venture. Other geopolitical events could push this into “money is no object” territory.
This new Fab is intended for DRAM so maybe storage isn't related at all to what Micron intends to do in New York.
Domestic chip production is important in securing supplies for military use as we're seeing. If rumors are true, Russia has been ripping apart commercial appliances to scavenge ICs for use in military hardware since they don't currently have access to a sufficient source through global trade for fairly obvious reasons. Conflicts could cause similar problems for US forces so having enough capacity locally to support their government's assertion over control of output (Defense Production Act or something like that permits them taking a commercial company's output and diverting all of it for government usage as part of a national emergency IIRC) would maybe not support you getting a replacement PC or phone, but could keep tanks rolling off assembly lines and missiles flying toward targets.
Came here to post something like this. Euro's scared of Putin. TSMC and Samsung scared of China, and NK.
Where do you build plants if you want them to remain safe in case of a local conflict? If tensions remain this way or escalate I can see a lot of manufacturing returning to the western Hemisphere.
As a general rule, the statement that there is no safe place can be applied to virtually any scenario from where you build your fabs to personal safety among a crowd of Twitch streamer stalkers. That's why companies don't assume complete safety and instead use risk management and risk mitigation techniques in order to make business decisions while factoring in cost and benefits. This new plant clearly meets Micron criteria or ground wouldn't be getting broken for the facility.
$9B in profit last year; only $7.4B in long term debt.
Over the last 4 years they've average $25B in revenue, sigma of ~$5B. Assuming they massively lose revenue, that's $400B in revenues to pay back $100B in capital loans - most of which won't be disbursed until they've earned >$200B in revenue (meaning if they fall short of revenue projections, the loans can be cancelled).
I love people who don't understand long term finance.
Also, this guy was just riffing. I have a bachelors of science in economics and I remember my business finance class well. What he said is the dumbest financial assessment of the company taking on this debt. There are a lot of biased domestic/foreign-influence criticisms happening in the AnandTech comments for any story related to the CHIPS and Sciences Act in order to attack it and US production fabs. I never expected this on AnandTech comments but follow down the thread for how this “interesting” comment is dumb or a troll pretending to know finance.
That’s interesting, but you never factored 20 years of inflation into the calculation. If we were to work with numbers like this today then the equivalent would be $60.75 billion of debt. And if you knew what market cap meant, then you wouldn't have cited it as if it’s a constant thing. In the last year their market cap was around double what it is today. You’re also assuming this isn’t replacing or connected with other debt they have on their balance sheets.
I love people who don’t have a degree in economics, or understand corporate business finance.
“Assuming they massively lose revenue” what are you talking about? If it’s sarcasm then hey sure that’s funny but AnandTech is a serious place and not appropriate for those numbers and sarcasm. Equities are a hedge against inflation. If you don’t know that then you’re not likely to pass a securities-law exam in the United States to be an investment advisor. Revenue will go up with inflation if they match previous market performance. So that means at the current revenue they would be bringing in around $600 billion over those 20 years. Not 400. This post was like an exam question in a business finance class that concludes, “Why is this assessment wrong?”
This is a more sensible location for a chip fab. It's got plenty of fresh water. It runs off of the highly reliable NPCC electrical grid. It's not prone to tornadoes or hurricanes. It's in close proximity to a highly skilled labor force.
I'm always surprised to see companies build outside of the Northeastern United States just for this reason. Historically (and currently) many tech companies have manufactured their electronics in this region, going back a century to the likes of RCA and GE, to more recent examples such as IBM, GloFo and Intel (who had been in negotiations to acquire GloFo for a year) adding to the already large footprint of fabs in the area.
Could it be environmental regulations? Wastewater or other toxins might need to be cleaned up in the NE whereas other States might be more lax about it?
Environmental regulations should fall under federal authority (EPA) as states should not be giving a pass on this sort of thing.
But as history has shown, we know how that goes. It could be worse than we know now that the EPA has been stripped of vast regulatory power by the supreme court.
I think we should be cautious where we get information about water usage because while it may have used to be true they could easily use tap water, I suspect in the last decade or two that has become impractical without serious filtration because it would contaminate the wafers and to some degree the cleanroom environment. I expect they take the used water and put it through stages of reverse osmosis because even the used water is probably cleaner than the tap water, and if they use a lot of it then it would be cheaper to reuse as much as possible. They’re pretty picky about having as much control over contamination as possible. Nobody’s exactly making clean rooms with opening windows for fresh air.
It’s federal regardless, as a minimum. But keep in mind the plant isn’t that far from where Love Canal was, which was a trigger to create the EPA in the first place. New York wouldn’t forget that quickly. In state regulations, usually they don’t differ much more than scientifically questionable issues. For instance that, California warning we always see, I’ve only ever seen it for substances that are shown in studies to be possible or probable carcinogens. The federal standard usually ends up aligning in some way but with detectable threshold limits in parts per billion or million. It comes with more conclusive studies but is defined in a different way so it needs to be implemented differently. Also, the Great Lakes System flows to the Atlantic from the rivers that feed it. Pollution won’t go upstream. If there was any it would fall under the EPA and US-Canada regulations.
My guess is that you need a chemical factory producing high purity hydrogen fluoride for EUV lithography, and that it's expensive to build such a chemical plant, along with the logistics to deliver it to the fab. Most of those chemical plants are in Texas/Arizona area, where they were already supplying for Intel/Micron/Samsung
Demand for chemicals must exist before production will move into an area so the Fab must pull on the supply chain before a chemical company will invest in a plant nearby.
Yeah, likely the future in this case. But it could also be moved in on freight trains. A train can move that much weight more efficiently than we perceive with trucks.
Rather sensible if you consider how easy it would be to cut the United States off from chip suppliers as lots of production is in places that the US sorts seem to consider unfriendly (China) or at risk of being exploded (Taiwan), but I do understand that US residents are quite caught up in the swirl of making everything about party politics. Its quite comical to watch how easily US folk are led around by their noses from various media sources such as the Aussies (Murdochs, I think they are) that own Fox News and stir up discontent to get viewership and advert money as a result. But carry on over there.
I’m an American and you have no idea how accurate you statement is from what people have said on AT comments recently. I don’t support the destruction of property, but the people criticizing the CHIPS Act have no clue how serious a threat it is to national and global security if China invaded Taiwan and TSMC DIDN’T blow up their own fab (no more specifics). It’s the biggest reason China wants to invade, because they’re 2-4 generations behind or 5-10 years behind. They just want to take over TSMC’s fabs.
I’d rather see an ASML EUV machine in smitherines than in the hands of Russia or China. And if it ends up with one, they’ll pass it to the other or run it for the other.
I wish that a disruptive investment would be done for High Volume Manufacturing (HVM) of Non Volatile Memory (NVM) 64Gbit or higher MRAM chips instead of volatile DRAM memory.
I believe that NVM Memory like MRAM, SOT-MRAM,… would enable so many new disruptive use cases, especially in Internet of Things (IoT) devices, Artificial Intelligence (AI), robotics,…
Unfortunately like emerging Electric Vehicules (EV) competing with Internal Combustion Engine (ICE), there is a likely a need for incentives to make emerging NVM memories cost competitive with volatile DRAM…
I also wish TSMC would be given incentives to manufacture NVM MRAM wich would push other memory manufacturers to follow-up…
Whew, remembered my password from when anand was in high school. This factory will be just 7-10 miles east of my house, can see the area from drone at my house.
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webdoctors - Monday, October 10, 2022 - link
Currently a $57B market cap company. Not sure they can afford this, even with the NY incentives....and spread over 20 years. Its value will be less than their book value in a few more months if rates keep hiking.flgt - Monday, October 10, 2022 - link
Probably better to think of this as a defense project than a commercial venture. Other geopolitical events could push this into “money is no object” territory.Threska - Monday, October 10, 2022 - link
Replacing every form of spinning rust with SSD and NVMe would eat all of that production.PeachNCream - Tuesday, October 11, 2022 - link
This new Fab is intended for DRAM so maybe storage isn't related at all to what Micron intends to do in New York.Domestic chip production is important in securing supplies for military use as we're seeing. If rumors are true, Russia has been ripping apart commercial appliances to scavenge ICs for use in military hardware since they don't currently have access to a sufficient source through global trade for fairly obvious reasons. Conflicts could cause similar problems for US forces so having enough capacity locally to support their government's assertion over control of output (Defense Production Act or something like that permits them taking a commercial company's output and diverting all of it for government usage as part of a national emergency IIRC) would maybe not support you getting a replacement PC or phone, but could keep tanks rolling off assembly lines and missiles flying toward targets.
Holliday75 - Wednesday, October 12, 2022 - link
Came here to post something like this. Euro's scared of Putin. TSMC and Samsung scared of China, and NK.Where do you build plants if you want them to remain safe in case of a local conflict? If tensions remain this way or escalate I can see a lot of manufacturing returning to the western Hemisphere.
Threska - Wednesday, October 12, 2022 - link
"Where do you build plants if you want them to remain safe in case of a local conflict?"Out in the middle of the ocean.
https://time.com/6177847/biden-pledged-to-defeat-d...
ballsystemlord - Wednesday, October 12, 2022 - link
That time's article doesn't mention the ocean and appears to be entirely about a violent criminal.Threska - Wednesday, October 12, 2022 - link
The POINT is that there is NO safe place from a conflict. Be it other countries, or domestic terrorism.PeachNCream - Thursday, October 13, 2022 - link
As a general rule, the statement that there is no safe place can be applied to virtually any scenario from where you build your fabs to personal safety among a crowd of Twitch streamer stalkers. That's why companies don't assume complete safety and instead use risk management and risk mitigation techniques in order to make business decisions while factoring in cost and benefits. This new plant clearly meets Micron criteria or ground wouldn't be getting broken for the facility.Doug_S - Monday, October 10, 2022 - link
Same way someone with a net worth of $100K is able to buy a $300K house.Though this is more like building a $300K house one room at a time every other year over a couple decades, and you make money off the rooms.
Sahrin - Monday, October 10, 2022 - link
$9B in profit last year; only $7.4B in long term debt.Over the last 4 years they've average $25B in revenue, sigma of ~$5B. Assuming they massively lose revenue, that's $400B in revenues to pay back $100B in capital loans - most of which won't be disbursed until they've earned >$200B in revenue (meaning if they fall short of revenue projections, the loans can be cancelled).
I love people who don't understand long term finance.
bji - Monday, October 10, 2022 - link
Your comment was informative but why did you have to add that last asshat sentence?RedGreenBlue - Tuesday, October 11, 2022 - link
People be mean to Vladimir, so Vladimir be mean to most serious American technology site.RedGreenBlue - Tuesday, October 11, 2022 - link
Also, thanks for letting me know the a**hat word isn’t blocked. Never knew that.RedGreenBlue - Tuesday, October 11, 2022 - link
Or maybe it’s a GlobalFoundries employee.RedGreenBlue - Tuesday, October 11, 2022 - link
Also, this guy was just riffing. I have a bachelors of science in economics and I remember my business finance class well. What he said is the dumbest financial assessment of the company taking on this debt. There are a lot of biased domestic/foreign-influence criticisms happening in the AnandTech comments for any story related to the CHIPS and Sciences Act in order to attack it and US production fabs. I never expected this on AnandTech comments but follow down the thread for how this “interesting” comment is dumb or a troll pretending to know finance.quorm - Tuesday, October 11, 2022 - link
Must be convenient to label anyone who disagrees with you a bot or troll.Good job posting a deluge of comments on this minor article. Were you able to drown everyone else out with your noise?
Threska - Wednesday, October 12, 2022 - link
Talks to himself too.RedGreenBlue - Wednesday, October 12, 2022 - link
Says the troll I keep seeing who politicizes a successful law because it’s success and public support support hurts his feelings.RedGreenBlue - Tuesday, October 11, 2022 - link
That’s interesting, but you never factored 20 years of inflation into the calculation. If we were to work with numbers like this today then the equivalent would be $60.75 billion of debt. And if you knew what market cap meant, then you wouldn't have cited it as if it’s a constant thing. In the last year their market cap was around double what it is today. You’re also assuming this isn’t replacing or connected with other debt they have on their balance sheets.I love people who don’t have a degree in economics, or understand corporate business finance.
RedGreenBlue - Tuesday, October 11, 2022 - link
You also ignored any tax advantages they’ll get which effects their margins, ROI and amplifies the debt they can take on.RedGreenBlue - Tuesday, October 11, 2022 - link
“Assuming they massively lose revenue” what are you talking about? If it’s sarcasm then hey sure that’s funny but AnandTech is a serious place and not appropriate for those numbers and sarcasm. Equities are a hedge against inflation. If you don’t know that then you’re not likely to pass a securities-law exam in the United States to be an investment advisor. Revenue will go up with inflation if they match previous market performance. So that means at the current revenue they would be bringing in around $600 billion over those 20 years. Not 400.This post was like an exam question in a business finance class that concludes, “Why is this assessment wrong?”
RedGreenBlue - Tuesday, October 11, 2022 - link
*after accounting for inflation the $600 billion in cumulative revenue would be like $800 billion after 20 years.RedGreenBlue - Tuesday, October 11, 2022 - link
Congrats you were off by a factor of 2. You really know long term finance. You should work for Lehman Brothers.RedGreenBlue - Tuesday, October 11, 2022 - link
Market cap doesn’t say much about loan qualification. It’s basically irrelevant.RedGreenBlue - Tuesday, October 11, 2022 - link
It also doesn’t do much for valuation.block2 - Monday, October 24, 2022 - link
They build over 20 years or slower, likely financed with 30 year loans.meacupla - Monday, October 10, 2022 - link
This is a more sensible location for a chip fab.It's got plenty of fresh water. It runs off of the highly reliable NPCC electrical grid. It's not prone to tornadoes or hurricanes. It's in close proximity to a highly skilled labor force.
Samus - Monday, October 10, 2022 - link
I'm always surprised to see companies build outside of the Northeastern United States just for this reason. Historically (and currently) many tech companies have manufactured their electronics in this region, going back a century to the likes of RCA and GE, to more recent examples such as IBM, GloFo and Intel (who had been in negotiations to acquire GloFo for a year) adding to the already large footprint of fabs in the area.webdoctors - Monday, October 10, 2022 - link
Could it be environmental regulations? Wastewater or other toxins might need to be cleaned up in the NE whereas other States might be more lax about it?Samus - Tuesday, October 11, 2022 - link
Environmental regulations should fall under federal authority (EPA) as states should not be giving a pass on this sort of thing.But as history has shown, we know how that goes. It could be worse than we know now that the EPA has been stripped of vast regulatory power by the supreme court.
RedGreenBlue - Tuesday, October 11, 2022 - link
I think we should be cautious where we get information about water usage because while it may have used to be true they could easily use tap water, I suspect in the last decade or two that has become impractical without serious filtration because it would contaminate the wafers and to some degree the cleanroom environment. I expect they take the used water and put it through stages of reverse osmosis because even the used water is probably cleaner than the tap water, and if they use a lot of it then it would be cheaper to reuse as much as possible. They’re pretty picky about having as much control over contamination as possible. Nobody’s exactly making clean rooms with opening windows for fresh air.RedGreenBlue - Tuesday, October 11, 2022 - link
Besides that water is probably supplied by the Great Lakes system being so close to Lake Ontario. Same reason German brew-meisters went to Milwaukee.RedGreenBlue - Tuesday, October 11, 2022 - link
It’s federal regardless, as a minimum. But keep in mind the plant isn’t that far from where Love Canal was, which was a trigger to create the EPA in the first place. New York wouldn’t forget that quickly. In state regulations, usually they don’t differ much more than scientifically questionable issues. For instance that, California warning we always see, I’ve only ever seen it for substances that are shown in studies to be possible or probable carcinogens. The federal standard usually ends up aligning in some way but with detectable threshold limits in parts per billion or million. It comes with more conclusive studies but is defined in a different way so it needs to be implemented differently. Also, the Great Lakes System flows to the Atlantic from the rivers that feed it. Pollution won’t go upstream. If there was any it would fall under the EPA and US-Canada regulations.meacupla - Monday, October 10, 2022 - link
My guess is that you need a chemical factory producing high purity hydrogen fluoride for EUV lithography, and that it's expensive to build such a chemical plant, along with the logistics to deliver it to the fab. Most of those chemical plants are in Texas/Arizona area, where they were already supplying for Intel/Micron/SamsungPeachNCream - Tuesday, October 11, 2022 - link
Demand for chemicals must exist before production will move into an area so the Fab must pull on the supply chain before a chemical company will invest in a plant nearby.RedGreenBlue - Tuesday, October 11, 2022 - link
Yeah, likely the future in this case. But it could also be moved in on freight trains. A train can move that much weight more efficiently than we perceive with trucks.Arsenica - Tuesday, October 11, 2022 - link
HF is used for some etching processes. Nothing to do with lithography per se.nandnandnand - Monday, October 10, 2022 - link
"think 64Gb DDR5 chips"I can think of much larger numbers. Let's octuple our RAM already.
RedGreenBlue - Tuesday, October 11, 2022 - link
Yeah, seriously. Leading edge better be more than this in a few years.Techie2 - Monday, October 10, 2022 - link
Gotz to get me Mo Money from the Biden regime.PeachNCream - Tuesday, October 11, 2022 - link
Rather sensible if you consider how easy it would be to cut the United States off from chip suppliers as lots of production is in places that the US sorts seem to consider unfriendly (China) or at risk of being exploded (Taiwan), but I do understand that US residents are quite caught up in the swirl of making everything about party politics. Its quite comical to watch how easily US folk are led around by their noses from various media sources such as the Aussies (Murdochs, I think they are) that own Fox News and stir up discontent to get viewership and advert money as a result. But carry on over there.RedGreenBlue - Tuesday, October 11, 2022 - link
I’m an American and you have no idea how accurate you statement is from what people have said on AT comments recently. I don’t support the destruction of property, but the people criticizing the CHIPS Act have no clue how serious a threat it is to national and global security if China invaded Taiwan and TSMC DIDN’T blow up their own fab (no more specifics). It’s the biggest reason China wants to invade, because they’re 2-4 generations behind or 5-10 years behind. They just want to take over TSMC’s fabs.RedGreenBlue - Tuesday, October 11, 2022 - link
The world economy would basically stop.RedGreenBlue - Tuesday, October 11, 2022 - link
I’d rather see an ASML EUV machine in smitherines than in the hands of Russia or China. And if it ends up with one, they’ll pass it to the other or run it for the other.Diogene7 - Friday, October 14, 2022 - link
I wish that a disruptive investment would be done for High Volume Manufacturing (HVM) of Non Volatile Memory (NVM) 64Gbit or higher MRAM chips instead of volatile DRAM memory.I believe that NVM Memory like MRAM, SOT-MRAM,… would enable so many new disruptive use cases, especially in Internet of Things (IoT) devices, Artificial Intelligence (AI), robotics,…
Unfortunately like emerging Electric Vehicules (EV) competing with Internal Combustion Engine (ICE), there is a likely a need for incentives to make emerging NVM memories cost competitive with volatile DRAM…
I also wish TSMC would be given incentives to manufacture NVM MRAM wich would push other memory manufacturers to follow-up…
block2 - Monday, October 24, 2022 - link
Whew, remembered my password from when anand was in high school.This factory will be just 7-10 miles east of my house, can see the area from drone at my house.