[News] OpenAI’s Bold Vision: Investing Heavily to Build 36 Wafer Fabs

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There are signs that OpenAI, the company that rose to fame with its AI models, is now eyeing the semiconductor manufacturing sector. However, can building a wafer fab be an easy success?

Recently, international media revealed details of OpenAI CEO Sam Altman’s meetings with senior executives from multiple chip manufacturers during his visit to Asia last year.

Altman visited top executives at companies such as TSMC and Samsung, proposing an ambitious plan to invest $7 trillion to build 36 new wafer fabs and data centers to drive the development of artificial intelligence. Altman envisioned that these fabs, funded by the United Arab Emirates, would produce AI chips, which OpenAI and other companies could use to build AI data centers.

The report highlighted that the scale of the investment Altman mentioned is equivalent to a quarter of the annual output of the U.S. economy. To meet OpenAI’s expansion needs for computing power, it would take several years to complete the necessary wafer fabs.

However, due to cost considerations, TSMC did not endorse Altman’s plan. TSMC executives considered Altman’s proposal too aggressive and risky. Even building a few more wafer fabs involves high risk due to the immense capital required, let alone 36 fabs.

How Much Does a Wafer Fab Cost? Hundreds of Billions of Dollars

In recent years, driven by the demand for AI models, the need for chips has surged, and wafer fabs have been expanding rapidly. However, as OpenAI’s experience shows building a wafer fab is no simple task. It faces challenges such as international dynamics, costs, and technological hurdles, with cost being the largest barrier.

The cost of a wafer fab primarily involves land and facility construction, equipment procurement, technology development and intellectual property, as well as operation and maintenance. Land and facility construction take up a significant portion, as a fab requires extensive land for building plants and basic infrastructure such as electricity, water supply, and communication.

On the equipment side, the purchase of lithography machines, etching machines, ion implanters, and thin-film deposition tools is a major expense, especially for advanced lithography machines, which are extremely costly.

Additionally, a wafer fab requires significant research and operational costs, including intellectual property, equipment maintenance, staff training, safety protocols, and environmental management, all of which demand continuous investment from manufacturers.

When all these factors are calculated, the cost of building a wafer fab is extremely high. Moreover, as chip manufacturing processes evolve, the cost of fabs continues to rise. The industry estimates that the cost of a modern fab is in the range of billions of dollars. For example, Intel’s two factories in Arizona are expected to cost $15 billion each, while Samsung’s fab in Taylor, Texas, is projected to cost $25 billion.

Regional Differences in Wafer Fab Costs

It’s also worth noting that the cost of building a wafer fab varies by region. In Asia, for example, due to a well-established supply chain, abundant talent, and policy support, the cost of building a fab is relatively lower. In regions like Europe, the U.S., and the Middle East, however, costs may be higher due to the need to import technology, train talent, and develop a complete supply chain.

(Photo credit: Intel)