[azemetre]

It costs over $5 billion dollars to build a single fab. I can only assume the more complicated chips costs 3-4 times more.

It also takes over three years to build the plant itself. We aren't even talking about the people you'd even need to employ, design, and run the place (highly specialized labor).

This is such a huge burdensome cost. It's not even a guarantee that that such an investment would even make sense once 5-years pass.

I do think there should be more fabs and having them located in one area of the world is already playing out to be a geopolitical nightmare. It's obviously going to become a national security issue for nearly every industrialized country on earth over the next decade if not sooner.

[lovich]

In the article it says they are committing to buying the entire production lines output. Isn't that just committing to spending as much money as building the factories + the profit of the vendor, but with no control over the actual production ?

[andrewxdiamond]

It’s very unlikely that the deal says “we will buy everything you sell us no matter what.” It’s probably a typical purchasing agreement with tolerances and QA, just paid in advance.

Thus there is still a lot of risk being taken on by the fabs. The production could go sour, geopolitics could change, resources might be unavailable, etc.

The purchasing companies are externalizing all of this risk by purchasing the products instead of the company.

[hermitdev]

The chip companies probably have forms of insurance in place to cover losses if their independent supply chain partners fail to deliver that they wouldn't be able to get if the partners were integrated.

[lovich]

ah, that was the part I did not understand