Fab investment where the money goes
What a fab buys.
A leading-edge fab costs up to $20 billion before it makes a single chip. About half of that is machines, and TSMC writes its machines off in five years.
The scene is a fab with its floor laid out by the tool market: each coloured block gets floor space in proportion to what the world spent on that kind of tool in 2024. Scroll to go on.
SIA and BCG (September 2020); TSMC financial statements. Named again where used.
01 The split
Half is machines.
SIA and BCG put a new fab at roughly $5 billion for advanced analog up to $20 billion for advanced logic or memory. "About half" of that goes to manufacturing equipment, and construction takes 20% to 40%. The rest is everything else.
SIA/BCG, "Government Incentives and US Competitiveness in Semiconductor Manufacturing", September 2020. "Everything else" is our remainder, not their category. Ten-year cost of ownership for advanced logic or memory, same report. A figure of 70 to 80% for equipment circulates widely; we found no source for it.
02 Wafer fab equipment
Which machines.
The world spent about $104 billion on fab tools in 2024. Lithography is the largest single market, but etch and deposition together are bigger. The block heights in the scene are decorative; floor space is market share.
Segment sales from CSET's Supply Chain Explorer, built on TechInsights data published May 2025. Shares are our arithmetic over the eight segments. This is the world market, not one fab's shopping list: a memory fab and a logic fab buy different mixes. SEMI counts the 2024 fab-tool market at $104.3 billion.
03 Writing it off
Every wafer pays rent.
A fab's machines lose value on the books over a few years, and each year's loss is a cost of every wafer made that year. TSMC depreciates machinery over 5 years and buildings over 10 to 20. In 2023 Intel stretched its machines from five years to eight.
Straight-line arithmetic on your inputs, at full output. For scale, CSET estimated about $4,235 of capital consumed per 5 nm wafer, and found depreciation at about a quarter of TSMC's revenue over 2004 to 2018. This is why fabs run day and night: an idle machine still costs the same.
04 Announced projects
The price tags.
Recent projects, at the amounts the companies announced. TSMC now puts Arizona at $265 billion for six fabs, two packaging plants and an R&D centre, up from $12 billion in 2020. Intel's €30 billion Magdeburg fab was cancelled.
Governments pay part. The EU Chips Act aims at more than €43 billion of public money; the US CHIPS programme has $39 billion for manufacturing incentives.
TSMC Arizona page; Micron (January 2026); NIST (Samsung Taylor); TSMC press releases (JASM, ESMC); The Register (Magdeburg); European Commission; NIST CHIPS. Euro projects are drawn grey and not converted to dollars. Announced amounts span many years and are not comparable one to one.
05 Where to go next
Money into machines.
Each block on that floor has its own explainer.
- Writing with light: the lithography block
- Sculpting in atoms: the etch and deposition blocks
- What a chip costs: from wafer cost to chip cost
- The memory cycle: what happens when everyone builds at once
- SIA/BCG: Government Incentives and US Competitiveness (2020)
- CSET/ETO Supply Chain Explorer · SEMI: 2024 equipment sales
- TSMC financial statements · Intel Q1 2023 · CSET: AI Chips
- TSMC Arizona · Micron New York · NIST: Samsung Taylor
- TSMC: JASM · TSMC: ESMC · The Register: Magdeburg
- European Commission: Chips Act · NIST: CHIPS