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No. The minimum speed is 20%, so an AM3 will always have a minimum crafting speed of 0.25 regardless of how many productivity modules you use. This is necessary since additive effects could otherwise result in negative crafting speed/power use.
Speed modules do not reduce crafting speed and thus are unaffected by the minimum crafting speed.
Effective crafting time is raw crafting time divided by crafting speed, and thus an 80% reduction in effective crafting time will require a 500% increase in crafting speed (from 1.25 to 6.25) which is going to take 4 SM3s and 6 beacons with 2 SM3s each.
But that is not a good idea. You should be using productivity modules wherever possible combined with speed beacons to get reasonable crafting speeds (since power costs are additive it takes a miniscule increase in power to undo the effects of the productivity modules)
It would also be nice if there were more examples in the wiki. The one example giving the math behind SM's goes like this (the page on Modules):
"As a rule modules do not have diminishing returns (except that consumption is capped to -80% [Scott:efficiency modules?]), that is if an assembler is making 2 items per second, adding 1 speed 3 module (+50% speed) will increase item production by 1/s, a second speed3 module will increase production by the same 1/s."
So I guess they are saying that this assembler is making two items per second, and you've added an SM3. So production is increased by one per second (50% of the two), so now you are producing three items per second. A second SM3 would now give you four items per second.
What if we were talking about SM1, a 20% increase in speed. Using this two items per second example, now it would be 2.4 items per second. The second SM1 would give you a final result of 2.8 items per second.
It also seems you could place four SM3 modules in an assembler 3 and be fine. Assuming a base production of 1 per second, you'd get 1.5 per second on one SM3, add another SM3 and now you're at 2 per second, a third, 2.5 per second, a fourth, 3 per second. So you're tripling the amount of items you are making per unit of time.
Does that make sense?
-Scott
An AM1 has a Craft Speed of 0.5. An AM2 has a Craft Speed of 0.75. An AM3 has a Craft Speed of 1.25. Most other vanilla machines (Chemical Plant, Refinery, Centrifuge, Pumpjack, Stone Furnace) have a Craft Speed of 1, though the Burner Miner (0.25), Electric Miner (0.5), Steel and electric furnaces (both 2) do not.
A single Speed Module 3 increases the speed 50%. Two increase it 100%, aka double it. A third increases it by 150%, and a fourth by 200%. In other words, it is additive. Productivity Modules are additive as well; though they subtract from the machine's Craft Speed and add to the Productivity Bonus.
A Chemical Plant can have 3 modules. One fairly important recipe for a Chem Plant is Solid Fuel, with a Recipe Time of 2. Since the time it takes for any one machine to do its thing once is Recipe Time / Craft Speed, in this case 2 / 1 = 2, it takes 2 seconds for the Chem Plant to make some Solid Fuel. In one minute, it will make this recipe 30 times.
Add in 1 SM3, and the Craft Speed goes from 1, to 1.5. 2 / 1.5 = 1.33333 second apiece. 60 / (4/3))=45 times per minute, an exact 50% increase over the base of 30.
Add in a second SM3, and the Craft Speed goes to 2. 2/2=1, 60/1=60 times per minute, exactly twice the output of no modules.
A third SM3 brings the machine to 2.5 Craft Speed. 2/2.5= 0.8 ... 60 / 0.8 = 75 crafts er minute.
Each increase of 50% speed brought about an increase of 50% base items per minute. Since the base items per minute here was 30, 50% of that is 15, the increment that adding Speed Module 3's provided to the output.
An AM1 with its 0.5 Craft Speed cannot take any modules. An AM3 with its Craft Speed of 1.25 can take 4. Add in 4 PM3's and you lose 60% of the Craft Speed (1.25 - (0.6*1.25)=0.5) to get the exact same craft Speed as an AM1, but you also get the 40% bonus (which means free stuff) which means 40% more items produced per minute than the AM1 can make, for exactly the same resources. This is why most end game factories use Productivity Modules in machines, and Speed Modules in Beacons; the Beaconized SM3 counteract the speed lost from the PM3's, giving faster machines with productivity bonuses, resulting in an even faster output.
Exceptions to the "Productivity everything you can!" rule are Miners and Pumpjacks. Speed Module those. Or Efficiency Module them if they are in danger of unwanted attention due to pollution.
But yeah, I'm getting now that, in general, you want PM3's in the machines and SM3's in beacons.
If you have a AM3 with a base crafting speed of 1.25 then one PM1 will reduce that to 1.2 (a 4% reduction) while a AM2 will have its speed reduced from 0.75 to 0.7 (a 7% reduction).
It's best to not think of these values as percentages even though they are quoted as percentages.
This runs counter to observed behavior of the information window of machines in the game.
AM2 :
0 PM1's : 0.75 craft speed
1 PM1 : 0.7125 craft speed
2 PM1 : 0.675 craft speed
AM3 :
0 PM1 : 1.25 craft speed
1 PM1 : 1.1875 craft speed
2 PM1 : 1.125 craft speed
3 PM1 : 1.0625 craft speed
4 PM1 : 1.000 craft speed
Each of those craft speeds are 5% of the base apart from the one previous.
Lets use the chem plant making solid fuel that I used earlier.
Craft speed 1, recipe time 2, so 2 / 1 2 seconds per. 60 seconds/minute / 2 seconds/item = 30 items/minute
Add in one PM1, and the craft speed drops to 0.95, but the productivity increases 4%.
2 / 0.95 = 2.105. 60 / 2.105 = 28.5 items/min. 28.5 * 1.04 = 29.172 items/min. Bear in mind, these numbers are rounded off; over a period measured in hours (aka multiples of 60 minutes) the average may be off slightly.
So, the productivity increase does not quite compensate for the speed decrease when you look at item production rate. For that, you need Speed Modules in Beacons!
Lets say you are making the Solid fuel in a chem plant with three PM3's and it has 8 Beacons, each with 2 SM3's in them. That brings bonus productivity to 30%, with a crafting speed of 4.55!
2 / 4.55 = .43956 seconds/item. 60 / .43956 = 137.6273 items/min * 1.3 = 178.915 items/minute overall.
Replace the PM3's with SM3's and the bonus production drops to 0%, but the speed jumps to 6.5.
2 / 6.5 = .30769. 60 / .30769 = 195 items/minute. Hmm. somehow I did not expect this to produce more items/minute than the PM3's variant.
So why use PM3's instead of SM3's in the machines? Input. The PM3 chem plant only needed 1377 (rounding up) Light Oil/minute to produce the almost 179 Solid Fuel/minute. The SM3 chem plant needed 1950 Light Oil/minute to produce that 195 SF/minute.
In other words, it took (1950-1377=) 573 more Light Oil to produce the extra (195-179=) 16 additional Solid Fuel. its supposed to take 10 LO to make one SF. Not 573/16=35.8!
I have pondered how SM's work really great with recipes which take a long time to produce. If you apply a lot of SM's to a recipe which is already fast (like copper wire, for instance), you start to become bound by other factors, like the speed of your inserters and belts.
And the PM's can have issues on the output side; are you're inserters and belts fast enough to get the items out of the machine?