5 ms·

> note that 85% of the world's capital spend on chip fabs is in Korea, China, Taiwan and Japan. Hence, 85% of the world chips are fabricated in that region. I

> note that 85% of the world's capital spend on chip fabs is in Korea, China, Taiwan and Japan. Hence, 85% of the world chips are fabricated in that region. I don't follow the logic. Why would the first 85% imply the second 85%?

11thEarlOfMar 6y ago
That's true, it really doesn't immediately mean that. Over time, should the regional spend patterns persist, it would in fact mean that in dollar terms. Edit: Perhaps should have said 'will be'. It's difficult to nail down the breakout of production regionally, because, for example, the US has 85% of the global semiconductor sales, but only 44% of that 85% are fabricated in the US. Here is the 2019 breakdown from Semiconductor International Association[0]. In unit terms, it could be quite different since there are so many low-value chips made on legacy equipment that has been depreciated. [0] https://www.semiconductors.org/wp-content/uploads/2019/05/2019-SIA-Factbook-FINAL.pdf https://www.semiconductors.org/wp-content/uploads/2019/05/20...
- winter_blue 6y ago
  > because, for example, the US has 85% of the global semiconductor sales This is incorrect. I looked at the PDF that you had linked to[0], and it says, on page 14 (of the PDF) that the total sales in the Americas is 22% of global sales. They say "Americas", so that includes Canada, Mexico, Central, and South America. The Asia Pacific region is where 60.3% of all semiconductors are sold to. And China is the largest consumer of semiconductors, at 33.8%. [0] https://www.semiconductors.org/wp-content/uploads/2019/05/2019-SIA-Factbook-FINAL.pdf https://www.semiconductors.org/wp-content/uploads/2019/05/20... (under Section 2: Global Market, on page 15 of the PDF / page 11 of the numbering scheme they use)
  - 11thEarlOfMar 6y ago
    I believe the 85% refers to global sales by firms headquartered in the US. That includes Intel & TI, but also Fabless, like nVidia, Broadcom, AMD, Qualcomm.
Pet_Ant 6y ago
I guess assuming linear correlation between spend and capacity?
craftinator 6y ago
Assuming that fab equipment has a relatively flat price in terms of production capability, it will be true over time. These are the places that purchase 85% the equipment, the equipment produces chips, so these places produce 85% of chips. Of course, some of the equipment will yield higher or lower chip outputs than others, and some of it will be shipped/resold elsewhere, but with large geographic and time scales, the output percentage will tend toward the capital spent percentage.
- nine_k 6y ago
  But how do you measure the output? I can assume that the price per wafer is relatively flat, but neither the size, nor the complexity, nor the dollar value linearly follow from it.
baybal2 6y ago
I wouldn't be surprised if the volume is actually bigger if you count not the money value, but wafers.

11thEarlOfMar 6y ago

That's true, it really doesn't immediately mean that. Over time, should the regional spend patterns persist, it would in fact mean that in dollar terms. Edit: Perhaps should have said 'will be'. It's difficult to nail down the breakout of production regionally, because, for example, the US has 85% of the global semiconductor sales, but only 44% of that 85% are fabricated in the US. Here is the 2019 breakdown from Semiconductor International Association[0]. In unit terms, it could be quite different since there are so many low-value chips made on legacy equipment that has been depreciated. [0] https://www.semiconductors.org/wp-content/uploads/2019/05/2019-SIA-Factbook-FINAL.pdf https://www.semiconductors.org/wp-content/uploads/2019/05/20...

winter_blue 6y ago
> because, for example, the US has 85% of the global semiconductor sales This is incorrect. I looked at the PDF that you had linked to[0], and it says, on page 14 (of the PDF) that the total sales in the Americas is 22% of global sales. They say "Americas", so that includes Canada, Mexico, Central, and South America. The Asia Pacific region is where 60.3% of all semiconductors are sold to. And China is the largest consumer of semiconductors, at 33.8%. [0] https://www.semiconductors.org/wp-content/uploads/2019/05/2019-SIA-Factbook-FINAL.pdf https://www.semiconductors.org/wp-content/uploads/2019/05/20... (under Section 2: Global Market, on page 15 of the PDF / page 11 of the numbering scheme they use)
- 11thEarlOfMar 6y ago
  I believe the 85% refers to global sales by firms headquartered in the US. That includes Intel & TI, but also Fabless, like nVidia, Broadcom, AMD, Qualcomm.

Pet_Ant 6y ago

I guess assuming linear correlation between spend and capacity?

craftinator 6y ago

Assuming that fab equipment has a relatively flat price in terms of production capability, it will be true over time. These are the places that purchase 85% the equipment, the equipment produces chips, so these places produce 85% of chips. Of course, some of the equipment will yield higher or lower chip outputs than others, and some of it will be shipped/resold elsewhere, but with large geographic and time scales, the output percentage will tend toward the capital spent percentage.

nine_k 6y ago
But how do you measure the output? I can assume that the price per wafer is relatively flat, but neither the size, nor the complexity, nor the dollar value linearly follow from it.

baybal2 6y ago

I wouldn't be surprised if the volume is actually bigger if you count not the money value, but wafers.