8 ms·

I have been thinking about this a lot recently, and I think Canon and Nikon, both of whom produce Deep UV machinery (ie, equipment that uses a laser wavelength

I have been thinking about this a lot recently, and I think Canon and Nikon, both of whom produce Deep UV machinery (ie, equipment that uses a laser wavelength about an order of magnitude wider than EUV's 13.5nm), have an opportunity due to demand for legacy foundry processes. They are a tiny part of the photolithography equipment sub-sector, but the present moment is marked by overwhelming demand for semiconductors for automotive applications, and those chips aren't running on leading-edge nodes like TSMC 5nm or Intel 10nm (there's no reason for them to). If I were the CEO of a global automaker, I'd be buying legacy (22nm and older) foundry equipment in order to make chips in-house because the eventual product mix transition (ICE vs EV) means I'm going to need more custom semiconductors than ever before. The semiconductor industry is so complex that it depends upon companies in many nations, including Japan. No one nation owns the semiconductor lifecycle, but each part of the process is dominated (but not entirely owned) by one nation. Japan dominates wafer production. One company in the Netherlands dominates photolithography equipment. The United States dominates processor design. China dominates device assembly. Korea dominates NAND. Taiwan dominates foundry. Companies in all of these places are laying out a bunch of CapEx so clearly there's an anticipation of a rising tide that lifts all boats, rather than a rejiggering of market share that hurts one economy (forgetting China for a second) while helping another.

stefan_ 6y ago
Those chips are also low margin and the shortage is only because of a failure of forecasting. It's like building mask factories, now there is a glut.
- totalZero 6y ago
  Very smart comment, and that's the question: is the present spike in semiconductor demand a temporary situation, or a new reality? If this demand environment is a new reality, then prices will go up and it will take several years of CapEx to get them back down. If it's just a spike, then the pure-play foundries may still invest in those legacy production lines, but there will be less of a long-term presence. I am personally of the opinion that this is a permanent market shift; WFH is here to stay, so there has been real and lasting demand creation for cars. Plus, the transition to EV is undeniable, and will perhaps see an inflection point in this self-reflective moment where automakers have to shut down production lines and reassess their plans anyway.
  - baybal2 6y ago
    > is the present spike in semiconductor demand a temporary situation, or a new reality? I have access to quite pricey market research from Digitimes, SEMI and such. Biggest contributors to growth are things very, very remote from both cars, and trendy gadgets. You just keep getting more ICs put into just about everything, and at the same time very simple devices get bigger global penetration. For example, a giant growth centre been rooftop solar equipment for developing countries — completely missed, and invisible in the West. Electric mopeds, scooters, and lsevs — again, things mostly invisible, and unknown in the West. LED lighting — growth immeasurable, and hard to count Home appliances Power ICs, and motor drivers Security devices: locks, locators, CCTV, alarms — 100x+ growth over a decade Vending machines, signage — 60x growth over a decade
- hinkley 6y ago
  I like how the Olympic committee has tried to take into account that the buildout of facilities every 4 years follows a similar boom/bust cycle, and they're at least trying to think about how we can satisfy both short-term and long-term goals at the same time. For instance, a stadium where 30% of the seats are built to last, and the remaining 70% are bolted on, meant to be taken back off and recycled after the closing ceremonies. I don't know how you build a mask factory so you can use it for something else. I do know of textile factories that have pivoted temporarily. Can you build up a short-lived production line for an integrated circuit and then tear it down but leave all of the infrastructure in place to pivot to something else? What I hear out of Intel is that setting up such a fab is a long and expensive process. What I also hear is a lot of people challenging Intel's wisdom. So now I don't know what to think.
  - baybal2 6y ago
    > Can you build up a short-lived production line for an integrated circuit and then tear it down but leave all of the infrastructure in place to pivot to something else? Not at those margins. Most fabs build will be running 24/7 until they crumble to dust. TSMC still operates fabs built in eighties.
    - totalZero 6y ago
      > Most fabs build will be running 24/7 until they crumble to dust. This is false. Fabs get decommissioned from time to time. > TSMC still operates fabs built in eighties. I mean, kind of. TSMC's oldest operating fab is Fab 2; it was built in 1989 and it started production in 1990. https://investor.tsmc.com/static/annualReports/2016/english/e_12_1.html# https://investor.tsmc.com/static/annualReports/2016/english/... Fab 1 was decommissioned twenty years ago.
  - m4rtink 6y ago
    Well, it has been done in the past - automobile (and many other!) companies built tanks and other war material during WW2.
- baybal2 6y ago
  > Those chips are also low margin and the shortage is only because of a failure of forecasting Not at all, at all. People have foreseen that at least half a decade ago, it's just the reality beaten even most brave forecasts. Semiconductor economics is one of the most studied fields after agriculture, and industrial commodities economics.
- dillondoyle 6y ago
  Is there a mask glut seems the opposite? The N95s I get are a little bit cheaper but still $4 /per for the nice ones. And they aren't US market masks. I'm 95% sure they are real. Not the kind with the fancy foil seal but if they're fake I'm sure they have basically the same effect. Lately I wear 3M 1870+ and it has the best fit for a tight seal.
  - ChuckNorris89 6y ago
    In Austria they made N95(FFP2) masks mandatory in closed public spaces so supermarkets sell them at 0.59$ a piece or give them for free with each purchase. At that price, they're not the best quality ones, but better than cloth or surgical ones and their shape makes it difficult for idiots to wear them underneath their noses.
    - dillondoyle 6y ago
      Yeah they don't have to be super fancy! I would think fit is the #1 thing material sounds easy enough (maybe it's not I'm just intuiting). I am so depressed with my country (US). this should have been so obvious and we should have used Defense Production Act to scale it up 10 months ago. It sounds like Biden admin is advocating N95s now hopefully they use legal means to push for it.
- ksec 6y ago
  There is a glut for crappy mask. Decent ones are still not quite in balance. >because of a failure of forecasting It depends on which side of forecasting, was it demand or supply? It is always easy for outsider to say they should have built 10 Fabs 4 years ago and they would have been riding the tide. But even older ones are still CapEx intensive and relatively long ROI. Which means from a business prospective it is better safe than sorry. And that is especially true with TSMC who are extremely conservative. There was another comment about Auto Maker should built their own Fab. I really dont see how this would make any sense. All Auto Maker has to do to guarantee supply was to sign a long term agreement with TSMC, or even ask TSMC to built dedicated Fabs for them. But not a single client ( apart from Apple ) was willing to bet. No one was willing to bet their game for 3-4 years in advance. There is also the conservative nature of traditional business in demand side. If they sign it now at a cost that is 40% higher than their previous median, will they end up like Airliners hedging on Oil Price and ultimately cost them the billions. So it really is the problem from both side. And the same is true in ALL other market. Anyone who has ever worked in buy and sell, supply chain should see how similar the conversations are.
tooltower 6y ago
Out of all these, processor design (what you say is USA-dominated) seems like the one that involves the smallest amount of capital investment. And is therefore the easiest crown to lose, right?
- totalZero 6y ago
  In a world where you don't have protections for IP, yes. That's a major part of the reason that Chinese companies like Huawei and SMIC find themselves on the naughty list -- it's not just about national security and slave labor. However, companies like Qualcomm and ARM wouldn't be able to exist without a strong global IP law infrastructure, but the former is a juggernaut and the latter is an object of desire.
  - KaoruAoiShiho 6y ago
    Think it's more accurate to say the US dominates software ecosystems that keep the processor designs relevant. China and Korea also have competitive processors.
    - totalZero 6y ago
      My point in the comment to which you responded is not that entirety of each constituent stage of the semiconductor production cycle belongs entirely to a different country. Rather, I contend that the lion's share of each constituent stage is maintained by a different country. I agree that Korea has competitive processor designs. Of course, even Samsung uses many Qualcomm SoCs and licenses many Qualcomm patents. If you remove US-developed design IP entirely from the Samsung portfolio, how many Samsung products would be affected? I think many.
  - baybal2 6y ago
    > However, companies like Qualcomm and ARM wouldn't be able to exist without a strong global IP law infrastructure They could've easily did that. I myself saw rather new ARM cores being all around Chinese FTPs. The thing is, just macros, or verilog code alone is near useless without tons of documentation, spoonfeeding by ARM FAEs, and tooling support.
baybal2 6y ago
> those chips aren't running on leading-edge nodes like TSMC 5nm or Intel 10nm (there's no reason for them to). If I were the CEO of a global automaker, I'd be buying legacy (22nm and older) foundry equipment You can, but you would be few years late to the party. There are already dozens of n-th tier fab wannabes riding the trend. Really ancient fab tools are flying off the shelf like hot cookies. People even scoop eighties era equipment off Ebay, and such.
- totalZero 6y ago
  And yet, several multinational automakers have shut down production lines. Why can't they keep things going temporarily by spinning up those n-th tier fab wannabes? (your words lol) In my estimation, there are few trustworthy foundries that can facilitate the kind of scale that an automaker would need. If you're in a hotly competitive industry, you're not likely to contact some random fab freelancer to do a few runs of some chip you need, even if you have the design and everything ready to go. They're unlikely to do it at the quantity you need, on the timeline you need, to the degree of quality that you need, and with the secrecy that you need. I mean, if you're Denso or Bosch, shouldn't you be able to make your own chips? Auto parts have a long life cycle, so you can amortize the cost of the machinery over many years.
  - formerly_proven 6y ago
    Bosch has a semiconductor division which operates a few fabs in Germany.
    - totalZero 6y ago
      They operate three, and a fourth in Dresden is expected to begin production this year. Despite this, they haven't been able to make delivery of orders to VW Group, who are reportedly considering seeking damages in the eight- to nine-figure range from Bosch for production downtime due to shortages. https://europe.autonews.com/automakers/vw-may-seek-damages-bosch-and-conti-over-chip-shortages https://europe.autonews.com/automakers/vw-may-seek-damages-b...
  - 6y ago

stefan_ 6y ago

Those chips are also low margin and the shortage is only because of a failure of forecasting. It's like building mask factories, now there is a glut.

totalZero 6y ago
Very smart comment, and that's the question: is the present spike in semiconductor demand a temporary situation, or a new reality? If this demand environment is a new reality, then prices will go up and it will take several years of CapEx to get them back down. If it's just a spike, then the pure-play foundries may still invest in those legacy production lines, but there will be less of a long-term presence. I am personally of the opinion that this is a permanent market shift; WFH is here to stay, so there has been real and lasting demand creation for cars. Plus, the transition to EV is undeniable, and will perhaps see an inflection point in this self-reflective moment where automakers have to shut down production lines and reassess their plans anyway.
- baybal2 6y ago
  > is the present spike in semiconductor demand a temporary situation, or a new reality? I have access to quite pricey market research from Digitimes, SEMI and such. Biggest contributors to growth are things very, very remote from both cars, and trendy gadgets. You just keep getting more ICs put into just about everything, and at the same time very simple devices get bigger global penetration. For example, a giant growth centre been rooftop solar equipment for developing countries — completely missed, and invisible in the West. Electric mopeds, scooters, and lsevs — again, things mostly invisible, and unknown in the West. LED lighting — growth immeasurable, and hard to count Home appliances Power ICs, and motor drivers Security devices: locks, locators, CCTV, alarms — 100x+ growth over a decade Vending machines, signage — 60x growth over a decade
hinkley 6y ago
I like how the Olympic committee has tried to take into account that the buildout of facilities every 4 years follows a similar boom/bust cycle, and they're at least trying to think about how we can satisfy both short-term and long-term goals at the same time. For instance, a stadium where 30% of the seats are built to last, and the remaining 70% are bolted on, meant to be taken back off and recycled after the closing ceremonies. I don't know how you build a mask factory so you can use it for something else. I do know of textile factories that have pivoted temporarily. Can you build up a short-lived production line for an integrated circuit and then tear it down but leave all of the infrastructure in place to pivot to something else? What I hear out of Intel is that setting up such a fab is a long and expensive process. What I also hear is a lot of people challenging Intel's wisdom. So now I don't know what to think.
- baybal2 6y ago
  > Can you build up a short-lived production line for an integrated circuit and then tear it down but leave all of the infrastructure in place to pivot to something else? Not at those margins. Most fabs build will be running 24/7 until they crumble to dust. TSMC still operates fabs built in eighties.
  - totalZero 6y ago
    > Most fabs build will be running 24/7 until they crumble to dust. This is false. Fabs get decommissioned from time to time. > TSMC still operates fabs built in eighties. I mean, kind of. TSMC's oldest operating fab is Fab 2; it was built in 1989 and it started production in 1990. https://investor.tsmc.com/static/annualReports/2016/english/e_12_1.html# https://investor.tsmc.com/static/annualReports/2016/english/... Fab 1 was decommissioned twenty years ago.
- m4rtink 6y ago
  Well, it has been done in the past - automobile (and many other!) companies built tanks and other war material during WW2.
baybal2 6y ago
> Those chips are also low margin and the shortage is only because of a failure of forecasting Not at all, at all. People have foreseen that at least half a decade ago, it's just the reality beaten even most brave forecasts. Semiconductor economics is one of the most studied fields after agriculture, and industrial commodities economics.
dillondoyle 6y ago
Is there a mask glut seems the opposite? The N95s I get are a little bit cheaper but still $4 /per for the nice ones. And they aren't US market masks. I'm 95% sure they are real. Not the kind with the fancy foil seal but if they're fake I'm sure they have basically the same effect. Lately I wear 3M 1870+ and it has the best fit for a tight seal.
- ChuckNorris89 6y ago
  In Austria they made N95(FFP2) masks mandatory in closed public spaces so supermarkets sell them at 0.59$ a piece or give them for free with each purchase. At that price, they're not the best quality ones, but better than cloth or surgical ones and their shape makes it difficult for idiots to wear them underneath their noses.
  - dillondoyle 6y ago
    Yeah they don't have to be super fancy! I would think fit is the #1 thing material sounds easy enough (maybe it's not I'm just intuiting). I am so depressed with my country (US). this should have been so obvious and we should have used Defense Production Act to scale it up 10 months ago. It sounds like Biden admin is advocating N95s now hopefully they use legal means to push for it.
ksec 6y ago
There is a glut for crappy mask. Decent ones are still not quite in balance. >because of a failure of forecasting It depends on which side of forecasting, was it demand or supply? It is always easy for outsider to say they should have built 10 Fabs 4 years ago and they would have been riding the tide. But even older ones are still CapEx intensive and relatively long ROI. Which means from a business prospective it is better safe than sorry. And that is especially true with TSMC who are extremely conservative. There was another comment about Auto Maker should built their own Fab. I really dont see how this would make any sense. All Auto Maker has to do to guarantee supply was to sign a long term agreement with TSMC, or even ask TSMC to built dedicated Fabs for them. But not a single client ( apart from Apple ) was willing to bet. No one was willing to bet their game for 3-4 years in advance. There is also the conservative nature of traditional business in demand side. If they sign it now at a cost that is 40% higher than their previous median, will they end up like Airliners hedging on Oil Price and ultimately cost them the billions. So it really is the problem from both side. And the same is true in ALL other market. Anyone who has ever worked in buy and sell, supply chain should see how similar the conversations are.

tooltower 6y ago

Out of all these, processor design (what you say is USA-dominated) seems like the one that involves the smallest amount of capital investment. And is therefore the easiest crown to lose, right?

totalZero 6y ago
In a world where you don't have protections for IP, yes. That's a major part of the reason that Chinese companies like Huawei and SMIC find themselves on the naughty list -- it's not just about national security and slave labor. However, companies like Qualcomm and ARM wouldn't be able to exist without a strong global IP law infrastructure, but the former is a juggernaut and the latter is an object of desire.
- KaoruAoiShiho 6y ago
  Think it's more accurate to say the US dominates software ecosystems that keep the processor designs relevant. China and Korea also have competitive processors.
  - totalZero 6y ago
    My point in the comment to which you responded is not that entirety of each constituent stage of the semiconductor production cycle belongs entirely to a different country. Rather, I contend that the lion's share of each constituent stage is maintained by a different country. I agree that Korea has competitive processor designs. Of course, even Samsung uses many Qualcomm SoCs and licenses many Qualcomm patents. If you remove US-developed design IP entirely from the Samsung portfolio, how many Samsung products would be affected? I think many.
- baybal2 6y ago
  > However, companies like Qualcomm and ARM wouldn't be able to exist without a strong global IP law infrastructure They could've easily did that. I myself saw rather new ARM cores being all around Chinese FTPs. The thing is, just macros, or verilog code alone is near useless without tons of documentation, spoonfeeding by ARM FAEs, and tooling support.

baybal2 6y ago

> those chips aren't running on leading-edge nodes like TSMC 5nm or Intel 10nm (there's no reason for them to). If I were the CEO of a global automaker, I'd be buying legacy (22nm and older) foundry equipment You can, but you would be few years late to the party. There are already dozens of n-th tier fab wannabes riding the trend. Really ancient fab tools are flying off the shelf like hot cookies. People even scoop eighties era equipment off Ebay, and such.

totalZero 6y ago
And yet, several multinational automakers have shut down production lines. Why can't they keep things going temporarily by spinning up those n-th tier fab wannabes? (your words lol) In my estimation, there are few trustworthy foundries that can facilitate the kind of scale that an automaker would need. If you're in a hotly competitive industry, you're not likely to contact some random fab freelancer to do a few runs of some chip you need, even if you have the design and everything ready to go. They're unlikely to do it at the quantity you need, on the timeline you need, to the degree of quality that you need, and with the secrecy that you need. I mean, if you're Denso or Bosch, shouldn't you be able to make your own chips? Auto parts have a long life cycle, so you can amortize the cost of the machinery over many years.
- formerly_proven 6y ago
  Bosch has a semiconductor division which operates a few fabs in Germany.
  - totalZero 6y ago
    They operate three, and a fourth in Dresden is expected to begin production this year. Despite this, they haven't been able to make delivery of orders to VW Group, who are reportedly considering seeking damages in the eight- to nine-figure range from Bosch for production downtime due to shortages. https://europe.autonews.com/automakers/vw-may-seek-damages-bosch-and-conti-over-chip-shortages https://europe.autonews.com/automakers/vw-may-seek-damages-b...
- 6y ago