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Not really. Fabs don't become obsolete for 20-30 years because there is ample demand for processes that are decades old. Profit margins drop but by the time the

Not really. Fabs don't become obsolete for 20-30 years because there is ample demand for processes that are decades old. Profit margins drop but by the time they drop significantly, the fab investment is generally paid off and it becomes a gravy train. AFAIK Intel's last plant to close was D2 in Santa Clara - it was built in 1989 and closed in 2009 after 30 years. Their earlier Chandler, AZ plant closed after 20 years.

fulafel 5y ago
Sure, oversimplification in my question I guess - the returns on older fabs don't go to zero, but their products fetch a margin that's a function of how close to bleeding edge the process is. But the question still stands. (btw fab site lifecycles don't usually correspond 1:1 to fab equipment generations, they tend to get refitted, this was also the case in Intel's D2 which had an old process by the time of retirement but not 30 years old)
- spankyspangler 5y ago
  The big costs are the variable costs per chip though, which is why technology shrinks have delivered such great cost savings for the end product despite the fact that every shrink has required ever greater outlays in development costs and capex for the manufacturing plant. The saving in the variable costs are so large that they pay for all that and the price drops. So even if you have entirely paid off an old fab or bought one outright for ~$0 at a fire sale, you probably won't be able to make DRAM at a hugely lower overall cost. Slightly lower, perhaps.
  - fulafel 5y ago
    The figures I found put capital costs as the highest slice of the pie and growing faster than materials or labour costs [1] [2] [1] http://smithsonianchips.si.edu/ice/cd/CEICM/SECTION2.pdf http://smithsonianchips.si.edu/ice/cd/CEICM/SECTION2.pdf p. 5) [2] https://www.icknowledge.com/news/Technology%20and%20Cost%20Trends%20at%20Advanced%20Nodes%20-%20Revised.pdf https://www.icknowledge.com/news/Technology%20and%20Cost%20T... p. 9
    - spankyspangler 5y ago
      I could well be wrong, sorry I should not have tried to make such a strong statement I don't actually have much knowledge of recent technology nodes. In your first link I'm struggling to see it demonstrate what you say. Actually that's more what I'm familiar with. Obviously it's quite old though. The second link does seem to show the trend going to equipment costs and trending upward indeed. Although it doesn't seem very detailed, I suppose that first graph on the left on page 9 looks like mostly fixed costs in orange. Thanks for the link.

fulafel 5y ago

Sure, oversimplification in my question I guess - the returns on older fabs don't go to zero, but their products fetch a margin that's a function of how close to bleeding edge the process is. But the question still stands. (btw fab site lifecycles don't usually correspond 1:1 to fab equipment generations, they tend to get refitted, this was also the case in Intel's D2 which had an old process by the time of retirement but not 30 years old)

spankyspangler 5y ago
The big costs are the variable costs per chip though, which is why technology shrinks have delivered such great cost savings for the end product despite the fact that every shrink has required ever greater outlays in development costs and capex for the manufacturing plant. The saving in the variable costs are so large that they pay for all that and the price drops. So even if you have entirely paid off an old fab or bought one outright for ~$0 at a fire sale, you probably won't be able to make DRAM at a hugely lower overall cost. Slightly lower, perhaps.
- fulafel 5y ago
  The figures I found put capital costs as the highest slice of the pie and growing faster than materials or labour costs [1] [2] [1] http://smithsonianchips.si.edu/ice/cd/CEICM/SECTION2.pdf http://smithsonianchips.si.edu/ice/cd/CEICM/SECTION2.pdf p. 5) [2] https://www.icknowledge.com/news/Technology%20and%20Cost%20Trends%20at%20Advanced%20Nodes%20-%20Revised.pdf https://www.icknowledge.com/news/Technology%20and%20Cost%20T... p. 9
  - spankyspangler 5y ago
    I could well be wrong, sorry I should not have tried to make such a strong statement I don't actually have much knowledge of recent technology nodes. In your first link I'm struggling to see it demonstrate what you say. Actually that's more what I'm familiar with. Obviously it's quite old though. The second link does seem to show the trend going to equipment costs and trending upward indeed. Although it doesn't seem very detailed, I suppose that first graph on the left on page 9 looks like mostly fixed costs in orange. Thanks for the link.