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The combination of it being a very specialized and expensive industry with high upfront costs, extremely high RnD, cut throat competition and patent la

The combination of it being a very specialized and expensive industry with high upfront costs, extremely high RnD, cut throat competition and patent landmine What prevents (companies in) Western nations from creating their own fabs on their own home soil? Obviously, labor costs are much lower elsewhere. But the massive capital expenditures involved mean that labor is a comparatively much lower % of overall costs compared to, say, spinning up a factory to make cheap shirts. I wonder if Western nations/companies will be spurred by this chip shortage to start prioritizing their own foundries. Like energy independence, except... silicon independence.

thereddaikon 5y ago
They have and are. Intel has major fabs in the US but until recently didn't sell foundry services. Global Foundries has fabs in the US, Germany and various other places. Samsung of course has its fabs in Korea. There are more fabs elsewhere that aren't on the absolute cutting edge. The problem isn't that TSMC is the only fab. Its that semiconductor fabrication is inelastic, in other words it cant respond quickly to changing demand. The lead time to start producing a given chip design is fairly long and a fab like TSMC will have its available capacity contracted out in advance. They were already running at capacity before COVID because their 7nm process was very popular. You cant just build a fab overnight and start producing chips. Just building the place and getting the appropriate equipment installed takes over a year and then there is a lead time for adapting the chip design to your process. You actually design your chips with the proprietary fab process in mind. So if you had contracted with TSMC but they cant fill your order and you have to move to one of the newly available Intel fabs your engineers must adapt your design before you can start producing again. Every step of this process takes time that means that no reaction due to COVID would be showing results yet. There will be a shortage for the foreseeable future.

thereddaikon 5y ago

They have and are. Intel has major fabs in the US but until recently didn't sell foundry services. Global Foundries has fabs in the US, Germany and various other places. Samsung of course has its fabs in Korea. There are more fabs elsewhere that aren't on the absolute cutting edge. The problem isn't that TSMC is the only fab. Its that semiconductor fabrication is inelastic, in other words it cant respond quickly to changing demand. The lead time to start producing a given chip design is fairly long and a fab like TSMC will have its available capacity contracted out in advance. They were already running at capacity before COVID because their 7nm process was very popular. You cant just build a fab overnight and start producing chips. Just building the place and getting the appropriate equipment installed takes over a year and then there is a lead time for adapting the chip design to your process. You actually design your chips with the proprietary fab process in mind. So if you had contracted with TSMC but they cant fill your order and you have to move to one of the newly available Intel fabs your engineers must adapt your design before you can start producing again. Every step of this process takes time that means that no reaction due to COVID would be showing results yet. There will be a shortage for the foreseeable future.