4 ms·

It's much more complicated then that. TSMC relies on a company called ASML which itself relies on a company called Carl Ziess. ASML makes the EUV etchers, and

It's much more complicated then that. TSMC relies on a company called ASML which itself relies on a company called Carl Ziess. ASML makes the EUV etchers, and carl ziess makes the optical components needed to focus the light... both companies hold exclusive technological monopolies on their respective products. In addition to this, Samsung and Intel are not that far behind the technology curve for making these chips... with Intel quickly shifting to include the capability of being a global foundry for making chips outside of their own designs. Historically the landscape in the chip industry changes very quickly. I'm sure your analogy fits some technology in the world, but semiconductors is not it.

mgfist 5y ago
ASML has 4750 suppliers. The supply chain in the chip world is probably the most complex system in existence. Both astounding and frightening.
- riffraff 5y ago
  > the most complex system in existence And by definition, anything that uses a chip will depend on this, I think? Cars, airplanes, game consoles, mobile phones... Heck, we have chips in pregnancy pee sticks these days. So, I think all supply chains for "modern" things are insanely complex and effectively incomprehensible. And this is not new, see the classic "I, Pencil"[0]. > Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree. [0] https://en.wikipedia.org/wiki/I,_Pencil https://en.wikipedia.org/wiki/I,_Pencil
  - knolan 5y ago
    I presume you’re referencing this? https://twitter.com/foone/status/1302820468819288066?s=21 https://twitter.com/foone/status/1302820468819288066?s=21
    - ralfd 5y ago
      Almost. This was first: https://news.ycombinator.com/item?id=24371703 https://news.ycombinator.com/item?id=24371703
  - kossTKR 5y ago
    It would be highly interesting to see a "tree of suppliers" for a single product - including how many people each part relied on, history etc. I would imagine a smartphone for example having an unimaginably large diagram.
    - philistine 5y ago
      Who makes the acid used to bleach the recycled cardboard for the box? Seriously if you include the box, a phone touches so much of our economy it’s astounding.
    - techdragon 5y ago
      Outside of specific fields/circumstances and/or a generous interpretation of just what counts as part of the supply chain, it’s basically impossible. The moment even the simplest items, like surplus vegetables grown and harvested by a slightly above subsistence level farmer on traditionally owned land, get carried in a truck, or even a bicycle, your supply chain explodes into a vast interconnected web of circular links. Which trucks trucked the parts to make the trucks to truck the parts to make the trucks that trucked the parts to make the trucks that… and so on.
  - N1H1L 5y ago
    The complexity of modern supply chains is in my opinion the strongest case for government regulations and against a lot of libertarian economic ideas. It is impossible for the end-consumer, and even a lot of producers to know the provenance of every component in the supply chain. Even if every American consumer is against the destruction of rainforests, connecting the dots to palm oil cultivation and understanding the scale of ubiquity of palm oil in supermarket products is impossible. The only way out of this is government regulations.
- gocartStatue 5y ago
  I think that Eli Goldratt would not agree with you; number of connections does not determine the complexity of the system, it can be less complicated than system with smaller amount of connections. I believe these suppliers are pretty specialized, and that among those 4k+ there are "backup" ones too. Disclosure: I know nothing about chip making :)
ethbr0 5y ago
Saying that TSMC relies on ASML and Zeiss is a bit reductive. If those were the ingredients of semiconductor success, then Intel wouldn't be in the position it's in. Historically, the landscape of the chip industry has had many leading node players. Now, it has ~1.75. TSMC & Samsung. With Intel and SMIC behind them. The reduction to those 4 players, coupled with demand from mobile, GPUs, and ML accelerators, is pretty unique since the earliest days of the industry... when pretty obscene profits were also made for a long time (Intel, late 80s to 2000). I'd call a decade of dominance a pretty stable industry.
- deltaonefour 5y ago
  >Saying that TSMC relies on ASML and Zeiss is a bit reductive. If those were the ingredients of semiconductor success I never said this at all. All I am saying is that the supply chain is complex and that to say TSMC is the sole monopoly holder of semiconductors is very very inaccurate.
blueblisters 5y ago
ASML supplies the machines, TSMC builds the infrastructure around them to maximize yields/make the investment profitable. Both of them have built complementary IP that is nearly impossible to replicate without violating multiple patents and spending 10s of billions of dollars.
- sooheon 5y ago
  In case any readers are (like I was) torn on the question of whether such a patent based legal monopoly (or duopoly or oligopoly...) is justifiable compensation for the resources these companies undoubtedly invested, check out this short intro to a highly recommended book that deals with this issue: http://www.dklevine.com/papers/imbookfinal01.pdf http://www.dklevine.com/papers/imbookfinal01.pdf
  - deltaonefour 5y ago
    Still even without the patents. The knowledge and know how is incredibly hard to replicate. China doesn't even respect patents and they can't fully replicate the associated tech.
  - Tarq0n 5y ago
    That’s a great reference. A number of mainland countries were only able to catch up to Britain in industrialisation by suspending patent law for a while. Looking back I think it’s obvious that the result of this was hugely positive. This also makes me somewhat sympathetic towards the lack of ip protections in China and other developing economies. Too often the patent system is used to kick away the ladder once one party has gained an advantage.
barry-cotter 5y ago
> Historically the landscape in the chip industry changes very quickly. I'm sure your analogy fits some technology in the world, but semiconductors is not it. Semiconductors is as close as we've ever come to a natural monopoly. Aircraft are second. Boeing and Airbus are the only games in town.,
- baq 5y ago
  for the big aircraft, yes. there's bombardier in the smaller segment and it's doing quite well.
  - atq2119 5y ago
    And don't forget about Embraer.
    - baq 5y ago
      i totally forgot! yes, absolutely.
_fizz_buzz_ 5y ago
TSMC obviously relies on ASML. But a foundry is a complex beast. You don't simply place an order with ASML, set up a clean room and when the machine arrives press the on-button. There are A LOT of other processing steps that have to work properly (lithography is only one of them, albeit arguably the most complex one). What TSMC does is HARD. Just as TSMC cannot build their on EUV machine, ASML wouldn't be able to run their own fab.
- deltaonefour 5y ago
  Of course. Never stated otherwise. However what TSMC does is arguably more easily replicate-able by another foundry (say Samsung or Intel) than the EUV machine. That being said, my main point wasn't to say that ASML has an exclusive monopoly over EUVs and therefore all chips... far from it. I was only illustrating the complexity of the supply chain. Many different entities have monopolies and the landscape constantly shifts.
  - ksec 5y ago
    As ASML CEO once said "Dont ask me about how well our EUV TwinScan is working, ask TSMC, they know more about our machine than we do."

mgfist 5y ago

ASML has 4750 suppliers. The supply chain in the chip world is probably the most complex system in existence. Both astounding and frightening.

riffraff 5y ago
> the most complex system in existence And by definition, anything that uses a chip will depend on this, I think? Cars, airplanes, game consoles, mobile phones... Heck, we have chips in pregnancy pee sticks these days. So, I think all supply chains for "modern" things are insanely complex and effectively incomprehensible. And this is not new, see the classic "I, Pencil"[0]. > Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree. [0] https://en.wikipedia.org/wiki/I,_Pencil https://en.wikipedia.org/wiki/I,_Pencil
- knolan 5y ago
  I presume you’re referencing this? https://twitter.com/foone/status/1302820468819288066?s=21 https://twitter.com/foone/status/1302820468819288066?s=21
  - ralfd 5y ago
    Almost. This was first: https://news.ycombinator.com/item?id=24371703 https://news.ycombinator.com/item?id=24371703
- kossTKR 5y ago
  It would be highly interesting to see a "tree of suppliers" for a single product - including how many people each part relied on, history etc. I would imagine a smartphone for example having an unimaginably large diagram.
  - philistine 5y ago
    Who makes the acid used to bleach the recycled cardboard for the box? Seriously if you include the box, a phone touches so much of our economy it’s astounding.
  - techdragon 5y ago
    Outside of specific fields/circumstances and/or a generous interpretation of just what counts as part of the supply chain, it’s basically impossible. The moment even the simplest items, like surplus vegetables grown and harvested by a slightly above subsistence level farmer on traditionally owned land, get carried in a truck, or even a bicycle, your supply chain explodes into a vast interconnected web of circular links. Which trucks trucked the parts to make the trucks to truck the parts to make the trucks that trucked the parts to make the trucks that… and so on.
- N1H1L 5y ago
  The complexity of modern supply chains is in my opinion the strongest case for government regulations and against a lot of libertarian economic ideas. It is impossible for the end-consumer, and even a lot of producers to know the provenance of every component in the supply chain. Even if every American consumer is against the destruction of rainforests, connecting the dots to palm oil cultivation and understanding the scale of ubiquity of palm oil in supermarket products is impossible. The only way out of this is government regulations.
gocartStatue 5y ago
I think that Eli Goldratt would not agree with you; number of connections does not determine the complexity of the system, it can be less complicated than system with smaller amount of connections. I believe these suppliers are pretty specialized, and that among those 4k+ there are "backup" ones too. Disclosure: I know nothing about chip making :)

ethbr0 5y ago

Saying that TSMC relies on ASML and Zeiss is a bit reductive. If those were the ingredients of semiconductor success, then Intel wouldn't be in the position it's in. Historically, the landscape of the chip industry has had many leading node players. Now, it has ~1.75. TSMC & Samsung. With Intel and SMIC behind them. The reduction to those 4 players, coupled with demand from mobile, GPUs, and ML accelerators, is pretty unique since the earliest days of the industry... when pretty obscene profits were also made for a long time (Intel, late 80s to 2000). I'd call a decade of dominance a pretty stable industry.

deltaonefour 5y ago
>Saying that TSMC relies on ASML and Zeiss is a bit reductive. If those were the ingredients of semiconductor success I never said this at all. All I am saying is that the supply chain is complex and that to say TSMC is the sole monopoly holder of semiconductors is very very inaccurate.

blueblisters 5y ago

ASML supplies the machines, TSMC builds the infrastructure around them to maximize yields/make the investment profitable. Both of them have built complementary IP that is nearly impossible to replicate without violating multiple patents and spending 10s of billions of dollars.

sooheon 5y ago
In case any readers are (like I was) torn on the question of whether such a patent based legal monopoly (or duopoly or oligopoly...) is justifiable compensation for the resources these companies undoubtedly invested, check out this short intro to a highly recommended book that deals with this issue: http://www.dklevine.com/papers/imbookfinal01.pdf http://www.dklevine.com/papers/imbookfinal01.pdf
- deltaonefour 5y ago
  Still even without the patents. The knowledge and know how is incredibly hard to replicate. China doesn't even respect patents and they can't fully replicate the associated tech.
- Tarq0n 5y ago
  That’s a great reference. A number of mainland countries were only able to catch up to Britain in industrialisation by suspending patent law for a while. Looking back I think it’s obvious that the result of this was hugely positive. This also makes me somewhat sympathetic towards the lack of ip protections in China and other developing economies. Too often the patent system is used to kick away the ladder once one party has gained an advantage.

barry-cotter 5y ago

> Historically the landscape in the chip industry changes very quickly. I'm sure your analogy fits some technology in the world, but semiconductors is not it. Semiconductors is as close as we've ever come to a natural monopoly. Aircraft are second. Boeing and Airbus are the only games in town.,

baq 5y ago
for the big aircraft, yes. there's bombardier in the smaller segment and it's doing quite well.
- atq2119 5y ago
  And don't forget about Embraer.
  - baq 5y ago
    i totally forgot! yes, absolutely.

_fizz_buzz_ 5y ago

TSMC obviously relies on ASML. But a foundry is a complex beast. You don't simply place an order with ASML, set up a clean room and when the machine arrives press the on-button. There are A LOT of other processing steps that have to work properly (lithography is only one of them, albeit arguably the most complex one). What TSMC does is HARD. Just as TSMC cannot build their on EUV machine, ASML wouldn't be able to run their own fab.

deltaonefour 5y ago
Of course. Never stated otherwise. However what TSMC does is arguably more easily replicate-able by another foundry (say Samsung or Intel) than the EUV machine. That being said, my main point wasn't to say that ASML has an exclusive monopoly over EUVs and therefore all chips... far from it. I was only illustrating the complexity of the supply chain. Many different entities have monopolies and the landscape constantly shifts.
- ksec 5y ago
  As ASML CEO once said "Dont ask me about how well our EUV TwinScan is working, ask TSMC, they know more about our machine than we do."