8 ms·

Well, of course, TSMC doesn't want chip supplies to be onshored. It's everyone other than TSMC and Taiwan willing to do so. West wants to have reliable access t

Well, of course, TSMC doesn't want chip supplies to be onshored. It's everyone other than TSMC and Taiwan willing to do so. West wants to have reliable access to chips without potential war with China. In addition to geopolitics, wouldn't overproduction of chips be beneficial to consumers in the form of cheaper chips and greater variety?

core-utility 5y ago
> In addition to geopolitics, wouldn't overproduction of chips be beneficial to consumers in the form of cheaper chips and greater variety? Another reason why TSMC would be against this
hwillis 5y ago
greater variety is not a thing that would happen (and incidentally, as an electrical engineer, there's plenty of variety already). The hardware used in semiconductor foundries is all made by the same few companies, which is a major reason everyone gets similar advances at the same time- they're all working with the same tools. The vast majority of variety in product lines comes from who is ordering the chips, not the foundries where they are made. Adding more foundries will not introduce any more different chips, just chips that have subtly different performance or reliability, which is already a nightmare engineers deal with continuously. China sells the cheapest chips, and companies only buy the cheapest chips. Making more foundries in the EU and Europe will not change that fact. China will have the huge majority of demand. If anything, a reduction in demand will give more power to counterfeiters and raise the floor price you have to pay to avoid them. It won't really impact prices at all (counterfeit chips are almost nonexistent for anything costing more than a couple cents) but it will make life significantly more irritating for people like me.
- kennywinker 5y ago
  When I read greater variety I was thinking of a greater variety of functions not a greater variety of fabrication techniques. Like if you’re shopping for a regulator there are dozens of manufacturers with dozens of options. If you’re shopping for something strange… say a 16x16 switch matrix? I think there’s a single chip? Excess capacity because of a proliferation of fabs could lead to a lot of cool chips being made for a low cost. Which in turn enables new technology in that “these are cheap, what can i make with them?” way.
- MangoCoffee 5y ago
  >The hardware used in semiconductor foundries is all made by the same few companies, which is a major reason everyone gets similar advances at the same time- they're all working with the same tools. it depend on the craft smith's skill. everyone have access to Python but some is able to craft a robust app while others app is buggy and unusable. TSMC consistently have the best yields and quality chips
  - yellow_postit 5y ago
    Acquired did a podcast deep dive in TSMC history which supports your argument — they’ve arrive at those yields from just a massive set of iterations. I had a lot more respect to the art + science aspect of chip manufacturing the more I learn about fabs, having originally thought it was a basic recipe easily replicated. [1] https://www.acquired.fm/episodes/tsmc https://www.acquired.fm/episodes/tsmc
- R0b0t1 5y ago
  Eventually the tech to create the chips will become more common and people will make their own purpose built chips. Eventually.
  - hwillis 5y ago
    That assertion fits worse with this industry than like, any other. The constant flow of freshly obsolete semiconductor machinery literally feeds entire other industries. There is always a huge amount of easily available equipment to make high performance semiconductors because new technology is constantly replacing it with new tooling. Expertise and facility time are the limiting factors. Low volume purpose built SOCs will never be cheap (outside chiplet-based designs) because the ability to fill out a production line is critical to amortizing the immense startup cost of a design. It is already possible to have completely custom chips built in lots of <100 on older manufacturing nodes. Runs cost low five figures to low millions of dollars. Some college courses involve having an entire chip made. Anyone can order one on 20-30 year old equipment. There is no demand and it will never get significantly cheaper aside from mass-produced chiplet ICs.
    - R0b0t1 5y ago
      You could say the same thing about something less niche like spectrum analyzers 20-30 years ago. They used to take up equipment cabinets, and you needed purpose built versions for specific analyses.
peppertree 5y ago
If you wait on TSMC it would never happen. I'm bullish on Intel to pull this off. Intel has the expertise, the right CEO to execute, the government support, and most importantly the drive for survival.
axg11 5y ago
> West wants to have reliable access to chips without potential war with China. The West also wants reliable access to chips _despite_ war with China.
55873445216111 5y ago
Historically, excess wafer fab capacity is what bankrupts semiconductor companies. An underloaded fab very rapidly eats up profit. Over the last 10 years, the industry has become very cautious not to overbuild capacity. We have now arrived at the opposite end of the long term (~10 year) cycle and we have accumulated a serious underinvestment in capacity.
- hoseja 5y ago
  Why isn't it possible to do this industry at less than razor edge?
  - sct202 5y ago
    It wasn't razor edge in 2009, when TSMC was running a 40% utilization rate. Forecasting is hard, and when you have in recent experience a massive glut it makes companies conservative about demand forecasts and investments.
    - xxpor 5y ago
      See also: oil "capital discipline" right now
  - blihp 5y ago
    Because that's not where you end up in a world without numerous serious competitors.
    - Macha 5y ago
      I would generally assume a lack of competitors would lead to a decreased need to innovate and therefore fatter margins.
      - blihp 5y ago
        Right, which is pretty much where we are now: very fat margins largely because fabs have been banging up against capacity for a while now because they could. (i.e. to avoid the risk of overcapacity... why take a chance if you don't have to?) In a more perfect world with healthy competition, one or more of them would see the lack of capacity and see opportunity to take the risk to build a new fab to take some of that business. The fact that it's basically governments saying 'you will do this' tells you everything you need to know about how much the players are really driven by competition. It's a great time to be a semi manufacturer: TSMC has customers like Apple funding their expansion, Intel has the U.S. government funding theirs. Can you blame them? A decade of record profits isn't what it used to be...
joe_the_user 5y ago
The thing about chips that is causing all the paradoxical effects we're seeing is that chip production extraordinarily specialized and capital intensive. You can't just build more chips - you have to build more chip factories for the type of chip you want. And if you build more chip factories than you need or factories of the wrong type, some of those factories will be unprofitable, will shutdown, at high cost, and then you will have fewer chips than you need, again.
cultofmetatron 5y ago
plus, tsmc having the majority of their fabs in Taiwan is the biggest incentive for the united states to step in if China tries to invade.
2OEH8eoCRo0 5y ago
If chips are cheap then isn't it tougher to turn a profit building wildly expensive fabs?

core-utility 5y ago

> In addition to geopolitics, wouldn't overproduction of chips be beneficial to consumers in the form of cheaper chips and greater variety? Another reason why TSMC would be against this

hwillis 5y ago

greater variety is not a thing that would happen (and incidentally, as an electrical engineer, there's plenty of variety already). The hardware used in semiconductor foundries is all made by the same few companies, which is a major reason everyone gets similar advances at the same time- they're all working with the same tools. The vast majority of variety in product lines comes from who is ordering the chips, not the foundries where they are made. Adding more foundries will not introduce any more different chips, just chips that have subtly different performance or reliability, which is already a nightmare engineers deal with continuously. China sells the cheapest chips, and companies only buy the cheapest chips. Making more foundries in the EU and Europe will not change that fact. China will have the huge majority of demand. If anything, a reduction in demand will give more power to counterfeiters and raise the floor price you have to pay to avoid them. It won't really impact prices at all (counterfeit chips are almost nonexistent for anything costing more than a couple cents) but it will make life significantly more irritating for people like me.

kennywinker 5y ago
When I read greater variety I was thinking of a greater variety of functions not a greater variety of fabrication techniques. Like if you’re shopping for a regulator there are dozens of manufacturers with dozens of options. If you’re shopping for something strange… say a 16x16 switch matrix? I think there’s a single chip? Excess capacity because of a proliferation of fabs could lead to a lot of cool chips being made for a low cost. Which in turn enables new technology in that “these are cheap, what can i make with them?” way.
MangoCoffee 5y ago
>The hardware used in semiconductor foundries is all made by the same few companies, which is a major reason everyone gets similar advances at the same time- they're all working with the same tools. it depend on the craft smith's skill. everyone have access to Python but some is able to craft a robust app while others app is buggy and unusable. TSMC consistently have the best yields and quality chips
- yellow_postit 5y ago
  Acquired did a podcast deep dive in TSMC history which supports your argument — they’ve arrive at those yields from just a massive set of iterations. I had a lot more respect to the art + science aspect of chip manufacturing the more I learn about fabs, having originally thought it was a basic recipe easily replicated. [1] https://www.acquired.fm/episodes/tsmc https://www.acquired.fm/episodes/tsmc
R0b0t1 5y ago
Eventually the tech to create the chips will become more common and people will make their own purpose built chips. Eventually.
- hwillis 5y ago
  That assertion fits worse with this industry than like, any other. The constant flow of freshly obsolete semiconductor machinery literally feeds entire other industries. There is always a huge amount of easily available equipment to make high performance semiconductors because new technology is constantly replacing it with new tooling. Expertise and facility time are the limiting factors. Low volume purpose built SOCs will never be cheap (outside chiplet-based designs) because the ability to fill out a production line is critical to amortizing the immense startup cost of a design. It is already possible to have completely custom chips built in lots of <100 on older manufacturing nodes. Runs cost low five figures to low millions of dollars. Some college courses involve having an entire chip made. Anyone can order one on 20-30 year old equipment. There is no demand and it will never get significantly cheaper aside from mass-produced chiplet ICs.
  - R0b0t1 5y ago
    You could say the same thing about something less niche like spectrum analyzers 20-30 years ago. They used to take up equipment cabinets, and you needed purpose built versions for specific analyses.

peppertree 5y ago

If you wait on TSMC it would never happen. I'm bullish on Intel to pull this off. Intel has the expertise, the right CEO to execute, the government support, and most importantly the drive for survival.

axg11 5y ago

> West wants to have reliable access to chips without potential war with China. The West also wants reliable access to chips _despite_ war with China.

55873445216111 5y ago

Historically, excess wafer fab capacity is what bankrupts semiconductor companies. An underloaded fab very rapidly eats up profit. Over the last 10 years, the industry has become very cautious not to overbuild capacity. We have now arrived at the opposite end of the long term (~10 year) cycle and we have accumulated a serious underinvestment in capacity.

hoseja 5y ago
Why isn't it possible to do this industry at less than razor edge?
- sct202 5y ago
  It wasn't razor edge in 2009, when TSMC was running a 40% utilization rate. Forecasting is hard, and when you have in recent experience a massive glut it makes companies conservative about demand forecasts and investments.
  - xxpor 5y ago
    See also: oil "capital discipline" right now
- blihp 5y ago
  Because that's not where you end up in a world without numerous serious competitors.
  - Macha 5y ago
    I would generally assume a lack of competitors would lead to a decreased need to innovate and therefore fatter margins.
    - blihp 5y ago
      Right, which is pretty much where we are now: very fat margins largely because fabs have been banging up against capacity for a while now because they could. (i.e. to avoid the risk of overcapacity... why take a chance if you don't have to?) In a more perfect world with healthy competition, one or more of them would see the lack of capacity and see opportunity to take the risk to build a new fab to take some of that business. The fact that it's basically governments saying 'you will do this' tells you everything you need to know about how much the players are really driven by competition. It's a great time to be a semi manufacturer: TSMC has customers like Apple funding their expansion, Intel has the U.S. government funding theirs. Can you blame them? A decade of record profits isn't what it used to be...

joe_the_user 5y ago

The thing about chips that is causing all the paradoxical effects we're seeing is that chip production extraordinarily specialized and capital intensive. You can't just build more chips - you have to build more chip factories for the type of chip you want. And if you build more chip factories than you need or factories of the wrong type, some of those factories will be unprofitable, will shutdown, at high cost, and then you will have fewer chips than you need, again.

cultofmetatron 5y ago

plus, tsmc having the majority of their fabs in Taiwan is the biggest incentive for the united states to step in if China tries to invade.

2OEH8eoCRo0 5y ago

If chips are cheap then isn't it tougher to turn a profit building wildly expensive fabs?