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The highest costs in Semiconductor fabrication are the specialized machines needed. Most of them are at best dual sourced. Many are single sourced. The fact a t

The highest costs in Semiconductor fabrication are the specialized machines needed. Most of them are at best dual sourced. Many are single sourced. The fact a technician in the US can make $100k when their counterpart in China would make $50k doesn't matter when the EUV Lithography machine is hundreds of millions of dollars.

andrewmutz 4y ago
Who makes those expensive machines? Are they made in-house by companies like TSMC? Or are they purchased from others? And whats the geopolitics of that part of the supply chain (made in taiwan? made in china? made elsewhere?)
- thechao 4y ago
  In many ways, ASML: https://www.asml.com/en/products/euv-lithography-systems https://www.asml.com/en/products/euv-lithography-systems
  - briffle 4y ago
    ASML is the very high end, but there are many other manufacturers as well. Canon and Nikon both make lithography systems used in many wafer fabs.
    - r00fus 4y ago
      I really doubt anyone else than ASML can do 4nm (which this factory is planned to target).
  - tpowell 4y ago
    Interesting 18min CNBC tour of ASML and their unique technology: https://youtu.be/iSVHp6CAyQ8 https://youtu.be/iSVHp6CAyQ8
- pkaye 4y ago
  The machines are made by other companies. Lithography is the most expensive now and its made by ASML in Netherlands is the only solution for EUV lithography. But there are many steps in manufacturing and a machine for each. The major equipment manufactures are spread across US, Europe and Japan. In the US the three big equipment manufacturers are Applied Materials and Lam Research and KLA. The costs are probably driven by extreme engineering requirements (temperature, pressure, corrosive chemicals, low contamination) and R&D costs to meet these requirements. The production volumes are not high either. Its not like they are building millions of these machines. Asianometry on YouTube is a good source for this kind of topic. https://www.youtube.com/watch?v=5Ge2RcvDlgw https://www.youtube.com/watch?v=5Ge2RcvDlgw
brookst 4y ago
Capex amortizable across the life of the fab and usually treated beneficially for tax purposes (though these fabs are so tax-special that may be meaningless). Opex is with you forever and affects the economics of the business much more profoundly.
- thereddaikon 4y ago
  The semiconductor industry is somewhat special in that it requires nearly constant investment in not just R&D but also in upgrading existing fabs to keep up with the cutting edge. And these are well into the billions of dollars. This is not a problem for players who have dropped out of the race like GloFlo. But its definitely the case for TSMC, Intel and Samsung. Your last three serious players who aren't working for the PRC.

andrewmutz 4y ago

Who makes those expensive machines? Are they made in-house by companies like TSMC? Or are they purchased from others? And whats the geopolitics of that part of the supply chain (made in taiwan? made in china? made elsewhere?)

thechao 4y ago
In many ways, ASML: https://www.asml.com/en/products/euv-lithography-systems https://www.asml.com/en/products/euv-lithography-systems
- briffle 4y ago
  ASML is the very high end, but there are many other manufacturers as well. Canon and Nikon both make lithography systems used in many wafer fabs.
  - r00fus 4y ago
    I really doubt anyone else than ASML can do 4nm (which this factory is planned to target).
- tpowell 4y ago
  Interesting 18min CNBC tour of ASML and their unique technology: https://youtu.be/iSVHp6CAyQ8 https://youtu.be/iSVHp6CAyQ8
pkaye 4y ago
The machines are made by other companies. Lithography is the most expensive now and its made by ASML in Netherlands is the only solution for EUV lithography. But there are many steps in manufacturing and a machine for each. The major equipment manufactures are spread across US, Europe and Japan. In the US the three big equipment manufacturers are Applied Materials and Lam Research and KLA. The costs are probably driven by extreme engineering requirements (temperature, pressure, corrosive chemicals, low contamination) and R&D costs to meet these requirements. The production volumes are not high either. Its not like they are building millions of these machines. Asianometry on YouTube is a good source for this kind of topic. https://www.youtube.com/watch?v=5Ge2RcvDlgw https://www.youtube.com/watch?v=5Ge2RcvDlgw

brookst 4y ago

Capex amortizable across the life of the fab and usually treated beneficially for tax purposes (though these fabs are so tax-special that may be meaningless). Opex is with you forever and affects the economics of the business much more profoundly.

thereddaikon 4y ago
The semiconductor industry is somewhat special in that it requires nearly constant investment in not just R&D but also in upgrading existing fabs to keep up with the cutting edge. And these are well into the billions of dollars. This is not a problem for players who have dropped out of the race like GloFlo. But its definitely the case for TSMC, Intel and Samsung. Your last three serious players who aren't working for the PRC.