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Once upon a time, there were around a dozen fabs competing to make high-end semiconductors. Now it's just TSMC (who sell cutting-edge capacity exclusively to Ap

by gary_0 4y ago

Once upon a time, there were around a dozen fabs competing to make high-end semiconductors. Now it's just TSMC (who sell cutting-edge capacity exclusively to Apple) with Samsung's fabs playing catch-up. And Intel... are you okay back there, Intel? There's isn't much hope on the horizon for more competition when it costs hundreds of billions to build a new next-gen fab, there's a significant chance of process shrinks failing economically, and the institutional knowledge required is concentrated in a few isolated groups, with most STEM students in most countries not finding the semiconductor industry attractive. There's a crunch on pretty much every axis.

axlee 4y ago
That's when governments should step in and invest in alternatives. The TSMC quasi-monopoly is any country national security risk, and that it is irresponsible for most western nations to let the industry be run by a single foreign player. If I'm not wrong, TSMC captures by itself 60% of the world's semiconductor market?
- adventured 4y ago
  Depends on your context. The US is more or less forcing (via political & economic pressure) TSMC to build inside the US. If anything were to happen in terms of national security (with regard primarily to China invading Taiwan), the US can stand up a US-TSMC entity in collaboration with TSMC Taiwan (or without them entirely), declare the Taiwan entity void as far as the US is concerned, claim all the assets globally as being owned by the US entity and go right on about its business. And it doesn't matter whether anyone else likes it or not, given the context that will be unfolding at that time. Ideally also shift all critical IP and talent out of Taiwan and into the US, to the extent possible, while the chaos is unfolding. It'd just be a new Operation Paperclip. If TSMC actually goes forward with its plans to build inside the US to the extent it's supposed to, it's no longer fully a foreigner player. Realistically it's a hybridization of TSMC for what-if scenarios. Once they do it, the US will not let them return to the way things were before.
hinkley 4y ago
"Is selling cutting edge capacity exclusively to Apple" I think undersells the situation, perhaps a little disingenuously. Apple has a track record of bankrolling build-out of cutting edge manufacturing facilities in a weird business loan/prepurchase arrangement where essentially they get stuff 18 months before anyone else would have been able to get it without doing the same thing. Waiting around for businesses to see a market and then a long line of processes necessary to make that a reality slows things down. When Apple made their first Intel laptop, they got a CPU bin that didn't actually exist for something like another 9 months. If Lenovo had shown up asking for it, they would have been told no, in no small part because Lenovo would have wanted 10x the capacity that Apple needed for those first macbooks. But Apple could handle waiting for what were essentially perfect chips to trickle out of a fab still working on yield. As Apple has gotten bigger they've had to make their own weather more and more. I have no doubt that if Apple hadn't shown up to TSM with a bag of money that Intel would only be a year or so behind TSM instead of whatever they are right now (which is Really Really Bad)
simonh 4y ago
That’s true, except Apple silicon has been well ahead of competing CPUs in performance even back when it was on the same or similar nodes. Remember half of the first 64 bit Apple ARM cores were fabbed by Samsung. They only moved completely off Samsung fabs in 2014. So yes undoubtedly having exclusive early access to the latest TSMC nodes helps but we know that’s not the whole story. They were thrashing Samsung in their own fabs for years. The main reason is Apple has the profit margins to be able to afford to use large chips with lots of cache and plenty of premium features. Look at the M1 architecture, those chips are monsters. Android OEMs don’t have the margins, so are trapped in a race to the bottom against each other.

by gary_0 4y ago

axlee 4y ago

That's when governments should step in and invest in alternatives. The TSMC quasi-monopoly is any country national security risk, and that it is irresponsible for most western nations to let the industry be run by a single foreign player. If I'm not wrong, TSMC captures by itself 60% of the world's semiconductor market?

adventured 4y ago
Depends on your context. The US is more or less forcing (via political & economic pressure) TSMC to build inside the US. If anything were to happen in terms of national security (with regard primarily to China invading Taiwan), the US can stand up a US-TSMC entity in collaboration with TSMC Taiwan (or without them entirely), declare the Taiwan entity void as far as the US is concerned, claim all the assets globally as being owned by the US entity and go right on about its business. And it doesn't matter whether anyone else likes it or not, given the context that will be unfolding at that time. Ideally also shift all critical IP and talent out of Taiwan and into the US, to the extent possible, while the chaos is unfolding. It'd just be a new Operation Paperclip. If TSMC actually goes forward with its plans to build inside the US to the extent it's supposed to, it's no longer fully a foreigner player. Realistically it's a hybridization of TSMC for what-if scenarios. Once they do it, the US will not let them return to the way things were before.

hinkley 4y ago

"Is selling cutting edge capacity exclusively to Apple" I think undersells the situation, perhaps a little disingenuously. Apple has a track record of bankrolling build-out of cutting edge manufacturing facilities in a weird business loan/prepurchase arrangement where essentially they get stuff 18 months before anyone else would have been able to get it without doing the same thing. Waiting around for businesses to see a market and then a long line of processes necessary to make that a reality slows things down. When Apple made their first Intel laptop, they got a CPU bin that didn't actually exist for something like another 9 months. If Lenovo had shown up asking for it, they would have been told no, in no small part because Lenovo would have wanted 10x the capacity that Apple needed for those first macbooks. But Apple could handle waiting for what were essentially perfect chips to trickle out of a fab still working on yield. As Apple has gotten bigger they've had to make their own weather more and more. I have no doubt that if Apple hadn't shown up to TSM with a bag of money that Intel would only be a year or so behind TSM instead of whatever they are right now (which is Really Really Bad)

simonh 4y ago

That’s true, except Apple silicon has been well ahead of competing CPUs in performance even back when it was on the same or similar nodes. Remember half of the first 64 bit Apple ARM cores were fabbed by Samsung. They only moved completely off Samsung fabs in 2014. So yes undoubtedly having exclusive early access to the latest TSMC nodes helps but we know that’s not the whole story. They were thrashing Samsung in their own fabs for years. The main reason is Apple has the profit margins to be able to afford to use large chips with lots of cache and plenty of premium features. Look at the M1 architecture, those chips are monsters. Android OEMs don’t have the margins, so are trapped in a race to the bottom against each other.