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Here is a brilliant video on Why Europe Lost Semiconductors: https://www.youtube.com/watch?v=5ZdmS-EAbHo https://www.youtube.com/watch?v=5ZdmS-EAbHo It boils d

by mrtksn 4y ago

Here is a brilliant video on Why Europe Lost Semiconductors: https://www.youtube.com/watch?v=5ZdmS-EAbHo https://www.youtube.com/watch?v=5ZdmS-EAbHo It boils down to education and economical structure differences with US and JP. To be on the cutting edge requires extreme scale and multidisciplinary talent. Europe, despite being in the front lines of the innovation, falls off as the European industries and military don't create the demand at scale required to keep up with the Americans. It's probably a similar story with the US today. China is 5X the population and they do all the manufacturing, they have amazing talent which vanished from the west with de-industrialisation. It was way more profitable to design stuff in California and make it in China. If everything is made in China and you demand fat margins, why would you have large scale cutting edge chip manufacturing in EU or USA? This become problem only after the break down of the supply chains and increase in political conflicts. But as the rest of the world catches up with IP and R&D, the manufacturing is bound to come back to the west. When you can do so much with a laptop and brains and China and India having so much from those, the West will have to start doing the low margin "uncool" stuff like producing physical goods.

fnordpiglet 4y ago
Given the context when you say China, I assume you mean Taiwan. China plays a role too, but TSMC is not Chinese. Given the lithography equipment used by TSMC is built by a single European company, I think it’s disingenuous to exclude Europe from the production chain. I think the reality is fairly complex and the entire world is involved in the end to end production. Further, TSMC is working to diversify their production facilities to meet some of the onshorinf demands rising from the pandemic chip shortage fiasco. Additionally the instability between China and Taiwan is driving regional diversification. China has made itself such an undesirable business partner there’s enormous pressure top to bottom across all industries to find alternatives for sourcing. Margins in China have gotten worse due to a rising labor movement and improved general prosperity. Finally, there are other semiconductor manufacturers (global foundries, etc) that are striving to catch up - and it’s the nature of things that someone will. So, I agree, the world will start diversifying production out of China for many reasons. This will be better for everyone, even, IMO, China.
- mrtksn 4y ago
  Politically Taiwan is not China, sure. Also it's true that the TSMC also has a global supply chain but this way or another the magic happens there. We like it or not, the world is global. Still, overspecialisation is proving dangerous when not all parties are open democracies because they can act in economically unwise but ideologically coherent ways to keep the political class in power.

by mrtksn 4y ago

fnordpiglet 4y ago

Given the context when you say China, I assume you mean Taiwan. China plays a role too, but TSMC is not Chinese. Given the lithography equipment used by TSMC is built by a single European company, I think it’s disingenuous to exclude Europe from the production chain. I think the reality is fairly complex and the entire world is involved in the end to end production. Further, TSMC is working to diversify their production facilities to meet some of the onshorinf demands rising from the pandemic chip shortage fiasco. Additionally the instability between China and Taiwan is driving regional diversification. China has made itself such an undesirable business partner there’s enormous pressure top to bottom across all industries to find alternatives for sourcing. Margins in China have gotten worse due to a rising labor movement and improved general prosperity. Finally, there are other semiconductor manufacturers (global foundries, etc) that are striving to catch up - and it’s the nature of things that someone will. So, I agree, the world will start diversifying production out of China for many reasons. This will be better for everyone, even, IMO, China.

mrtksn 4y ago
Politically Taiwan is not China, sure. Also it's true that the TSMC also has a global supply chain but this way or another the magic happens there. We like it or not, the world is global. Still, overspecialisation is proving dangerous when not all parties are open democracies because they can act in economically unwise but ideologically coherent ways to keep the political class in power.