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My understanding is that a 40nm fab is only economically viable if it's spent the first several years of its life producing high margin chips. In other words;

• FirmwareBurner 3y ago
  You are correct. Building fabs today only for fabbing much older nodes will not be profitable. You have to target 22nm and below otherwise you can't afford to jump in the semi fab ring.
  • hajile 3y ago
    TSMC is building a lot of new 28nm production with plans to shut down all their older nodes and move everyone over in the next few years. GlobalFoundries (formerly AMD fabs) created a brand-new 22nm planar process specifically for older chips as an upgrade to other company's 28nm processes. Profits seem possible if you approach it the right way.
    • throwup238 3y ago
      The math works out a lot better when you’re upgrading pre-EUV fabs or expanding an existing facility. A lot of the gear and setup is mostly the same such as wafer cleaning, HVAC and isolation, etc and the local challenges to setup and labor have been figured out.
      • ls612 3y ago
        Whatever is the best they can make a DUV, planar process do will be used for decades to come.
    • FirmwareBurner 3y ago
      We're talking about different things here. I was talking about building new fabs for 28nm nodes and you're talking about TSMC upgrading existing fabs from older nodes to 28nm production. Of course upgrading an existing older "sunk-cost" fab to 28nm production will be profitable, but not building a new one from scratch just for that same older node.
      • AnthonyMouse 3y ago
        But now this makes the subsidies angle make more sense: You subsidize initial construction and then the domestic plant remains online indefinitely because the construction is a sunk cost and the incremental cost of upgrades over time is sustainable.
  • zozbot234 3y ago
    You will always have pure analog electronics and other bespoke things that basically don't benefit from anything finer than these nodes. Even for digital chips, it makes no sense to use leading edge nodes for very simple logic where a lot of the area is just contact pads.
    • janekm 3y ago
      But you can only really make those profitably for a few industries (military, medical, seismic come to mind). The EU does have the chip fabs for those industries, of course...
      • phkahler 3y ago
        >> But you can only really make those profitably for a few industries I think it's more like they're only profitable if the equipment is already paid for. And even then the margins may be low.
      • eternauta3k 3y ago
        Power electronics are a mainstream, very profitable market.
    • jacquesm 3y ago
      It's not about what you can do or can't do. It is about what you can do profitably and that's a completely different thing.
      • voakbasda 3y ago
        I have to wonder if the ability to profit depends entirely on the established cartel of semiconductor manufacturers. They determine the current prices of chips in the marketplace. If entering that marketplace requires competing with them, then I am not sure anyone that is not already in the market can ever win. The margins are too low and the startup costs are too high. Government intervention seems to be the only possible solution, and that option hardly sounds viable when considering that cartel’s collective lobbying power.
  • cduzz 3y ago
    "But I've got a product that's certified with this part that's running on a 40nm process that has these specifications that are deeply tied to features of that 40nm process; things like voltage ranges and temperature tolerances! If you force me to switch to a comparable but not identical part at 22nm I'll have to re-certify my widget with 18 different regulatory agencies!"
    • Someone 3y ago
      If those are your needs, you order all the parts you need over your product’s lifetime up-front or get (= pay for) a contract with the manufacturer that makes them promise to sell you the parts for X years (they probably wouldn’t keep producing old parts, but would stockpile enough of them to be able to deliver working ones years later) (Or you prepare for having to go to eBay for working parts. https://www.nytimes.com/2002/05/12/us/for-parts-nasa-boldly-goes-on-ebay.html https://www.nytimes.com/2002/05/12/us/for-parts-nasa-boldly-...)
      • kjs3 3y ago
        There are companies (I've used Rochester Electronics) that both stockpile and manufacture legacy chips specifically for the long tail support situations.
  • Workaccount2 3y ago
    There might be an argument then that it would be worth it for the state to take the hit. If shit hits the fan and you have zero semi-manufacturing, then you are going to be pretty screwed.
    • qwytw 3y ago
      > If shit hits the fan and you have zero semi-manufacturing, then you are going to be pretty screwed. I don't really understand this claim at all. Chips are not exactly fungible, unless you force your local companies to use you "state sponsored chips" in their products just being able to produce "chips" wouldn't be that useful. What are you going to do with them?
      • 15155 3y ago
        Guide munitions if needed.
  • black_puppydog 3y ago
    So the cost of building a fab hasn't come down in the last decades, huh? Genuinely asking, is there some^W^W^W what is the "uncompressible" cost in fab-fabbing? I'd totally guess that staff and the building itself are not it?
• RobotToaster 3y ago
  How does an entire semiconductor factory become FUBAR from being offline for a year?
  • cduzz 3y ago
    The example is hypothetical, but complex machines can be complex to keep running, and often suffer catastrophically when shut down. If the fab was barely profitable before shutting down, it doesn't take much to total it. Fabs are full of machines that cost tens of millions of dollars when they were new and there are simply no spare parts of vendor support for them now, and you can't just swap in a modern replacement. Fabs are full of extremely sensitive environments (no dust here, acid that will kill you if you touch it there, constant temperatures, no humidity, etc). If any of that is compromised, it's now just a toxic waste dump. Again, I have no specific knowledge in this domain, but I imagine most of the time the owner's happy enough just to walk away from the headache.
    • tyingq 3y ago
      There's also the brain drain aspect. All the process engineers and techs that understood all the various "recipes", quirks, etc, of the various machines moved on to other work. A new crew will eventually work it out, but there's a lot of trial and error getting to the right bake time/temps, spin rpm, etc, etc. Yield and rework suffers while they do that.
  • TheCondor 3y ago
    Not an expert, but there are additional start up costs that need to be spent to “start it up.” With any significant downtime, those could eat up any possible profit unless it’s a newest technology fab.
  • JAlexoid 3y ago
    Dust is the simplest example. Once you shut off the dust extraction, you may just end up with too much dust collected in the equipment to make it utterly useless.
• BiteCode_dev 3y ago
  Not all ventures need to be profitable. The EU may decide to take a loss on this solely for strategic reasons.
  • qwebfdzsh 3y ago
    > strategic reasons Such as? I can't really think of any benefit besides providing jobs and funding for contractors (so kicks backs etc.) Then again it's not particularly surprising, the EU is well know for wasting massive amounts of money on all sorts of nonsense while ignoring things that actually matter.
    • mbauman 3y ago
      There's both supply-chain and runtime security.
      • cduzz 3y ago
        Don't forget the MBAs willing to burn it all down to juice the Q2 profits.
    • KerrAvon 3y ago
      Have you looked at a Pentagon budget lately? It's entirely welfare for defense contractors.
      • qwebfdzsh 3y ago
        > Have you looked at a Pentagon budget lately? No, but I trust you. However the US tech industry is doing just fine without too much government funding and intervention so it's not such a huge issue (in this specific area of course, not in general)
• mcbits 3y ago
  Sounds like there is a need for investment into innovation beyond just building the next-generation fab for $2^x billion. Bringing the cost of a new less-advanced fab down from $2 billion to $100 million, and then building 20 of them, could also be profitable (though less exciting). There is a national economy that's actually been growing quite well for a few decades now by applying that general idea to other industries.
• georgeecollins 3y ago
  But if you were a country or an alliance that wanted to be 1000% sure you always had access to a component (drone parts) you might be willing to pony up billions to make sure you could not be blockaded or embargoed. I don't know if that makes sense but given what is going on in Ukraine and the Mid East, people have to be thinking about that.
• hakfoo 3y ago
  What confuses me is that there seems to be a bathtub curve on the fab market. We've got the race to 7-5-3-2nm for high-end parts, and then a couple generations back on support chips and lower-performance cheap parts. Then you've got the dead zone. Is there a meaningful active use case for 1-micron processes anymore? But then you get to perennial embedded-market stuff (Z80, 65C02, 80186) originally built on 40-year-old processes. And going even further, you have stuff that's a handful of transistors on a die that was probably drawn with markers for the original lithography; I'm not sure we'd even use numbers to describe that process. How does that stuff get made anymore? It can't all be draining down old stock. I can't imagine it's cost effective to use modern-fab capacity to manufacture Z80s, 555s, or 74LS04s at their original die sizes. And if you shrunk them to put a million on a wafer, even assuming that's feasible, you'd change their performance characteristics in ways that might break long-established specs and contracts.