5 ms·

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

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.

jacquesm 3y ago
The capital expense on a new fab is crazy. There may be a cartel factor but that usually would work to the advantage of the manufacturers, so that doesn't seem to be the case here.
mardifoufs 3y ago
There's no real cartel for older nodes. It's not even really possible considering how many fabs exist and how many players are operating those older fabs.
- cf1241290841 3y ago
  Number of producers of these fabs is still quite limited though.
cduzz 3y ago
I don't think this is a "cartel of semiconductor manufacturers" so much as it's been a "shambolic cluster of organizations running crappy old fabs into the ground producing cheap chips that were subsidized by a prior decade's worth of very expensive products." I can afford to sell gazillions of chips at $0.08 per chip if I'm running a fab I didn't pay to build. I'm only (barely) paying for the inputs. When Stan, the last guy who understands how to run the widget verifier, or Elaine, the last lady to understands how to run the polishing machine retire, I'll have to close up shop. Those $0.08 per chip devices have been absurdly subsidized in that a replacement infrastructure to make them would require that they cost $10 per device, and the ecosystem of things built on $0.08 chips isn't viable in a $10 per chip world. In order to have a fab make $0.03 per unit devices, you first have to have the fab spend 10 years making $300 per unit devices, regardless of the underlying node size of those $300 per unit devices. Likely you couldn't even go back and make a fab that makes large volumes of 60nm-90nm node sizes at all, for any amount of money, because the equipment to do this (new) hasn't been made in 2 decades and no company is willing to invest the money to make new crappy old equipment. It's not a nefarious oligopoly as much as a synchronized "run the asset to failure" lifecycle of the infrastructure. How much does it cost to make a 300 year old tree?
- photonbeam 3y ago
  > How much does it cost to make a 300 year old tree? Aside from your main point, I found this an interesting thought exercise thinking about cost of air, sunlight, soil, water and then 300 years of security
  - Qwertious 3y ago
    I imagine if you're going to grow one 300 year old tree, then your best bet is obscurity. Find a stable very-rural area that's not prone to bushfires, plant one tree and make sure it's doing well for a few years, come back 300 years later, you're done. If you're not going the obscurity path then you'd really want to scale it up - there's not much difference between security for one tree and security for 100 trees.
- cf1241290841 3y ago
  >Likely you couldn't even go back and make a fab that makes large volumes of 60nm-90nm node sizes at all, for any amount of money, because the equipment to do this (new) hasn't been made in 2 decades and no company is willing to invest the money to make new crappy old equipment. I believe your argument assumes that there is a fixed cost to produce even 180nm or 350nm ICs that hasnt changed since the first one was produced. We still need 300 years for a 300 year old tree, but 25 year old technology might now be relatively easy to build if we start from scratch. What was high tech then might be relatively easy to solve now. One example might be https://github.com/circuitvalley/USB_C_Industrial_Camera_FPGA_USB3 https://github.com/circuitvalley/USB_C_Industrial_Camera_FPG... being open source instead of a multi year, multi million dollar project.
  - cduzz 3y ago
    Yes, my argument is that producing at industrial scales even chunky nodes requires enormous capital expenditures and may be impossible without rebuilding large chunks of an antiquated and abandoned supply chain. Even if it is 10% the cost of making the each of the individual components involved in making a relatively simple 90nm chip, you're still looking at vast costs. If you're talking about making 30 chips in a university fab, sure, I'll concede that it is "possible" but if you're talking about propping up an industry built on products that require a herd of standardized "$0.30" parts made on legacy 90nm fabs, that ship has sailed. Update your BOM and recertify or raise your costs by an order of magnitude.

jacquesm 3y ago

The capital expense on a new fab is crazy. There may be a cartel factor but that usually would work to the advantage of the manufacturers, so that doesn't seem to be the case here.

mardifoufs 3y ago

There's no real cartel for older nodes. It's not even really possible considering how many fabs exist and how many players are operating those older fabs.

cf1241290841 3y ago
Number of producers of these fabs is still quite limited though.

cduzz 3y ago

I don't think this is a "cartel of semiconductor manufacturers" so much as it's been a "shambolic cluster of organizations running crappy old fabs into the ground producing cheap chips that were subsidized by a prior decade's worth of very expensive products." I can afford to sell gazillions of chips at $0.08 per chip if I'm running a fab I didn't pay to build. I'm only (barely) paying for the inputs. When Stan, the last guy who understands how to run the widget verifier, or Elaine, the last lady to understands how to run the polishing machine retire, I'll have to close up shop. Those $0.08 per chip devices have been absurdly subsidized in that a replacement infrastructure to make them would require that they cost $10 per device, and the ecosystem of things built on $0.08 chips isn't viable in a $10 per chip world. In order to have a fab make $0.03 per unit devices, you first have to have the fab spend 10 years making $300 per unit devices, regardless of the underlying node size of those $300 per unit devices. Likely you couldn't even go back and make a fab that makes large volumes of 60nm-90nm node sizes at all, for any amount of money, because the equipment to do this (new) hasn't been made in 2 decades and no company is willing to invest the money to make new crappy old equipment. It's not a nefarious oligopoly as much as a synchronized "run the asset to failure" lifecycle of the infrastructure. How much does it cost to make a 300 year old tree?

photonbeam 3y ago
> How much does it cost to make a 300 year old tree? Aside from your main point, I found this an interesting thought exercise thinking about cost of air, sunlight, soil, water and then 300 years of security
- Qwertious 3y ago
  I imagine if you're going to grow one 300 year old tree, then your best bet is obscurity. Find a stable very-rural area that's not prone to bushfires, plant one tree and make sure it's doing well for a few years, come back 300 years later, you're done. If you're not going the obscurity path then you'd really want to scale it up - there's not much difference between security for one tree and security for 100 trees.
cf1241290841 3y ago
>Likely you couldn't even go back and make a fab that makes large volumes of 60nm-90nm node sizes at all, for any amount of money, because the equipment to do this (new) hasn't been made in 2 decades and no company is willing to invest the money to make new crappy old equipment. I believe your argument assumes that there is a fixed cost to produce even 180nm or 350nm ICs that hasnt changed since the first one was produced. We still need 300 years for a 300 year old tree, but 25 year old technology might now be relatively easy to build if we start from scratch. What was high tech then might be relatively easy to solve now. One example might be https://github.com/circuitvalley/USB_C_Industrial_Camera_FPGA_USB3 https://github.com/circuitvalley/USB_C_Industrial_Camera_FPG... being open source instead of a multi year, multi million dollar project.
- cduzz 3y ago
  Yes, my argument is that producing at industrial scales even chunky nodes requires enormous capital expenditures and may be impossible without rebuilding large chunks of an antiquated and abandoned supply chain. Even if it is 10% the cost of making the each of the individual components involved in making a relatively simple 90nm chip, you're still looking at vast costs. If you're talking about making 30 chips in a university fab, sure, I'll concede that it is "possible" but if you're talking about propping up an industry built on products that require a herd of standardized "$0.30" parts made on legacy 90nm fabs, that ship has sailed. Update your BOM and recertify or raise your costs by an order of magnitude.