4 ms·

If I were a G7 leader, the state of global semiconductor production would make me very nervous. ASML is a Dutch company and is essentially a monopoly now that

by jmyeet 2y ago

If I were a G7 leader, the state of global semiconductor production would make me very nervous. ASML is a Dutch company and is essentially a monopoly now that they first commercialized EUV lithography. They can essentially decide what companies live and die. TSMC is probably ASML's largest customer because it reportedly produces over half of the world's chips. It is a Taiwanese company (and Taiwan accounts for two-thirds of global chip production). There is Intel too but TSMC have been way more successful in commercial chip fabrication in recent years. TSMC is of course in Taiwan, which is way more politically precarious than Western Europe. A major disruption to Taiwan's production could be absolutely devastating. This is probably why the US is pursuing domestic chip fabrication (eg in Ohio with the CHIPS Act). But having two companies with this much potential market influence has to make a lot of people very nervous.

chmod775 2y ago
Both TSMC and ASML are just the tip of an iceberg. Each has thousands of supplier companies spread across many countries. Many of these supplier companies are peerless themselves in their respective areas. It's a lot less concentrated on those two countries than it seems, but at the same time things are even more fragile than your post would imply.
- Edd1CC 2y ago
  Yep, when you get down to the raw materials used for these devices you get to three/four companies the supply chain relies on
  - autorizo 2y ago
    What are the materials/companies?
    - deleted 2y ago
      [deleted]
    - sknzl 2y ago
      The lithography/EUV optics comes from Zeiss. The laser for generating the plasma from Trumpf. Both key elements that ASML would not be able to build in-house or get from a different supplier.
      - varjag 2y ago
        There's a lot of expertise with lasers and precision optics around the world.
        Edd1CC 2y ago
        There’s always these weird bottlenecks in the supply chain though. My favorite example is during Covid where reduced boron quantities resulted in less Pyrex glass that makes test tubes meaning transporting vaccines was at points rate limited. I’ve read similar points in the components for lasers to ASML but can’t remember specifics. Chip shortage is the funny one, ASML require more chips that limit their turnaround times which in itself limits chips.
        chmod775 2y ago
        There's a lot of expertise with lithography around the world too (companies like Canon build lithography machines), but we're not talking the usual levels of it. The EUV lasers ASML/TRUMPF builds don't even work the same way other "conventional" lasers would[1]. You physically can't get there by incrementally improving some existing process. Now I don't know how ZEISS makes mirrors that blown up to the size of a country would have imperfections smaller than a human hair, but I'm pretty sure it's no small feat either. These companies invested decades and untold sums into this when few other companies even had incentive to attempt it themselves. Sure, other companies could eventually replace them, but you're not closing a 2-decade technology gap in an afternoon. [1] It's a bit insane, really. Vaporizing falling droplets of tin with two laser pulses 100,000 times a second to get just the right wavelength? Here's a good video: https://www.youtube.com/watch?v=5Ge2RcvDlgw https://www.youtube.com/watch?v=5Ge2RcvDlgw
        varjag 2y ago
smallnamespace 2y ago
These observations while good are probably old news (about a decade old) by now. The US has viewed tech as strategic and a realm of competition with China since at least the late Obama admin (so 2015 or so). Semicon as a key strategic goal for China is regularly mentioned in their 5 year plans in an extremely public way. The US has leaned heavily on ASML to go along with export restrictions against China, along with a wide array of restrictions for e.g. leading edge GPUs and even CPUs. These restrictions have ramped up recently but they’ve been in place for years now. Not only does this situation make policymakers nervous but they’ve been taking action. It's funny that the public has finally started noticing.
- 7thpower 2y ago
  You are making the situation sound much less precarious than it is. The reality is that the US has only really done something in the last few years, and those changes and attempts to hedge will take a very long time to materialize. Odds are the US and Europe will never enjoy the comparative advantage Taiwan has in the semiconductor supply chain. What does that mean? One of the west’s key strategic advantages is the ability to lead in frontier compute technologies. China, in addition to rapidly working its way up the value chain and nodes, can easily mitigate much of this advantage if it deems the calculus worthwhile. It need only disrupt Taiwan and basically all leading edge fab capacity is off the table. Outside of the work Intel is doing, the US does not have leading edge fabs. We do not have the skilled workforce or supply chain to take advantage of leading edge fabs. Why is this situation with Taiwan so difficult to unwind? In the West there is a fantasy that if war breaks out, we will just load all the Taiwanese onto a starship and bring them over to the US where they will happily resume their work in OUR fabs. But they don’t want that. They want their home and ideals to be defended, and they’re willing to do the work… from their soil. The reality is the fabs are bargaining chip with the West, far better than any iron dome. The question becomes, how did we get in this position? And the answer is deliberately. The US saw putting semiconductor production in Taiwan and a way to reduce cost and challenge the Japanese, but also a way to imbed incentives into our foreign policy for protection of tenuous Taiwanese democracy and independence. We have known this for a very very long time.
  - 2y ago
bee_rider 2y ago
I’m not sure Intel and Samsung are behind TSMC to the extent that switching to their CPUs would be, like, catastrophic. There’s a big advantage to using the newest node because people who buy iPhone want to be assured that their iPhones were made using the best, newest tech. But a 2 year old iPhone is not totally junk, it actually is still a much more powerful computer than almost anybody really needs. TSMC has huge value, their R&D is hugely important. But if they vanished overnight, your G7 nation wouldn’t start to starve or anything.
- re-thc 2y ago
  > I’m not sure Intel and Samsung are behind TSMC Intel is trying to catch up but Samsung just has no idea. Samsung spent years poaching, merging and sniffing trade secrets to survive. Problem with Intel is that most of it is Intel specific (still)
  - wkat4242 2y ago
    Also, Samsung's fab is genuinely behind. Exynos and Samsung-built tensor chips are consistently hotter and more power-hungry than Snapdragons. It's pretty sad for us in Europe because we pay the same for our phones but get a worse product. We also miss out on features like 5G mmWave and MST (though I believe that's now gone from the US too)
    - The_Colonel 2y ago
      Samsung is consistently behind in the sense it's difficult to compete for them in the high end mobile chips. But this difference is virtually meaningless in the strategic sense. Samsung can produce any capability TSMC can. The loss of TSMC would be strategically important only in the lost capacity.
    - Iulioh 2y ago
      Thank got at least the new Ultras have only snapdragon I had a exynoss s22 and my experience was miserable, in and out the repair center.

by jmyeet 2y ago

chmod775 2y ago

Both TSMC and ASML are just the tip of an iceberg. Each has thousands of supplier companies spread across many countries. Many of these supplier companies are peerless themselves in their respective areas. It's a lot less concentrated on those two countries than it seems, but at the same time things are even more fragile than your post would imply.

Edd1CC 2y ago
Yep, when you get down to the raw materials used for these devices you get to three/four companies the supply chain relies on
- autorizo 2y ago
  What are the materials/companies?
  - deleted 2y ago
    [deleted]
  - sknzl 2y ago
    The lithography/EUV optics comes from Zeiss. The laser for generating the plasma from Trumpf. Both key elements that ASML would not be able to build in-house or get from a different supplier.
    - varjag 2y ago
      There's a lot of expertise with lasers and precision optics around the world.
      - Edd1CC 2y ago
        There’s always these weird bottlenecks in the supply chain though. My favorite example is during Covid where reduced boron quantities resulted in less Pyrex glass that makes test tubes meaning transporting vaccines was at points rate limited. I’ve read similar points in the components for lasers to ASML but can’t remember specifics. Chip shortage is the funny one, ASML require more chips that limit their turnaround times which in itself limits chips.
      - chmod775 2y ago
        There's a lot of expertise with lithography around the world too (companies like Canon build lithography machines), but we're not talking the usual levels of it. The EUV lasers ASML/TRUMPF builds don't even work the same way other "conventional" lasers would[1]. You physically can't get there by incrementally improving some existing process. Now I don't know how ZEISS makes mirrors that blown up to the size of a country would have imperfections smaller than a human hair, but I'm pretty sure it's no small feat either. These companies invested decades and untold sums into this when few other companies even had incentive to attempt it themselves. Sure, other companies could eventually replace them, but you're not closing a 2-decade technology gap in an afternoon. [1] It's a bit insane, really. Vaporizing falling droplets of tin with two laser pulses 100,000 times a second to get just the right wavelength? Here's a good video: https://www.youtube.com/watch?v=5Ge2RcvDlgw https://www.youtube.com/watch?v=5Ge2RcvDlgw
        varjag 2y ago

smallnamespace 2y ago

These observations while good are probably old news (about a decade old) by now. The US has viewed tech as strategic and a realm of competition with China since at least the late Obama admin (so 2015 or so). Semicon as a key strategic goal for China is regularly mentioned in their 5 year plans in an extremely public way. The US has leaned heavily on ASML to go along with export restrictions against China, along with a wide array of restrictions for e.g. leading edge GPUs and even CPUs. These restrictions have ramped up recently but they’ve been in place for years now. Not only does this situation make policymakers nervous but they’ve been taking action. It's funny that the public has finally started noticing.

7thpower 2y ago
You are making the situation sound much less precarious than it is. The reality is that the US has only really done something in the last few years, and those changes and attempts to hedge will take a very long time to materialize. Odds are the US and Europe will never enjoy the comparative advantage Taiwan has in the semiconductor supply chain. What does that mean? One of the west’s key strategic advantages is the ability to lead in frontier compute technologies. China, in addition to rapidly working its way up the value chain and nodes, can easily mitigate much of this advantage if it deems the calculus worthwhile. It need only disrupt Taiwan and basically all leading edge fab capacity is off the table. Outside of the work Intel is doing, the US does not have leading edge fabs. We do not have the skilled workforce or supply chain to take advantage of leading edge fabs. Why is this situation with Taiwan so difficult to unwind? In the West there is a fantasy that if war breaks out, we will just load all the Taiwanese onto a starship and bring them over to the US where they will happily resume their work in OUR fabs. But they don’t want that. They want their home and ideals to be defended, and they’re willing to do the work… from their soil. The reality is the fabs are bargaining chip with the West, far better than any iron dome. The question becomes, how did we get in this position? And the answer is deliberately. The US saw putting semiconductor production in Taiwan and a way to reduce cost and challenge the Japanese, but also a way to imbed incentives into our foreign policy for protection of tenuous Taiwanese democracy and independence. We have known this for a very very long time.
- 2y ago

bee_rider 2y ago

I’m not sure Intel and Samsung are behind TSMC to the extent that switching to their CPUs would be, like, catastrophic. There’s a big advantage to using the newest node because people who buy iPhone want to be assured that their iPhones were made using the best, newest tech. But a 2 year old iPhone is not totally junk, it actually is still a much more powerful computer than almost anybody really needs. TSMC has huge value, their R&D is hugely important. But if they vanished overnight, your G7 nation wouldn’t start to starve or anything.

re-thc 2y ago
> I’m not sure Intel and Samsung are behind TSMC Intel is trying to catch up but Samsung just has no idea. Samsung spent years poaching, merging and sniffing trade secrets to survive. Problem with Intel is that most of it is Intel specific (still)
- wkat4242 2y ago
  Also, Samsung's fab is genuinely behind. Exynos and Samsung-built tensor chips are consistently hotter and more power-hungry than Snapdragons. It's pretty sad for us in Europe because we pay the same for our phones but get a worse product. We also miss out on features like 5G mmWave and MST (though I believe that's now gone from the US too)
  - The_Colonel 2y ago
    Samsung is consistently behind in the sense it's difficult to compete for them in the high end mobile chips. But this difference is virtually meaningless in the strategic sense. Samsung can produce any capability TSMC can. The loss of TSMC would be strategically important only in the lost capacity.
  - Iulioh 2y ago
    Thank got at least the new Ultras have only snapdragon I had a exynoss s22 and my experience was miserable, in and out the repair center.