6 ms·

How does this make any financial sense?

_aavaa_ 2y ago
This is how most modern supply chains look like. Plus, chips are small in size and cost a lot so you can fit a lot in a container. Per unit shipping costs probably come out to be pretty low. Especially when compared to the political costs and risks associated with not onshoring.
- CPLX 2y ago
  > you can fit a lot in a container Guys these are microchips on wafers. You can put a million dollars worth in your jacket pocket. They aren't being shipped in containers.
arcticbull 2y ago
Marine shipping is just about the most fuel efficient way of moving things between any two places, by a lot. A 100,000 dwt ship can get 1050 miles per gallon per ton of cargo. It takes about a teaspoon full of fuel to move an iPhone sized device across the pacific when I ran the numbers last.
- Vt71fcAqt7 2y ago
  Interesting. Could you give a brief description of how you got that number? Eg. what factors were considered.
  - eric-hu 2y ago
    Those numbers match what comes up with a quick search: https://www.extension.iastate.edu/grain/topics/EstimatesofTotalFuelConsumption.htm https://www.extension.iastate.edu/grain/topics/EstimatesofTo... That study uses 1,043.4 mpg for the fuel economy of a 100,000 dwt ship. Videos of transportation ship engines are cool. Each cylinder is wide enough for a person to lay down inside it. https://youtu.be/G0eMyA388bE https://youtu.be/G0eMyA388bE
- School-Cotton 2y ago
  To ship things to/from these fabs by sea you have to add the cost of shipping by truck between Phoenix and (presumably) LA. Not sure how big of a difference that makes.
  - nine_k 2y ago
    Chips are small, so one truck once a few days may suffice.
    - CPLX 2y ago
      Airplanes. They use airplanes. We are talking about microchips here, possibly the highest dollar per gram substance that exists on the planet. The interest you'd pay just losing a couple days in transit time would exceed the cost of purchasing a dedicated private jet and the crew to fly it.
    - jocaal 2y ago
      Imagine the insurance...
  - kstrauser 2y ago
    A semi truck carries +- 15 tons of cargo and gets an average of about 6 MPG, so about 90 MPG/ton.
  - ponty_rick 2y ago
    Trains are pretty efficient as well.
snakeyjake 2y ago
The machines and processes needed to package the individual integrated circuits are fantastically expensive but the margins are so low in that step that it's only profitable at massive scales. So you put the fantastically expensive machines near where most of the customers are and most of the customers are in Asia. Works the same way with fiber optic cables. Making the long skinny bits is hard and high-margin. Actually turning them into cables is easy and low-margin. So Corning makes huge spools of fiber optic cable in Arizona, North Carolina, and New York (I think) and ships it off to Taiwan and China where it is made into the cables that you plug into stuff.
fblp 2y ago
I'm suprised they can't ship (flat) packaging that could be used in Arizona with a simple assembly line. If they had that packaging design then for this to make financial sense the two way shipping (and loading, unloading, custom clearance etc) would have to be less than shipping the packaging, the setup cost per unit cost of putting the chip in a box
- krisoft 2y ago
  Wait, wait. In the context of semiconductor manufacturing packaging does not mean what you think it means. It is not putting the product in a paper box. It is about cutting the wafer into individual chips, wire bonding the silicone to pins, and covering the whole thing with epoxy. Here is a video which explains it better: https://www.youtube.com/watch?v=7gg2eVVayA4 https://www.youtube.com/watch?v=7gg2eVVayA4 It would be indeed crazy if they would ship the ready chips to Taiwan just to be put in a paper box. basically the input of the process is a wafer which looks like this: https://waferpro.com/wp-content/uploads/2016/08/Patterned-Low-Anti-Reflective-Low-Defect-Ctg-on-silicon-Wafer-300x242.jpg.webp https://waferpro.com/wp-content/uploads/2016/08/Patterned-Lo... And the output of the process is something which looks like this: https://res.cloudinary.com/rsc/image/upload/b_rgb:FFFFFF,c_pad,dpr_2.625,f_auto,h_214,q_auto,w_380/c_pad,h_214,w_380/F1310270-01?pgw=1 https://res.cloudinary.com/rsc/image/upload/b_rgb:FFFFFF,c_p...
  - zeusk 2y ago
    The packaging in this context is not wire bonding but CoWoS - chip-wafer and wafer-wafer bonding.
    - krisoft 2y ago
      You are correct. I was just illustrating what kind of processes belong to the umbrella term "packaging" in the context of semiconductor manufacturing. Was not talking about what particular process are missing from the Arizona facility. But you are right on that it is CoWoS which is the missing ingredient.
  - fblp 2y ago
deleted 2y ago
[deleted]
CPLX 2y ago
These are literally microchips. Tens of thousands of dollars of value in each gram. Shipping cost is fundamentally irrelevant, you can put $100MM worth on a direct flight and have room left over for your family and friends.
- School-Cotton 2y ago
  Your overall point is probably right, but "tens of thousands of dollars of value in each gram" seems like an exaggeration. How much does one CPU weigh?
  - CPLX 2y ago
    Order of magnitude it's within range. A single wafer for something higher end is worth tens of thousands of dollars. So whatever that weighs. It's not much.
    - School-Cotton 2y ago
      But surely a wafer weighs more than a gram, no?
      - DougMerritt 2y ago
        Yes. One source I just double checked says that a 300mm silicon wafer weighs 840 grams, which seems to be in the right range anyway.
        grues-dinner 2y ago
        I see that source too (universitywafer.com) which is sucked into the AI slop panel on Google. A 300mm wafer at 0.775mm thickness that weighs that much would be a density of 15g/cm³: midway between lead (11) and gold (19). Silicon is only 2.3g/cm³. A 300mm wafer should be much closer to 100g than 1kg. Another page (on the same website!) says 125g, which is pretty dead-on 2.3g/cm³.
  - 2y ago

This is how most modern supply chains look like. Plus, chips are small in size and cost a lot so you can fit a lot in a container. Per unit shipping costs probably come out to be pretty low. Especially when compared to the political costs and risks associated with not onshoring.

CPLX 2y ago
> you can fit a lot in a container Guys these are microchips on wafers. You can put a million dollars worth in your jacket pocket. They aren't being shipped in containers.

arcticbull 2y ago

Marine shipping is just about the most fuel efficient way of moving things between any two places, by a lot. A 100,000 dwt ship can get 1050 miles per gallon per ton of cargo. It takes about a teaspoon full of fuel to move an iPhone sized device across the pacific when I ran the numbers last.

Vt71fcAqt7 2y ago
Interesting. Could you give a brief description of how you got that number? Eg. what factors were considered.
- eric-hu 2y ago
  Those numbers match what comes up with a quick search: https://www.extension.iastate.edu/grain/topics/EstimatesofTotalFuelConsumption.htm https://www.extension.iastate.edu/grain/topics/EstimatesofTo... That study uses 1,043.4 mpg for the fuel economy of a 100,000 dwt ship. Videos of transportation ship engines are cool. Each cylinder is wide enough for a person to lay down inside it. https://youtu.be/G0eMyA388bE https://youtu.be/G0eMyA388bE
School-Cotton 2y ago
To ship things to/from these fabs by sea you have to add the cost of shipping by truck between Phoenix and (presumably) LA. Not sure how big of a difference that makes.
- nine_k 2y ago
  Chips are small, so one truck once a few days may suffice.
  - CPLX 2y ago
    Airplanes. They use airplanes. We are talking about microchips here, possibly the highest dollar per gram substance that exists on the planet. The interest you'd pay just losing a couple days in transit time would exceed the cost of purchasing a dedicated private jet and the crew to fly it.
  - jocaal 2y ago
    Imagine the insurance...
- kstrauser 2y ago
  A semi truck carries +- 15 tons of cargo and gets an average of about 6 MPG, so about 90 MPG/ton.
- ponty_rick 2y ago
  Trains are pretty efficient as well.

snakeyjake 2y ago

The machines and processes needed to package the individual integrated circuits are fantastically expensive but the margins are so low in that step that it's only profitable at massive scales. So you put the fantastically expensive machines near where most of the customers are and most of the customers are in Asia. Works the same way with fiber optic cables. Making the long skinny bits is hard and high-margin. Actually turning them into cables is easy and low-margin. So Corning makes huge spools of fiber optic cable in Arizona, North Carolina, and New York (I think) and ships it off to Taiwan and China where it is made into the cables that you plug into stuff.

fblp 2y ago

I'm suprised they can't ship (flat) packaging that could be used in Arizona with a simple assembly line. If they had that packaging design then for this to make financial sense the two way shipping (and loading, unloading, custom clearance etc) would have to be less than shipping the packaging, the setup cost per unit cost of putting the chip in a box

krisoft 2y ago
Wait, wait. In the context of semiconductor manufacturing packaging does not mean what you think it means. It is not putting the product in a paper box. It is about cutting the wafer into individual chips, wire bonding the silicone to pins, and covering the whole thing with epoxy. Here is a video which explains it better: https://www.youtube.com/watch?v=7gg2eVVayA4 https://www.youtube.com/watch?v=7gg2eVVayA4 It would be indeed crazy if they would ship the ready chips to Taiwan just to be put in a paper box. basically the input of the process is a wafer which looks like this: https://waferpro.com/wp-content/uploads/2016/08/Patterned-Low-Anti-Reflective-Low-Defect-Ctg-on-silicon-Wafer-300x242.jpg.webp https://waferpro.com/wp-content/uploads/2016/08/Patterned-Lo... And the output of the process is something which looks like this: https://res.cloudinary.com/rsc/image/upload/b_rgb:FFFFFF,c_pad,dpr_2.625,f_auto,h_214,q_auto,w_380/c_pad,h_214,w_380/F1310270-01?pgw=1 https://res.cloudinary.com/rsc/image/upload/b_rgb:FFFFFF,c_p...
- zeusk 2y ago
  The packaging in this context is not wire bonding but CoWoS - chip-wafer and wafer-wafer bonding.
  - krisoft 2y ago
    You are correct. I was just illustrating what kind of processes belong to the umbrella term "packaging" in the context of semiconductor manufacturing. Was not talking about what particular process are missing from the Arizona facility. But you are right on that it is CoWoS which is the missing ingredient.
- fblp 2y ago

deleted 2y ago

[deleted]

CPLX 2y ago

These are literally microchips. Tens of thousands of dollars of value in each gram. Shipping cost is fundamentally irrelevant, you can put $100MM worth on a direct flight and have room left over for your family and friends.

School-Cotton 2y ago
Your overall point is probably right, but "tens of thousands of dollars of value in each gram" seems like an exaggeration. How much does one CPU weigh?
- CPLX 2y ago
  Order of magnitude it's within range. A single wafer for something higher end is worth tens of thousands of dollars. So whatever that weighs. It's not much.
  - School-Cotton 2y ago
    But surely a wafer weighs more than a gram, no?
    - DougMerritt 2y ago
      Yes. One source I just double checked says that a 300mm silicon wafer weighs 840 grams, which seems to be in the right range anyway.
      - grues-dinner 2y ago
        I see that source too (universitywafer.com) which is sucked into the AI slop panel on Google. A 300mm wafer at 0.775mm thickness that weighs that much would be a density of 15g/cm³: midway between lead (11) and gold (19). Silicon is only 2.3g/cm³. A 300mm wafer should be much closer to 100g than 1kg. Another page (on the same website!) says 125g, which is pretty dead-on 2.3g/cm³.
- 2y ago