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Comment by maxander | Hacker News Reader

Every once in awhile, one hears about some accident like this one at a single, physical factory, followed by a laundry list of tech companies that are adversely effected. It powerfully demonstrates how awfully centralized microchip production is; individual plants can account for substantial fractions (or even majorities) of entire product categories, which means that individual incidents can have outsized effects. I don't know if that sort of risk has been fully internalized by the tech sector.

For that matter, how specialized is the market for whichever high-purity chemicals were behind this incident? What portion of the semiconductor industry was purchasing from the same supplier? We may not have heard the last of this.

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It's not just the tech industry that is concentrated like that. I think more and more industries have these insane levels of concentration.

In 2016, an explosion at a single industrial gas facility caused a whipped cream shortage in the US. [1] I mean in the scheme of world problems, that's one we'll survive, but it does illustrate how vulnerable a lot of our supply chains are.

In 2007, the shutdown of the Canadian Chalk River reactor caused worldwide shortages of isotopes used for medical imaging, with real life consequences for patients. [2]

There are probably countless other examples. In the end, its the direct consequence of the constant quest to lower production costs and increase efficiencies.

[1] https://www.theatlantic.com/science/archive/2016/12/the-dead...

[2] https://www.nytimes.com/2007/12/06/business/worldbusiness/06...

Redundancy just isn’t rewarded by the market, yet another form of market failure.

I think more often than not it is... not sure where you would get that idea from.

The increasing trends of the world to be dependent on a single source fo things... Must be something pushing the trend.

Maybe the current article or similar situations where a single point of failure leads to huge delays, financial losses, bottlenecks or other issues for any nurter of companies that are reliant on this one point. It's a problem that's increasingly affecting many industries, where the amount of suppliers capable of providing certain parts is in the low single digits or even the source of a certain material can be traced to a single place. EUVL is a great example. If anything were to happen to ASML, 7nm would be dead in the water for a long time.

It depends on the likelihood of shortage. Some industries are better at this than others: automotive do multiple vendors for everything (most easily evident are tires: the same model could be supplied with tires from two or three different vendors).

About a decade ago I visited a European fab of one of the European semiconductor manufacturers, where they told me they are also manufacturing for an American semiconductor firm (which had its own network of fabs). The reason was insistence from auto companies to diversify the supply chain, getting the same processor from multiple fabs in different continents.

> I don't know if that sort of risk has been fully internalized by the tech sector.

It’s known and understood completely within any silicon company. If you can afford it, and it’s technically possible (no special deals or tech), you’ll require at least some functionality at a second fab. What you cannot do is immediately get a second fab up and running. There’s a surprising amount of process tuning, sometimes accommodating new device models, and design rule differences (they will not guarantee or sometimes even start if they’re not meet). It’s in no way turn-key if you’re anywhere near the limits of what the fab can do.

> As shrinking becomes more complex, requiring more capital, expertise, and resources, the number of companies capable of providing leading edge fabrication has been steadily dropping. As of 2018, only three companies are now capable of fabricating integrated circuits on the most cutting edge process: Intel, Samsung, and TSMC.

https://en.wikichip.org/wiki/technology_node#Leading_edge_tr...

I was just thinking about this while reading about a (the?) company that produces extreme ultraviolet lithography scanners. Intel, Samsung, and TSMC all buy EUL scanners from this one company, ASML, to make their ~7nm chips. Only 31 of these machines exist in the world, with another 30 orders projected for this year.

https://www.anandtech.com/show/13904/asml-to-ship-30-euv-sca...

At 100+ mill a pop not cheap..

I think the problem is that cutting edge chip fabs are insanely expensive. Like $10-$20 billion dollar range. It's also ridden with specialty, so the risk of (very) expensive set backs and fuck ups is much higher for new entrants to the market.

The barrier to entry is massive, even for mega corporations.

> Like $10-$20 billion dollar range.

And over 100B for an entire fab complex, if you want to have even a remote hope of attaining real economies of scale.

This is why I predict that this industry will go the way of jet engine manufacturing, without any hope of any new competitor coming.

This is right on the back of nVidia's stock taking a beating after admitting that the global market for GPUs has become soft from the collapse of the crypto bubble.

You mean like AWS being down?

Or a bad BGP route being broadcasted, whether intentionally or not:

https://bgpmon.net/bgp-leak-causing-internet-outages-in-japa...

Not even- I don’t know the relevant numbers, but I’d bet there are many more AWS regions than factories making the same kind of chips as the one in the article.

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