Japanese companies fight for share of EUV chip technology sector
asia.nikkei.com
asia.nikkei.com
I got a little taste of their recession in the 1990's, but not much information since then. Are they as worried now as we were when Toyota ate everybody's lunch?
ASML San Diego was part of their joint research before acquisition.
It seems like there's been a deliberate push, like propaganda, to play up ASML's importance over everyone else in the past year or so. I've been seeing ASML brought up everywhere and often seemingly for no reason.
EUV is the core technology for the leading-edge nodes of Intel, Samsung, and TSMC. ASML is the only company in the world that makes those machines. They sold 6 of them this past quarter and delivered 9, despite limitations on their ability to do business with Chinese foundries. They're approximately four-fifths of the lithography market in general, and basically five-fifths of the EUV market. So while their machines are not the only component of a foundry's toolkit, it's quite clear that ASML is a critically important business.
The semiconductor industry is so complex that it depends upon companies in many nations, including Japan. No one nation owns the semiconductor lifecycle, but each part of the process is dominated (but not entirely owned) by one nation. Japan dominates wafer production. One company in the Netherlands dominates photolithography equipment. The United States dominates processor design. China dominates device assembly. Korea dominates NAND. Taiwan dominates foundry. Companies in all of these places are laying out a bunch of CapEx so clearly there's an anticipation of a rising tide that lifts all boats, rather than a rejiggering of market share that hurts one economy (forgetting China for a second) while helping another.
If this demand environment is a new reality, then prices will go up and it will take several years of CapEx to get them back down. If it's just a spike, then the pure-play foundries may still invest in those legacy production lines, but there will be less of a long-term presence.
I am personally of the opinion that this is a permanent market shift; WFH is here to stay, so there has been real and lasting demand creation for cars. Plus, the transition to EV is undeniable, and will perhaps see an inflection point in this self-reflective moment where automakers have to shut down production lines and reassess their plans anyway.
I have access to quite pricey market research from Digitimes, SEMI and such.
Biggest contributors to growth are things very, very remote from both cars, and trendy gadgets.
You just keep getting more ICs put into just about everything, and at the same time very simple devices get bigger global penetration.
For example, a giant growth centre been rooftop solar equipment for developing countries — completely missed, and invisible in the West.
Electric mopeds, scooters, and lsevs — again, things mostly invisible, and unknown in the West.
LED lighting — growth immeasurable, and hard to count
Home appliances
Power ICs, and motor drivers
Security devices: locks, locators, CCTV, alarms — 100x+ growth over a decade
Vending machines, signage — 60x growth over a decade
For instance, a stadium where 30% of the seats are built to last, and the remaining 70% are bolted on, meant to be taken back off and recycled after the closing ceremonies.
I don't know how you build a mask factory so you can use it for something else. I do know of textile factories that have pivoted temporarily. Can you build up a short-lived production line for an integrated circuit and then tear it down but leave all of the infrastructure in place to pivot to something else? What I hear out of Intel is that setting up such a fab is a long and expensive process.
What I also hear is a lot of people challenging Intel's wisdom. So now I don't know what to think.
Not at those margins.
Most fabs build will be running 24/7 until they crumble to dust.
TSMC still operates fabs built in eighties.
This is false. Fabs get decommissioned from time to time.
> TSMC still operates fabs built in eighties.
I mean, kind of. TSMC's oldest operating fab is Fab 2; it was built in 1989 and it started production in 1990.
https://investor.tsmc.com/static/annualReports/2016/english/...
Fab 1 was decommissioned twenty years ago.
Not at all, at all. People have foreseen that at least half a decade ago, it's just the reality beaten even most brave forecasts.
Semiconductor economics is one of the most studied fields after agriculture, and industrial commodities economics.
And they aren't US market masks. I'm 95% sure they are real. Not the kind with the fancy foil seal but if they're fake I'm sure they have basically the same effect. Lately I wear 3M 1870+ and it has the best fit for a tight seal.
I am so depressed with my country (US). this should have been so obvious and we should have used Defense Production Act to scale it up 10 months ago.
It sounds like Biden admin is advocating N95s now hopefully they use legal means to push for it.
>because of a failure of forecasting
It depends on which side of forecasting, was it demand or supply? It is always easy for outsider to say they should have built 10 Fabs 4 years ago and they would have been riding the tide. But even older ones are still CapEx intensive and relatively long ROI. Which means from a business prospective it is better safe than sorry.
And that is especially true with TSMC who are extremely conservative.
There was another comment about Auto Maker should built their own Fab. I really dont see how this would make any sense. All Auto Maker has to do to guarantee supply was to sign a long term agreement with TSMC, or even ask TSMC to built dedicated Fabs for them. But not a single client ( apart from Apple ) was willing to bet. No one was willing to bet their game for 3-4 years in advance. There is also the conservative nature of traditional business in demand side. If they sign it now at a cost that is 40% higher than their previous median, will they end up like Airliners hedging on Oil Price and ultimately cost them the billions.
So it really is the problem from both side.
And the same is true in ALL other market. Anyone who has ever worked in buy and sell, supply chain should see how similar the conversations are.
However, companies like Qualcomm and ARM wouldn't be able to exist without a strong global IP law infrastructure, but the former is a juggernaut and the latter is an object of desire.
I agree that Korea has competitive processor designs. Of course, even Samsung uses many Qualcomm SoCs and licenses many Qualcomm patents. If you remove US-developed design IP entirely from the Samsung portfolio, how many Samsung products would be affected? I think many.
They could've easily did that. I myself saw rather new ARM cores being all around Chinese FTPs.
The thing is, just macros, or verilog code alone is near useless without tons of documentation, spoonfeeding by ARM FAEs, and tooling support.
Same goes for ARM. Their entire business is making and licensing designs internationally. That's what they do. That's how they make money.
> The thing is, just macros, or verilog code alone is near useless without tons of documentation, spoonfeeding by ARM FAEs, and tooling support.
Looking at past cases, I think this is an extremely poor characterization of how infringement actually happens. More likely,
(A) customers (or former customers) use licensed technology for which they underpay (or refuse to pay); or
(B) competitors hiring engineers from customers or former customers to compete with the company.
And that's, in part, why every IC shop I checked in China ran off decade old warezed Cadence EDAs.
Who could've knew that warez market exists even for such rare, pretty much custom made software for which there are less than <100 licensors in the world.
This caused major problems for the WAN between ASML headquarters in Eindhoven and the remote offices in those Asian countries.
The difference is that in the US enough licenses are used to pay for the "average" number of users, while overseas it's zero.
And frankly, if the big EDA tools companies actually fixed and improved their software instead of milking it for decades, legit US clients would care more than they do now.
For those who haven't had the pleasure, most EDA products are like buying a boxed Windows in 2021 and they turn out to actually be Win 3.1 - no exaggeration.
You can, but you would be few years late to the party. There are already dozens of n-th tier fab wannabes riding the trend.
Really ancient fab tools are flying off the shelf like hot cookies. People even scoop eighties era equipment off Ebay, and such.
Why can't they keep things going temporarily by spinning up those n-th tier fab wannabes? (your words lol)
In my estimation, there are few trustworthy foundries that can facilitate the kind of scale that an automaker would need. If you're in a hotly competitive industry, you're not likely to contact some random fab freelancer to do a few runs of some chip you need, even if you have the design and everything ready to go. They're unlikely to do it at the quantity you need, on the timeline you need, to the degree of quality that you need, and with the secrecy that you need.
I mean, if you're Denso or Bosch, shouldn't you be able to make your own chips? Auto parts have a long life cycle, so you can amortize the cost of the machinery over many years.
https://europe.autonews.com/automakers/vw-may-seek-damages-b...
It takes time to tape out over to another node, and by then they expect to not have the supply issue anymore with their regular suppliers.
Years long lead times. Every 200mm fab around is booked for at least 1y+ despite biggest increases in capacity in decades.
A labs scale manufacturing can be setup within months, but it takes 3-4 years to setup AMHS fit fabs on a commercially profitable scale invariably of the technology level involved.
I know this is a typo, but that would explain the dimensional trend in smartphones...
Still, I'm not going to get the image of a city-sized IC out of my head.
http://audilab.bmed.mcgill.ca/~funnell/InforMed/Bacon/HW/pri...
> Years long lead times. Every 200mm fab around is booked for at least 1y+ despite biggest increases in capacity in decades.
This is precisely my point. There is a need for more capacity.
Japan = materials(chemical) as we can see from Japan-SK trade dispute when Japan cut off chemical to SK.
Taiwan = manufacturing
overall, semiconductor industry is too complex and rely on too many players.
Would be curious to run this by PG and a bunch of Y-combinator folks - While your voice might drown in Adtech noise, it would be crucial for the west to maintain semiconductor manufacturing expertise. What does AH think about it?
Anything with effectively zero incremental costs will seem a better investment in the short term
That looks good, but they’re in a highly cyclical market; every recession, their sales more or less completely dry up, and those figures are for a good year.
That’s why I can understand why investors aren’t lining up to invest in that kind of company.
[1] https://hotchips.org/assets/program/tutorials/HC2020.Cerebra...
You'll find most are doing various ip blocks on someone else's process or finding novel process flows on known equipment. Obviously most are fabless because it's just so much less capital intensive. My company has invested many millions into just the equipment in just my lab and I can only measure stuff someone else made. CAD software is very expensive as well.
As for startup specifically related to novel manufacturing techniques. I guess it depends on what a startup is. Is a newly founded company with $50M in funding a startup or just a new company? The bay area has some companies doing interesting things in silicon photonics (in-package optical io is a hot topic as well as quantum computing)
And if you're willing to expand the geographic area outside Silicon Valley there is quite a lot more.
Whats the issue in transporting them? The more expensive, the less it should matter?
Intel does 10nm production at their fab complex in Chandler, AZ. About 600 miles away from Silicon Valley.
They supply the whole industry, from Samsung to TSMC to Intel.
ASML is the reason the chips of the past two years have been making such performance gains, after multiple years of marginal improvements.
My question is: How long is it expected that ASML will be the sole provider _on the planet_ for these lithography machines? Is their secret sauce literally impossible to replicate?
It’s fascinating how one of the most important pieces of tech regarding the future is held by one entity.
What I believe made them to start to fall behind around the time of first immersion tools is unwillingness to work with academia, and general closednes.
Too much NIH in other words.
Latest litho equipment is a multidomain know how which is not humanly possible to internalise inside a single company these days.
Japanese were fine when they were able to just ride on their superior optics expertise alone, and just put more, and more monstrous optics on the tool to achieve higher resolution.
But that model definitely broke when optics alone became insufficient to achieve a shrink. Now, a node shrink is an industry-wide effort no company alone can sell as a single package.
EUV is not only about a light source:
Godly level of mechanical engineering to articulate wafer stages, and the reticle.
Work with deep vacuum systems, and materials.
New lithography chemistry, photoresists in particular.
Mirrors manufacturing.
Alignment tech.
EUV Mask tech.
EUV inspection, defectoscopy and metrology.
EDAs, and cell design.
> That said, if I were one of those financial rating companies, I'd be downgrading Nikon's rating at the moment. You know, from something like A to BBB (using Standard & Poor's rating board). (Nikon publishes their Japan Credit Rating Agency value, which is currently A+/Negative for long-term debt. That would be the third highest rating, or "a high level of certainty to honor the financial obligations," though the outlook [Negative] is that the rating might be lowered.)
[0]: https://www.nikkei.com/article/DGXMZO61125800T00C20A7TJ2000
(The US has effectively prevented European exporters of chip making equipment to sell EUV equipment to Chinese companies as the equipment contains "American IP". Getting around this would be a massive oppurtunity for a Japanese (or an European) equipment maker.)