TSMC cancels chip price cuts and promises $100B investment surge
asia.nikkei.com
asia.nikkei.com
2. Since leading edge node is forever increasing in cost, the next 3 years, i.e 3nm in 2022 and 2nm in 2024 are expected to be higher. ~$100B investment aligned with their initial plan / trend / target anyway.
3. So really the major news is stopping ( or to be precise, delaying ) price reduction. Which is unusual but understandable given the current demand situation. And No, it is not TSMC's fault. You should ask how every single Fabless Semiconductor company has failed with their demand, supply chain analysis and projection. Although one could argue it is not their fault either, since their client gave wrong projection. The only company that is not affected is possibly Apple.
4. There has been mounting pressure from investors, politicians and MSM media on Intel IDM 2.0, and supply problems. This announcement feels more like addressing those concerns.
5. Remember both Samsung and Intel are expanding capacity. And even GF and many other smaller players. It took DRAM and NAND three years to catch up with demand ( and then over supply ). Which in hindsight is pretty damn impressive. Although during the ~2016 - 2019 everyone felt awful.
However, the car industry got it badly wrong - people, afraid of public transit, started buying more cars rather than less. The car industry, being screwed due to their just-in-time religion of zero stock, was faced with their production lines stopping so they called up all their vendors, and asked for those orders back, and some more on top. The vendors then tried to get their fab slots back, and were told to come back next year. Some of them ended up buying other fabless IC designers out of their slots, causing the problem to spread. Others cancelled their existing orders to other customers, and auctioned off their existing inventory to increasingly desperate car manufacturers at a 6x to 8x premium. Anyone who was not prepared to pay that or didn't act fast enough was screwed. From that point on, a bunch of companies that depend on those lines of microcontrollers had to rapidly redesign their product to use another device, taking even more devices off the market with unplanned demand. The users of those devices then had to move to others, causing even more availability cascades. This is how two nasty moves by the car industry caused global market disruption in a number of industries that depend on electronics. This is not a normal "demand has increased, and industry can't keep up" event, it's elephants dancing and trampling everyone else underneath.
This is further aggravated by the top three automotive semiconductor suppliers (NXP, Renesas, Infineon) having their facilities destroyed in two unrelated disastrous events - a fire at Renesas' wafer processing plant, and Texas freezing over, destroying NXP's and Infineon's fabs through cleanroom contamination and process interruption. Those events took out months' worth of production, and destroyed product that had already been sold before manufacture. This would have been recoverable in a normal market, because distributor stock could hold a couple months, but in this case it was game over for non-automotive customers as all distributor stock was already gone by then.
I see this in my work every day now - customers coming to me for help with redesigning products to use a different microcontroller, or help with sourcing parts from unusual sources because their normal channels are gone. I've been in this industry a long time and never seen anything like this before. This is not a failure of supply chain analysis and projection on the part of the fabless semicon vendors. This is their biggest customers fucking their vendors over not once but twice by lying to them about their own demand.
I'd be interested to learn more about the order cancellation you were saying that fabs were doing to non car manufacturers. Shouldn't contracts prevent that sort of behavior (without proper compensation)? And if they did that, they are burning bridges that would make people less likely to do business with them in the future. Maybe the car chip business is enough money to warrant such moves, but seems potentially sort sighted depending on exactly all what you said happened.
That depends on how big the customer/order is, no? If (as a manufacturer) you could get away with not having it in a contract, why include it?
Similarly, instead of actually cancelling they could also "lie". Say that there are capacity issues, etc. That the capacity issue is mostly because they resold the existing manufacturing capacity, is left out.
> Just in time delivery
The well-known example of this is Toyota. Interestingly, they've started ensuring they do have stocks. See e.g. https://www.reuters.com/article/us-japan-fukushima-anniversa.... I found that rather interesting.
If the assumptions fail, then it's not a failure of the optimization, but an incorrect application of it. Maybe we don't currently live in a world in which elastic semiconductor availability at scale can be assumed.
JIT is useful when the end-product has a high depreciation rate and/or you forsee yourself frequently changing the part out for a newer version.
Another tendril on the issue; modern accounting practices tend to prefer JIT instead of the costs/overhead mechanics of storing inventory.
JIT (aka lean manufacturing) today has now permeated pretty much most of the global supply chain. Human civilisation is far more fragile at the moment than in the last few. hundred years.
It was less fragile when there were famines all the time?
I don't understand how people can repeat this rhetoric when it seems obvious to me that however fragile it is, it's less so than in all of history. Even if things rapidly get much, much worse, it wouldn't change my opinion.
How do you think we would determine which is the correct perspective?
Compared to a self-sufficient small-scale agrarian society (say, 10th century Europe), what would have caused famine in their time would not for us.
At the same time, we allocate our time differently than they did -- few of us actually farm for ourselves.
If we allocated time more similarly + applied current technology, it'd be pretty hard for people to starve (between improved long term food storage, GMO crop yields, and environment mitigation).
Side note: the always educational Bret Devereaux lays out a solid argument for why famines were the result of an underdeveloped monetary and trade system, that led to fragile choices being optimal for individual farmers. [0]
[0] see "Risk Control" section https://acoup.blog/2020/07/24/collections-bread-how-did-they...
fabless design house sign wafer agreement with Fab like TSMC. I'm guessing they didn't sign the agreement thus cancel their slot.
I do not fault companies for not planning for a worldwide pandemic.
You write at the beginning and end of your post that the car industry lied to their vendors, but then you also write they got it badly wrong, which means they were incorrect about their projections of demand. Surely it can't be both, and it sounds like the car industry did not lie, but simply were wrong about their predictions for the future.
Or am I misunderstanding?
Nevertheless, thanks for providing context for the whole situation.
Rather, the only people with intent to deceive might be the chip vendors. They either sold chip capacity that the automakers still had the legal rights to, or they reneged on sales to non automakers to resume supplying to automakers.
Why would you build chips you know you can't sell?
Also, people talk about how big of an impact car manufacturing is to the economy and while that is true, they aren't chip manufacturers biggest customers. Apple spends more per year on semiconductors than the ENTIRE auto industry. To top that off the automotive ICs aren't high margin stuff, so if I was a fab or chip vendor, I would be focused on higher margin stuff.
The blame for this is SOLELY on the auto manufacturers.
Or is this the mass exodus from American cities I keep reading about? They're buying cars because they're moving from NY to Florida, that sort of thing?
My running theory is that manufacturers and retailers continue to underprice their goods,likely because they expect to eventually return to normal. This ends up effectively hiding inflation.
Many buyers have more discretionary cash than usual due to reduced spending from lockdowns. Demand is therefore increased on the things people can and want to buy. Then resellers/scalpers see the margin and buy up inventory to arbitrage. The scarcity compounds.
If you have 1000 ICs in a car, and one of them is missing, that's a $100,000 car you can't sell.
Car industry haphazardly buying out last stocks of ICs will not help them work around that "one missing chip" problem, and production lines are potentially stuck for many more months.
The panic was undue, well, or best say of no use. The are screwed, but its of no use for them to hope for some desperate moves improving the situation now if they can't assure 100% availability of all, and every component on their BOM.
I have few buddies who went to work on an ECU for MTU/Siemens. They ran exactly into that when their companies went for a complete redesign of their ECU to run on consumer STM32. They had hopes of that such old 180nm-130nm CMOS chips easily tolerating around 130C°, they did tests, it worked fine, and then they ran into undocumented high temperature protection kicking in on a slightly newer chip revision, but they already bough few millions of them, and other ICs for a new design in inventories.
All of which have been used in custom keyboard builds but are capable of doing other things as well.
sneaky market segmentation by STM?
It seems like the way to reduce risk would be interchangeable parts from multiple suppliers?
4 Forces Changing Automotive Electronics Systems
https://www.eetimes.com/4-forces-changing-automotive-electro...
Allow manufactures to hedge / lock in future value.
I own a store that sells parts and tools to attach things to each other (originally we sold nuts and bolts but those are unprofitable without gigantic volumes).
In the last months suddenly we started to get an unusually high amount of orders from factories intending to use our products in manufacturing, while until then all we ever got was orders for replacements parts and maintenance.
Since we are a store, not a manufacturer, our prices aren't lowest as possible... so we are very confused about why Toyota/Honda and others for example, called us wanting parts, instead of calling our supplier, since we know they have their contact anyway (I won't say who it was but for example one time a manufacturer asked us if a product would help them, and asked us to design something for their production line... we did, then they ordered the product from our supplier and never paid us anything for all "free" engineering work we did for them).
So now I can guess what happened: car industry cancelled non-semiconductor orders too, their slots got sold, and now they want it back... so my store that tends to have higher stock than others keep getting new clients willing to pay through the nose to have parts because our own supplier doesn't have them in stock and can't deliver any in short term...
In the US people love to keep huge numbers of cars in stock. Apparently most people buy from stock there, and almost nobody does JIT, for some reason. So this isn’t the case everywhere.
I normally don't update unless I need to, but they advertised so many fixes that I felt compelled. It's reproducible, I can lock it up immediately upon starting Prime95, and it'll occasionally crash running CBR20. I would hope over time, probably take a year or two, they'll get this sorted out.. but I may just order an i9-10850K and a Z490, and be done with this. I run bone stock UEFI BIOS settings, no PBO or other overclocking.
I run a small business off this machine, and it has to be reliable, performance doesn't matter if you have stability issues.
I wish the industry would standardize on using "transistors per square millimetre" as the metric for their node size instead of "nm".
The best I believe will be a whole cell library metric using some lowest common denominator blocks like registers, adders, bus pieces etc
All us armchair semiconductor fabrication experts can have a good old time arguing ove who's 2nm is better. The real world will continuing doing it's thing.
*I know this is hacker news and some of you might be real experts. I know nothing. Please don't feel disrespected.
There will be a large-ish excel spreadsheet somewhere to do the comparison.
The nm number is for press releases and non-technical investors.
28HPC+ and 28HP have very different performance, even if they're both "28nm".
And if you really want to specify a process you also need to know the metal stack (lots of options there), Vt selection(s) (most processes have 2-5 options) & high-voltage device support option.
https://read.nxtbook.com/ieee/spectrum/spectrum_na_august_20...
Following this trend - 2nm will have something on the order of 200 billion in capex outlays. Given that being first to market has a premium, the loan will be high risk. If you borrow thinking you'll be first and are late by 4 years then you and your bank are going to have a problem.
On the other hand, even in practical terms the older nodes are more than adequate for most customers these days simply because they are far closer to a modern node than the equivalent would have been 20 years ago (for the reason stated above).
This is an interesting point. Apple is pretty hard nosed on their predictions and capacity reservations, to the point where they could be funding part of this expansion at TSMC (as they have done for Hon Hai, among others, for decades).
I continue to be astonished by Apple’s ability to manage their supply chain so tightly (which requires not just an iron fist but very very intense internal process). They seem to be the only ones who can manage to do that.
And it’s not like other big companies are lazy; the part that really amazes me is that their process hasn’t leached out to other companies, as so much else does in the Valley.
So at the end of the day, it isn't that Apple was necessarily better...their demand just didn't change and continued the downward trend in certain product areas, giving them breathing room.
What's really interesting is how well they couple demand to shipment. One is that they appear to have low levels of unsold inventory, both on the incoming (BOM) side and output (unsold manufactured output, such as phones), reflecting some incredible discipline. They also manage to insure themselves against supply shock (because such a tight tolerance for over purchase and overproduction makes your supply chain more brittle) by making big moves in their supply chain like financing their suppliers, doing manufacturing R&D on their suppliers' technology and then supplying that tech to the suppliers, taking big positions in commodity markets (e.g. famously in DRAM a few years ago) and other such things you can do when you have so much cash on the balance sheet.
You could think of it as avoiding bufferbloat in the physical domain.
And did that job for Steve Jobs during the growth of the iphone.
It would be expected that Apple would have extended insight into supply chain and capacity, seeing as the head of the company was/is the one who did that job.
If there's anything I expect Apple to excel at, almost without question, under his leadership, it's supply chain management.
But supply chain management? They excel at that which doesn't surprise me given who the CEO is.
Yes, I know Cook came from Compaq for his supply chain chops, but there are amazing supply chain folks elsewhere in the industry. On this dimension Apple is in a class by itself. Perhaps that fixation does come from Cook, as supply chain wizards typically don't rise that high in the corporate chain.
That's an oversimplification. As lead times increase, overbooking increases and that gives rise to further extension of lead time. Delays also become more prevalent at high utilization because there's no capacity in reserve. It's very difficult to predict where demand will go in a year of totally abnormal market behavior and unpredictable helicopter money.
In other words, fabless chipmakers are asked to do the impossible and some of them, predictably, failed to accomplish that task. Imagine asking AMD in April of 2020 to predict how many PS5s will sell during Christmas.
I write a lot of software for my job (although it’s not my title) and I’ve been thinking of trying for pure software jobs even if the work is more boring (I do semiconductor R&D)
It's all about supply/demand ratio, which is higher for hardware engineers. Hence they get paid less. There are simply far fewer HW jobs than SW ones. While there are more SW engineers, it doesn't make up for the delta in number of jobs available.
Even within the SW world, I've jumped around jobs of varying difficulty. The tougher jobs did not pay more.
This sounds like me in a past life. I assure you: It's worth the change. (Often) Easier work. Paid more. Treated better. Nicer work environment. It's worth it even if the pay were the same.
Also, with SW roles in your resume, you can then find jobs outside the semiconductor industry. Lots more options available to you.
How many dead xboxes and PlayStations have chips in them that are still good?
I'm thinking of a reverse pick and place machine that pulls chips of boards (boards that can not be used to fix other dead devices) and is able to test each valuable component for later reuse.
Those things have one big APU (with weak CPU cores), some VRM and memory, GDDR5 + useless DDR3. I'd discount the APU as it'd need someone to make OS support for with the blessing of Sony/Microsoft. That leaves the chips of GDDR5, which can be used by low end GPUs - I don't think they'd ever recoup and investment and likely cheap manual labor of preheat + hot air is the easier option. No idea if anyone would get a license from AMD or NVidia for such GPU.
Edit: the capacitors would have the best value but well... I cant see anyone relying on old caps for anything but repair.
This is already been happening for decades on industrial scale in countries doing eWaste recycling. Just a decade ago, you could've still find people selling refurbished chips in Shenzhen on every corner. Now it kinds of became a much more low profile enterprise.
The US defence department, colloquially known as the pentagon, ran a wargame scenario a few years ago to see what will happen if US will be hit with a worst case scenario, years long semiconductor unavailability due to sabotage of domestic fabs, massive industry wide cyberattack, or something happening to Taiwan.
One of comissioned think tanks recommended that exact methods of military going door-to-door to gather old gaming console, smartphones, and PCs for conversion to use in munitions, and military equipment.
On the whole, that 1000x increase in performance mostly bought the ability to have most of the code that runs be interpreted or JITed rather than statically compiled, to play videos, to do some heavy numerics and graphics (including things like family photos and videos), and so on.
It's hard to think of anything I really /need/ in a life-or-death sense or an economic-survival sense that couldn't be done on older hardware with appropriate software. There's a ton of things I want, that help, or where migrations would be massive projects.
If computers were to entirely disappear, and I couldn't automate things, communicate digitally (emails, messaging), word process, write code, I think that'd be a major systemic-collapse-level implosion of society. A lot of people would simply die.
On the other hand, if computers were to regress to 33MHz-level performance, Youtube isn't sticking around, but we'd likely adapt as a society with some structural change, but without such a collapse.
As an end user it would be manageable but dont forget that the whole world runs on servers and many Industries would collapse if computing power is gone
If we lost a few decades of processor improvements, it would be about as parent noted.
If we lost worldwide connectivity or all undersea backbones between some terrestrial networks... it would be civilization-altering.
On the server side, you'll be running C code rather than a nice high-level language, but it will get the job done. You might not have all the ML which lets me get the most relevant product recommended, but....
Emails definitely won't be HTML, but they'll come through.
The world would work.
We could do it if we had to, of course.
Military could probably pressure Microsoft to give them some way to turn an original xbox into a PC; and if you give people $50 for an original xbox most will be happy.
Creating something that can read several sensors (switches and buttons are also sensors), and putting aggregate status updates on a serial line, or displaying status lights, triggering relay or something similar can be done, on decades old gaming consoles, and is probably one of the most common use of processors in the world today.
In fact it is easier than trying to use modern cpu, that wasn't designed for that.
Not everything is about computation, in fact in terms of units sold its probably a minority.
We defend Taiwan with everything we’ve got. There is no plan B, and it’s not just about semiconductors.
https://www.theverge.com/2017/9/19/16333376/us-navy-military...
Of course this is a far cry from ripping a SoC from a smartphone and putting it into e.g a bomber drone, but I assume there's much more being done - just not published.
I have a vision that on a submarine there is a cable box, not unlike the one that most of us probably have, filled with random cables with connectors we haven't used in years. And somewhere in that tangled mess is a spare XBox controller. I can imagine some poor Seaman trying to untangle a the controller cord so that they can use a periscope. I'm sure the Navy is far more organized, but it's funny to think about.
But you can't just 'build a fab' can you? Thats the point. You need a shipment of ASML's magic EUV machines and a bunch of their engineers and a bunch more technicians and managers with the right kind of skills for running a large cutting edge fab.
In a WWII scenario, how long does it take to rapidly retrain a bunch of people with these skills. We have no shortage bunch of brilliant, quantitatively minded people trading derivatives and writing ML models to recommend TV shows. In a total war scenario, I assume most would be drafted for the war effort. Semiconductor engineering is complex, but probably not so complex that your average Math Olympiad couldn't pick it up in a month or two.
We have a chip shortage going on for months now, if all it took was two months and a bunch of smart people, those billions of dollars in chip orders would've made it happen. That tells me it has to be a bit more complex than you think.
This is a very different calculus than a WW2 type scenario. Fully mobilized, the government would almost certainly pay up for microchip capacity today, regardless of the long-term payback residual.
If there was evidence of deep-pocketed firms trying and failing to get into semiconductor fab in 2020, I'd change my opinion. Like if Google or Amazon were trying to open their own fab plants, but were failing, then I might suspect that a WW2 fully mobilized war effort would run into difficulties. But as far as I can tell, the issue is that nobody wants to jump into the fab business, regardless of the temporarily higher profits over the next 2-4 quarters.
We had many brilliant minds working on these problems for decades, but it took time, skill, effort, and money over these decades to achieve each milestone of development. Now each of these firms (and each of their suppliers) has trade secrets that go deep, and barring some unlikely breakthrough of brilliance, these secrets can't be independently discovered by the brightest minds in any less than the time it already took to discover and develop them in the first place.
There's also the problem of supply chains -- modern fab tech requires a ton of downstream tech: the fab machines, the parts in them, and the places those parts were developed and manufactured... and the machines that were required there as well (repeat...). Also the raw materials, especially rare earth minerals.
To sustain AI and other applications that require cutting-edge tech, the best strategy would be to either stockpile chips (not really feasible since the tech is deprecating) or to build spare capacity, along with the necessary supply chain.
OP: >years long semiconductor unavailability due to sabotage of domestic fabs
OP said "sabotage of domestic fabs". what the govrt. lay out is what happened when all else failed thus going door to door to collect semis.
There is also the danger of counterfeit chips. It is already a plague for those of us hoping to get some good deals from Chinese vendors, but the US Navy as well was hit at least once with fakes.
https://www.justice.gov/sites/default/files/criminal-ccips/l... (.pdf document)
With clever software, you can eek much more real world use out of hardware. For example, your PS3 is probably sitting with its CPU idle right now, when it could be doing useful computations for someone else who needs more computing power.
Chips experience solid-state diffusion, so I'd expect the expected survival probability of chips (ignoring any infant mortality effects) to go something like feature_size / sqrt( time ). If this is true, then I'd guess modern process nodes would have very low survival rates out at 100 years. Though, it's been over 20 years since I had any solid state chemistry, and most of my experience with diffusion modeling is in financial models, so take my wild guess with a grain of salt.
Take a 5 year old phone, and the chances of the main board being bad might be 10%... But the chances of the main CPU being bad is probably under 0.1%. The other 99% of failures are mostly water damage, physical damage, bad soldering, fatigue failure, bad nand, etc.
Maybe they'll all fail at once, but I somehow doubt it. IC's from the 1970's are still going strong, also with a low failure rate.
A PS3 only has 256mb of ram, so you need to get it out of the case, remove it from the board, check it still works, package it up and sell it.
But I can buy 2GB for 5 GBP. Can you do all the aforementioned things for less than that?
I wonder if we could sort and melt down chips as a source of raw semiconductors (I hear rare earth metal mining/refining is very dirty). Maybe that would be economic?
Do they actually have machines for this? I understand that the re-work house we use do it by hand and also spend a chunk of time inspecting the chip once removed since it's very easily damaged. Maybe there are more automated places doing this on a mass scale, we don't do it very often which might explain the general poor results.
This video is pretty cool showing the process https://www.youtube.com/watch?v=TIPO4Q9k1Zo
I think the Xbox One is the first console to have no unsigned code execution at all during it's lifetime.
Not that the government doesn't already have copies, of course.
"However, Liu said that it is "economically unrealistic" for all countries to "onshore" additional chip production, warning that this could lead to more unprofitable capacity."
Well. The world is clearly not listening to that. So the question is how the business of chip manufactoring will look in 2 or 3 years?
2. TSMC and the rest of the foundry industry are exposed to the highly cyclical nature of the semiconductor industry. we are seeing the high demands for chip because of covid and car vendors' f'ck up. what you going to do with all the fabs build in the US when you are hit with downturn?
we saw Intel struggle with 10nm and 7nm delay. i think its wiser to invite fab company like TSMC and Samsung to build fab in the US even with smaller capacity.
* "It's economically unrealistic for all the countries to build additional chip production capacity,"
* “Uncertainties led to double booking, but actual capacity is larger than demand,” How quickly those concerns are resolved “really depends on future U.S.-China negotiations.”
* each country developing its own domestic semiconductor industry would lead to a lot of “nonprofitable” capacity.
>what you going to do with all the fabs build in the US when you are hit with downturn?
Priority sourcing from domestic fabs, let TSMC whither, by design. Semi is oil now, there's more strategic/geopolitical considerations than supply/demand curve. US/EU/CN do not want Taiwan to have semi dominance, it's not in anyone's interest. Current TSMC position is happenstance due to poor industrial policies that countries are scrambling to address. IMO press releases and capex spending around Arizona announcement suggest TSMC wasn't prepared to built US fab, let alone 6. US pressured them, EU failed to. There's a good chance TSMC/Taiwan will try to delay their silicon shield evaporating for as long as they can. Probably not a coincidence big ticket US weapons sales are scheduled around when fabs would be up.
I do think that its going to become a race to the bottom for wafer/ic costs, but that is actually a really good thing. I think there are going to be more companies that are developing in house technology and more focus on things like FPGA and edge-based compute. If TSMC, GlobalFoundries, UMC and Intel are smart, they will focus on pivoting towards the software/simulation side of things, IP cores and flexible logic like FPGA type of solutions. Ideally they would want every big company developing their own CPUs, edge devices, etc. and have them optimized for their process nodes.
I suspect this won't be the last major fab push, especially since people are seeing how fragile the supply chain is.
Is there an impediment I'm not aware of? Or maybe it's not as good of a deal as I think?
Samsung and TSMC are home-grown in their respective countries and Intel still makes chips. Together, they make the majority of the world's chips.
There definitely is but it will come at the cost of share buy backs and keeping share price up which affects compensation of management. Failure to keep the share price up by investing in manufacturing in US will also invite predatory share holders to topple the management. The cult of "free" markets driving wealth growth at the top of the society seems to have trumped strategic common sense.
Because America fell asleep at the wheel while Taiwan did not. TSMC and other Taiwanese chip manufacturers benefited from a government that saw the need to be a part of high value manufacturing. Meanwhile America of the 90s and 2000s assumed that it would be the most powerful country in perpetuity and so it wouldn't matter where something was being produced as long as they could pay for it.
The events of the 2010s has shown the flaws of this thinking. It is now possible for American firms to be cut off completely from semiconductor manufacturing, similar to how Huawei was cut off. There is now support from the American government to restore semiconductor manufacturing. They are footing a part of the bill for TSMC's new plant. I'm sure Intel's lobbyists are skilled enough to get part of their new plants paid for as well. China is doing the same - the state has deployed all it's resources behind SMIC to ensure that what happened to Huawei never happens again.
It's more complicated than this though. You don't just need semiconductor fabs, you also need rare earth metals, almost all of which is mined and refined in China. America is attempting to reshore this too (https://www.economist.com/finance-and-economics/2021/03/31/g...)
This is usually presented as an ace up the sleeve that China has secured through shrewd strategic thinking. In reality, rare earth metals are neither particularly rare, nor are they expensive, nor are they in high demand.
Rare earth metals are more common than silver or mercury, somewhat rarer than cobalt. The ones with excellent magnetic quantities go for ~$50 per kilo (allegedly only 200g is required per electric car), the ones used for catalysts and alloy making go for as low as $2 per kilo, cheaper than copper.
They're not nearly as much of a constraint as claimed.
[1] https://e360.yale.edu/features/china-wrestles-with-the-toxic...
[2] https://www.bbc.com/future/article/20150402-the-worst-place-...
The 70s started the trend of financializing (is that the word?) everything, that meant that at every step of every productive process someone packaged it into a tradable "paper", which got packaged with other paper from other productive processes and then re-sold and repackaged again and again to the market as proxies of the value from those productive processes.
Holding paper assets turned out to be much more lucrative than the actual production for most companies, not to mention far far easier than competing in the market with products and innovation, so naturally it slowly began to chip away at the quality of the production in favor of holding paper that represented production. Outsourcing became possible and they noticed it didn't matter to the ones buying the paper assets who actually did the work, so it skyrocketed.
Financialization required an immeasurable amount of debt, they began extending credit to anyone so they could buy said paper, and then turned around and made the debt itself financial paper.
That got us the stock market booms of the 80s, the 90s, the dot com, the financial crisis, and of course their busts.
Now we are at the end, and the signal? companies are adding bitcoin to their balance sheets. The cycle of finacialization is complete, paper is no longer required and you don't even have to outsource your production, not that you have it anyways, as all you need to post profits and pretend you are a good CEO is buy crypto and hodl.
Production for a 'modern' business is rapidly becoming a thing of the past. Governments can try to buy their way into any market but it is useless; most businesses have no real capacity to compete delivering cutting edge products with actual real "bare-metal" profitable businesses because they can only make profits "on paper".
(sorry if finacialization is not how it's written)
Top 10 companies
https://fxssi.com/top-10-most-valuable-companies-in-the-worl...
Most of these are providing goods and services that 100s millions of people are getting value from, with the possible exception of Facebook :p
As an aside I must admit I had never heard of Delta Electronics before at all; nearly 50 years old and 5th most valuable company.
Out of the top 10 you do get some pure play financial companies like Berkshire, Morgan Chase, Visa (maybe).
Cutting edge semi conductor manufacture is arguably some of the most advanced technology and manufacturing we do at scale. It's just plain hard hard. The equipment, the expertise, the lead time to manufacture, it's all big scale problems.
Relatively speaking getting manufacturing of old node sizes would like not be remotely as hard, 32nm maybe even 16nm.
Apple became the biggest company in the world not only because they create products everyone wants, but equally because they are masters at managing money and debt. That is what gives them the edge in production as they barely produce anything. They are probably the best at managing financial assets by far.
And Tesla, well Tesla is very bad at building cars, they are bankrupt without paper profits. They shouldn’t be on that list.
Semiconductors is not harder than any other cutting edge industry that has come before. Taiwan is not special, they are 20 million people. A good chunk of them trained and educated in the US.
What, by not having any? The correct amount of cash for a company to have is $0 because it's not a productive asset, as you say, but Apple's strategy ended up with them having hundreds of billions of it overseas. That is literally the opposite of MBA philosophy, not an even better version of it.
(And they own a factory in Ireland.)
Who said anything about MBAs? The Apple way is clearly the better way to do it at the moment, and has been for the last decade. The MBAs at Intel are not even in the same league.
And Apple owns factories in the US too. They own them for other reasons, not because they "need" them to make products or are profitable on their own.
This literally isn't possible because of how GAAP accounting rules work for bitcoin. You can't count the value going up if you hold, but you have to mark it down if it goes down. It's only bad for you.
https://www.reuters.com/article/eu-tech-semiconductor-idUSKB...
So when you're talking a few hundred billion dollars for a US-first technological capability, the important question is who will get the money and how will they be held accountable for delivery? What, even, are they expected to deliver - no use if the plant is more expensive than TSMC so everyone chooses them anyway.
The history of these initiatives is not great: https://www.wyomingpublicmedia.org/post/foxconn-promised-130... (Republican)
https://fortune.com/2015/08/27/remember-solyndra-mistake/ (Democrat)
China big fund 2014 yield nothing. SMIC still have to poach TSMC engineers to get them to 14nm. we'll see how China big fund II going to do.
U.S. govrt is dumping money into semis by asking TSMC and Samsung to open fab in US and Intel is gunning for US govrt's money by going IDM 2.0.
A bunch of talented people with experience who can use the equipment productively = priceless. Probably can't be bought, otherwise some countries would already have done it.
On the design and verification side the story is slightly better, verilator (https://www.veripool.org/wiki/verilator) for instance is an excellent tool that lets you simulate system-verilog code with high performance. It has seen wide industry adoption in the last years and now a couple of companies like Google, SiFive, etc. are investing in open source tooling for hardware. You can go a long way to building your design without having to pay for expensive licenses. The downside is that most of the interface type components (PCI-Express, DDR4, etc.) are prohibitively complicated to build yourself, so you will need to rely on external IP at some point.
Unless you talk about countries where people simply don't pay for software no matter what.
Some companies are just fine with 10 years old pirated Virtuosos in places like China.
It was a big surprise to me that even software which probably has less than 100 licensees globally is still getting warezed.
Bare minimum estimates, working backwards:
- $? for marketing and distribution, physical inventory costs
- $100k/y for one field engineer (FAE)
- $250k for first successful manufacturing run
- $250k for first full mask run with bugs
- $100k bringup boards, test equipment, engineering time fixing it
- $25k shuttle run for initial testing. This will find at least one bug.
- $100-200k outsourced layout: this is boring, specialised, and low value-add, so get someone else to do it
- $500k/y misc software and testing staff or consultants
- $100-500k/y each: 3-5 senior design engineers. For best results, these are people you already know and are spinning out of their job at Big Boring Semi Co
- optional $100k really big FPGA + software + custom boards
- $250k/y software licenses from Cadence or Synopsys, unless you're very brave and want to try the open source flow
- IP licenses. Not just obvious things like ARM cores, but analogue or semi-analogue IP like high-speed transcievers.
People are always shocked when I tell how tiny is the semi industry, but it really is.
Besides the super-concentration of semi manufacturing which starts to get more coverage, designs needs some exposure too.
When Apple bought PA Semi, it went rather unnoticed, but people didn't know that the amount of logic designers of a such calibre who can design cores like ZEN, or Firestorm is probably less than 100 in the whole of North America.
Sounds very dramatic, but America is less than 100 senior logic designers away from getting out of design business too.
I'm still in university and I've always liked hardware and low level related stuff but I've heard bad things about software in hardware companies like Qualcomm.
Almost every part of semi industry is very bad on effort to salary ratio, and players like Intel, or Qualcomm are far from the worst, they actually do very well on salary front, and attracting talent. It's Asian companies who score the worst on that.
TSMC process development job is 100:1 lottery win + 20 years of your life for $50k a year salary. Know people with first hand experience of that.
In many other places software is an afterthought to the hardware, and it shows.
A decade ago, it would've taken you $1m in China for a 50/50 shot at it.
If your first tapeout works, you will make money, if not... you wasted $1m.
$1m looks like pocket change to most American tech people now, but the fabless trains has long since departed.
You will need a sum with few more zeroes, to get a jumpstart in the industry now.
There was 4-3 years long extreme consolidation push in the industry, with big swallowing dozens producers of commodity products. It is very reminiscent how the demise of American oil industry happened when the industry gone from thousands of oil producers, to less than 10 in one decade. Everybody bets now that there will be 10-15 or so mega-fabless running the industry in coming decade.
There are plenty of designs where just $10k will get you an ASIC built in some university... It won't be anything like leading edge silicon though, but for some products that's all you need.
With a few micron university process? Yes, can you commercialise it? No.
I believe 180nm has for long been the limit of how "commercially viable" is defined even for stuff like analogue, and discrete logic ICs.
https://news.ycombinator.com/item?id=23755693
Google offers free fabbing for 130nm open-source chips (fossi-foundation.org)
The raspberry pi pico team also did a good podcast episode talking about this - I think it was a podcast called innovation coffee or something like that. Hosted by a guy from ARM Europe.
maybe the video phone will become an actual reality instead of something most people only see on TV and in movies
Likely December.
Right now, because everyone is fearful of shortages, they've overbought or are in the process of overbuying.
At some point, everyone is going to realize that, in the US, carrying inventory has tax implications, and everybody is going to try to dump a bunch of inventory back into the system that they really didn't need and aren't prepared to pay taxes on.
Which will be fine for a while--until the middlemen get back up to what they consider useful inventory levels and quit buying. And all the prices will crash.
This is because a newly competitive AMD takes up a ton of wafers. They can't make them fast enough, and in 2022 they are releasing a completely new platform with DDR 5 on 5nm, and presumably new GPU line.
This should again clobber Intel 10nm products. Even if there's no chip shortage, the customers of TSMC are very healthy (AMD, Apple, other phone manufacturers).
If they pushed those microcontrollers back right now, they'd make quite a nice profit. But they won't.
Instead, those companies will hit the tax implications starting in December and then will try to push their overbought inventory. Of course, at that point everybody will be trying to push their inventory and the prices will crash.
Everyone, their kids and their pets has updated their electronics this year. That made sense as work/school from home was a thing. Now they have new electronics, and no need for additional electronics. Plus pretty soon things will reopen, and people will have opportunities to spend money on beer and restaurants and events.
Even if covid 2.0 launches this year, I already have a new ipad etc.
I think there'll be very low sales for most electronics for a while.
What makes you think the company will use this method of financing?
Do you think this is the right approach? Why or why not?