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Comment by Jyaif | Hacker News Reader

What are the bottle necks preventing TSMC from meeting the demand?

Scaling up fabs is eye-wateringly expensive and, more importantly, depends on a supply chain of boutique equipment manufacturers. All the money in the world won't build a new cutting-edge fab in 3 months, or even 6.

Machines from ASML.

ASML can only build so many machines... IIRC, there is also a loop here because ASML needs advanced chips to make those chipmaking machines.

Even if ASML could build more machines, I would still limited by Zeiss optics.

Even if anyone can buy the same machines (and wafers and chemicals) as TSMC, integrating and operating a fab that results in good yields is an art. Only a couple competitors can do it. The learning curve is hideously lossy: You have high costs, billions in capital tied up creating those operating losses, and you have to sell for less because your customers know the pain you are in.

It is incredibly expensive to expand microchip production capacity. You need extremely large, extremely clean clean rooms filled with expensive machines from ASML and other vendors for the well over 1.000 different steps that need to be done for a modern chip. And then you need staff to operate these machines.

And while everyone wants more investment in capacity, presumably no-one wants to be an investor who's left holding the bag if capacity overshoots and supply exceeds demand in 1-3 years' time.

You'd be surprised. You can almost _always_ sell excess supply given enough time. These parts... take up very little space. Even if it has to sit in a warehouse for 5 years eventually someone will buy them and while they may not break even, they'll get close.

That’s a terrible situation from a capital efficiency standpoint.

The problem with supply exceeding demand isn't unsold inventory/capacity, it's that your profit margin gets slim enough that you can no longer fund the R&D and fab construction necessary to remain on the leading edge. This is especially apparent for memory chips that are more commoditized than processors. Boom and bust cycles frequently result in at least one major bankruptcy, merger or pivot away from leading-edge processes. Qimonda, Elpida, Winbond all had their heyday as major DRAM manufacturers. For logic fabs, casualties include Chartered, GloFo, UMC, Motorola/Freescale—all of whom were once able to manufacture competitive processors.

I don't think you understand the scale at which these companies act.

A 300mm wafer holds 150ish chips, and TSMC makes 13 million wafers a year. Or roughly 2 trillion chips per year.

Now let's say TSMC expands to 2.2 trillion chips/year with a new fab.

If there is no customer for the 200 billion chips / year, you need to keep building newer and newer warehouses constantly. That's just not a number that can be solved with one or two warehouses.

Should that be 2 billion/y, not 2 trillion/y?

You could fit 200 billion chips in an Amazon warehouse with room to spare, easily. If your customer disappears, you can turn off the faucet. You can sell equipment, land, IP, break contracts, etc.

The extreme scenario you define is a fantasy.

The ASML are the star of the show, and they are divas.

They demand staggering amount of power, purest water, liquid H, liquid He.

And if one of those are missing, they will refuse to work. So you better have backup.

In the end, the cost of the ASML machine won't be that high.

Do you know any numbers for the staggering amounts? And what size these machines are?

Enough to draw attention of environmental protection regulators: https://wccftech.com/tsmcs-second-2nm-plant-sparks-environme...

Edit: apparently, TSMC alone is responsible for nearly 5% of the entire energy consumption of Taiwan. Holy. https://english.cw.com.tw/article/article.action?id=2766

I remember seeing those figures on some video from AMSL about EUV machine. They also mention about how many planes are needed to transport those machines. But I don't remember the values.

Lack of cheap, well-trained, and educated STEM people who could bear extremely bad work-life-balance and promised profit for more than ten years to cover the cost of scaling up.

Apparently one of them is water for cooling; Taiwan has been suffering from a severe drought.

That drought was back in April. It has been raining frequently and reservoirs across the country are full[1]. It's not a problem right now, but it's a recurring issue and will probably spur investment into additional reservoirs or desalination plants.

[1]: https://eng.wra.gov.tw/

Probably none in the longer term.

Though I would think they are worried about overinvesting / overexpanding - building investing in capacity now that is not needed when it becomes ready.

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