Fun fact by the way, at some point Japan and Europe were very close in state-of-the-art semiconductor manufacturing while the US didn’t have the capabilities anymore because it was outcompeted by Japan. At that point, the US donated funds and 20 years of research to ASML since it was better than letting Japan win the race, according to Chip War by Chris Miller.
Or do we seriously expect that US companies will generate significant demand even though TSMC and Samsung are already building heavily subsidized fabs in the US?
Yes I think so, presuming that there is not an over-supply of capacity.
US companies would much rather rely on an EU country than one that is being threatened with invasion over a small gap of sea. US local supply will never be enough.
Agreed
> US local supply will never be enough.
But you won't just have US supply. You'll have US and Taiwanese supply, and I don't believe that Taiwan will happily let TSMC (the only cutting edge foundry left in the world, when you take Samsungs abysmal yields into account) build foundry redundancy in the western world.
But we'll see, you could definitely end up being right. I just hope we'll invest at least an equal amount of money into chip design.
Intel says they're going for two factories of 20 bln indeed [1], Samsung for 17 bln in Taylor, Texas [2], and Micron claims to go for 100 bln (over time) in Clay, New York [3].
> Why invest 20 billion dollars [...] to create supply without demand?
Why do we have to pay about 5 dollars per month for a VPS with only 1 vCPU, 1 GB RAM, and 10 GB storage? I'm certainly hoping these specs to all increase 10-fold over the next 10 years for the same price.
[1]: https://www.intel.com/content/www/us/en/newsroom/news/intel-...
[2]: https://news.samsung.com/global/samsung-electronics-announce...
[3]: https://investors.micron.com/news-releases/news-release-deta...
Look at the machine you can build for one months’ typical AWS cost for a medium size SaaS company.
Cloud also charges insanely high rates for bandwidth.
It's quite low, but the real costs are on datacenter space and connectivity anyway, I have no idea what their cost structure looks like.
I would expect any real user to switch into renting servers as soon as small VPSs aren't enough. (But yes, the fact that there is a market of large VPSs tells people don't to that. I don't think I will ever understand this, as I don't understand most people usage of AWS.)
Besides, the cost of designs pales in comparison to the cost of producing locally.
It's not necessarily about supply and demand. These past few years have shown what shortages of chips can do to the supply chain. It's a strategic vulnerability if Europe does not at least think about this.
On the other hand, if people are trying to build the cutting-edge, there might not be as much local demand since it is probably only needed for the latest IT equipment, most of which is built in the Far East.
Was austerity broad-based or specifically targeted toward industrial areas? I'd always assumed austerity meant cutting back on public benefits/pensions/etc. but not strategic areas like this which is why I'm curious.
Asianometry has a great video on YouTube detailing the creation of TSMC: https://www.youtube.com/watch?v=9fVrWDdll0g
_leading-edge chip manufacturing_ must be seen like "defence": making money out of it is optional, but it has to stay _really_ leading-edge and should be ready to produce at scale for other failing "friendly" part of the world. Since South-Korea and Taiwan did just that, and the others not, they are now alone on the global market.
To believe the "supply/demand" rule of the economy can magically make the money flow decently and properly is _REALLY_ dangerous, it cannot apply to everything.
It's tied into the culture, tbh, but you know, at least make it easier for someone to start, fail and start again.
Even forming a company is a major struggle compared to US, UK. Nevermind the insanity after a bankruptcy.
Sole proprietorship is still very common, and of course when you are in trouble with that, you are in trouble.
I am not trying to absolve Greece from its liabilities, just pointing out that Greece is a bad example for austerity not playing a significant role in slowing industrial development.
Source: I am Greek living in Greece.
Many, many Europeans do work in factories. Just ask the Germans.
What's wrong with working in chip factories anyway? They produce some of the highest margin products in the world and since they are highly automated, working in a chip factory requires certain knowledge and education on physics, quality assurance, automation, material science, and certainly give you experience that makes you a valuable worker with future perspects rather than a replaceable cog in a dead end job as is the case for the Europeans working in most other factories that are a few steps away from being off-shored to lower cost areas.
Regular users would generally stay for several hours to make it worth it. No break, water, toilet or food, probably come in with an empty bladder and empty stomach and stay the whole day.
From what I have read, it requires specialised training and intermediate if not advanced level skills and relatively high level of education. You work on the same machines for years and they pay is not necessarily that high compared to the trouble that you put in.
In fact, even in Taiwan the challenge is that people often switch to chip design or software instead. This definitely gets harder as people age.
Asia has what some would call almost slave labor and a complete lack of care for workers. Many countries don’t care about pollution either.
US and European countries will gladly clean up manufacturing at home while shifting to countries who could care less about employees or environmental impacts.
I could believe EU has some stricter environmental regulations than both, though
https://i.kym-cdn.com/photos/images/original/002/407/503/119...
For this industry, you want as many verticals as you can to ensure supply. Have the early parts of the chain is great, but producing the end product is necessary too.
You also see this problem the other way around, when a US company produces a chip design, but then actually gets it fabricated, packaged, integrated into a product, boxed, all in another country
wasn't really a "donation" it had strings attached which is why ASML wasn't allowed to export to China, the US has all the say at the end of the day
Thanks for the reference, just bought Chip War.
[1] https://www.intel.co.uk/content/www/uk/en/newsroom/news/eu-n... [2] https://ec.europa.eu/commission/presscorner/detail/en/ip_22_...
It's clear that EU did what US wanted instead of what would be in its interest.
20B in Ohio: https://www.intel.com/content/www/us/en/newsroom/news/intel-...
20B in Arizona: https://www.intel.com/content/www/us/en/newsroom/news/intel-...
Who said they're not good enough? They're slightly worse than TSMC, but still put out competitive chips for desktops, laptops and servers. Slightly more expensive, slightly higher power consumption but still, perfectly acceptable and still the market leader in some areas.
> It's clear that EU did what US wanted instead of what would be in its interest.
No, it's not clear. Why would the EU do that? They did the best they could given the very limited choice present.
The blast-radius for non-intel chip fabricators is much wider and impactful for the economy
While TSMC will be on what, 1nm by then?
Intel's PR link doesn't go into details on this.
have looked at perf per W?
It really depends on the model. I see, for example, Kaby Lake Y models with a TDP of 4.5W . Though, in general, yes, many report that Intel is not taking power consumption as a priority (which does not mean that they do not offer niche "ultra/extremely-low power" products).
That said, it's all a moving target, and anyone who thinks Intel isn't producing good parts today is wrong -- they are.
I don't know: if you check graphs such as
https://www.cpubenchmark.net/power_performance.html
there is intersuccession of Intel and AMD. AMD seems to offer more models, but a proper analysis of their stand-outs and similarities is required to get a proper picture.
In the current desktop generation AMD and Intel are much closer than in Intel 12th vs AMD Zen 3. That's mostly because 13th gen has pretty much the same limits as before, but is more efficient, while Zen 4 has massively increased the power targets throughout the stack - by 60 to 90 % - to keep up with Intel (plus the marketing advantage of getting through the 5 GHz wall)
E.g. a 5600X had a PPT of 76 W, a 7600X has a PPT of 142 W. A 5950X was 142 W, a 7950X is 230 W.
Though it’s impressive how much efficiency they’ve squeezed out of that node regardless.
But to say that TSMCs process doesn’t confer large advantages is silly. Intel even uses them for their new discrete graphics cards — they wouldn’t have been able to compete otherwise (among other less interesting business reasons)
[1] https://www.intel.com/content/www/us/en/newsroom/news/intel-...
[2] https://www.granitefirm.com/blog/us/2021/12/28/tsmc-process-...
TSMC -> US
Intel -> EU
Toyota -> US
Honda -> US
Ford -> MX / Canada
GM -> MX / Canada
For the current trend to move to the US. That has to be government funding. Luckily, fabs require large investments at the start which might break-even more expensive labor. Also, maybe some more automation in the fabs could also help in making the fabs cost competitive.
While a factor, labor costs alone are the primary reason. In reality is more about the wider regulatory burden on a company, including environmental controls
That said it does not explain why a Japan Company can make cars profitably in the US but a US Manufacturer can not.
If it was only labor why would Toyota not have a factory right next to GM's in Mexico and import cars from Mexico to the US?
I think making cars in Mexico for the US became less worthwhile when Trump pulled the US out of NAFTA.
lol, trump did not "pull the US Out of NAFTA" not only is that not with in the power of the president to do, it was never on the table, NATA was replaced with USMCA, and only made a few small changes, for Automotive that means 75% of the vehicle components must be made in MX, US, or Canada, up from 64% under NAFTA
Nothing in the law would impact making at car in the US vs MX, and was aimed at preventing increased parts from China or other non-north American nations, and all of the changes were passed by congress with wide bipartisan support
Both were proposed changes that were not adopted in the final version.
Interestingly enough the “Clean Energy for America” bill pushes for additional tax incentives on EV's built by companies using union labor:
More specifically, the proposal says that electric vehicles assembled in the United States would qualify for a $10,000 tax credit while EVs that are built at facilities whose production workers are members of, or represented by, a labor union would be eligible for the full $12,500 credit.
It doesn't even make a lot of sense as an incentive to have workers unionize, since why would workers care what price what they're selling cars for. The law would only exist to benefit existing unions.
you dont pay tariffs if you produce locally. not hard to understand.
Good luck with that bet in the future.
I find it more odd to presume that corporations have some nationalistic competitive interest.
1. By operating a local subsidiary, you avoid unfavorable regulation and sometimes protectionism (Toyota/Honda/Intel).
2. Cost savings (transportation, labor, taxes, etc).
3.Proximity to customers.
It's incredibly provincial to think of multinational companies so simply.
It makes sense. ASML are in the Netherlands, as are NXP. ST are in France. Germany has quite a bit of semiconductor production for the automotive industry.
It'll be slow and expensive to get there though. There's not many places in the EU where you could simply drop a Shenzen in, demolishing historic buildings and natural environment along the way.
There are plenty of industrial parks available near transportation, water, and electricity in Europe to build this out. This also aligns with how the modern chip ecosystem works where the fab components are coming from Europe, the advanced chips are coming from Taiwan, other chips are coming from across SEA, and final assembly is happening in China. What I suspect will happen is that Europe will start printing advanced chips and most of them will be shipped to China for integration. If a conflict/dispute breaks out, switching to European assemblers will be expensive but totally doable with a short-term investment (2-3 years??)
Semiconductor manufacturing is dirty business. I live in the EU next to one such fab and whenever local environmental concerns are raised about the fab, since nasty chemicals are sometimes found in the river the plant uses, the official response is always "the exact process is confidential, we cannot allow external inspectors inside, but we can pinky swear we conform to all regulations via self audits" and the government rolls with that as the unofficial response is "stop bothering us about the environment or we relocate production to Asia and you're left with a bunch of unemployed engineers and tax hole in your city coffers".
Yeah, about that:
"STMicroelectronics N.V. commonly referred as ST or STMicro is a Dutch multinational corporation and technology company of French-Italian origin headquartered in Plan-les-Ouates near Geneva, Switzerland"
The lengths French and Italian corporations will go to to avoid taxes and red tape in their home countries, it's almost poetic. Even Airbus is now headquartered in Leiden, Netherlands instead of it's original place of Blagnac, France.
Without the skilled workforce or infrastructure the company will for sure not be competitive.
What most big companies are now doing to get insanely wealthy is have most governments foot the bill for the infrastructure, protection, and education of their workforce, while all the profits from the fruit of their labor go directly to shareholders and the governments don't see a dime in taxes so stuff like education, healthcare and infrastructure is falling apart while corporate profits have never been higher.
You are mixing chicken and eggs here. We had education and skilled people before huge governments stealing massive amounts of taxes from people existed. The disposable income from the population gave rise to bureaucrats who love to tax everything under and pretend that they world cannot run without them. That's pure twisted logic.
I'm not sure we're learning, though.
At the moment, it seems that we are not only still buying the energy and resources from said warmongering criminal dictators (thus funding their war of aggression), but also setting up institutions to patrol gas pipelines, so that said dictator cannot blow them up as easily and so that we can buy even more resources from said dictator. You couldn't make this up.
In light of this, I have little hope for rational policy making regarding China and chip production, unfortunately.
I see this repeated as a matra, in a way of Carthago delenda est.
But it is not true. Said warmongering dictators do not need dollars or euros to wage any war. The entire chain of the war machine is in local currency, backed by local resources. They do not need anything there, that has to be bought for dollars or euros. They are not some third would countries that have to buy their weapons abroad.
By repeating this mantra, we are only lying to ourselves.
Not really. There are already signs that the Russian military industry is in hot water now because there are no Russian semiconductor fabs that can supply the type of chips needed for anything beyond dumb ballistic missiles [1]. And it's not just chips, but also other basic electronic components or modules whose manufacturing has long since gone to China and other countries, some of which are under the scope of international sanctions against Russia.
> They are not some third would countries that have to buy their weapons abroad.
They are buying a ton of drones from Iran, for example, or Soviet-era stocks of artillery munition from North Korea [2].
> Said warmongering dictators do not need dollars or euros to wage any war.
Oh yes they do. No country on this planet is self-sufficient, not even the US. And it's not just about military equipment, it's about basic necessities of life, especially medicine and food. Russia needs money to buy these abroad, and for that they need foreign currency.
[1] https://www.politico.eu/article/the-chips-are-down-russia-hu...
[2] https://www.nytimes.com/2022/09/05/us/politics/russia-north-...
Same goes for "iranian" drones. Iran would have no idea how to start integrating them with russian C4ISR (note how the "mopeds" are observed by lancet drones); non-integrated drones would be OK for tactical, but not operational level of war-waging.
Russia is closest thing to autarchy that you can find on this planet (US isn't even a player here, US deindustrialized itself in the name of cost cutting). The 2014 sanctions only helped in building such economy. Medicine is easy to clone, if you are not bothered with intellectual property (see also India) and they are net food exporter. Sure, some french cheese or wines could be missing, but they are not necessary for the war.
But back to our topic: none of this means that buying energy is financing the war. It is there for conditioning western population to get used to more expensive energy (basic economic theory: the supply was cut, demand was preserved, the equilibrium moves). The oligarchs are going be laughing all the way to the bank. It is just surprising that someone with intelligence to be discussing on HN would be taking part of such conditioning, without realizing it.
I don't know what your definition of «the type of chips needed for anything beyond dumb […]» is, but – if I were to infer – all chips manufactured for military needs are the dump chips, be it in China, or in Russia, or in South Korea, or in the US etc.
Military does not chase cutting-edge, smallest nanometer manufacturing facilities nor do they look for fancy 3D stacked L1 CPU caches and alike, the ones we encounter in consumer tailored microchips (MC's). MC's produced for the military sector 1) are always several generations behind the consumer counterparts; 2) are slower; 3) get subjected to extreme and very rigorous testing, e.g. getting baked in specially designed ovens; 4) they come with hardened shells to later get subjected to irradiation; 5) likely something else. Surviving specimens make it into missiles and elsewhere, for all is required for a missile is a chip that will be guaranteed to not have failed a mission.
Freescale (ex-Motorola) and Texas Instruments are two of the largest MC manufacturing contractors in the US. They have separate lines set up for consumer and military needs, with the military contracts taking a priority. I can't be bothered to check whether Intel or AMD have clandestine US DoD contracts but it is safe to assume so. When Motorola used to manufacture their own MC's, they also had two separate lines for the highly sought after DSP's, 56k and 96k series. There were two versions, a hardened one (prohibited for export out of the US), and the consumer version (with somewhat more relaxed export controls for the 56k series but not for the 96k series). Tolerance specs of the hardened version were classified at the time.
Back onto Russia. To cut it short, it is a case of hypocrisy on both sides as propaganda has been busy working on both sides. Soviet Union (and later, Russia) has been self-sustained, self-contained and has been manufacturing their own chips since late 1960s - early 1970s with always prioritising military needs over the consumer needs. They have never chased the latest designs or developments, but their stuff has been reliable where required.
It is not easy to assess their current situation due to the information disclosure suppresion and also due to prior reports of embezzlement on a unfathomable scale having taken place in Russia specifically when it comes to military contracts. What it is known with a fairly high degree of certainty is that Russia had commenced a 90 nm manufacturing facility as early as 2014[•]. There have also been sketchy reports that they have since moved on to a 28 nm process. Finding a reliable source is not easy, though.
Either way, chips that have been produced to a 90 (or 28 nm) process and have been subjected to hardcore testing requirements are good enough to drive missiles (likely, other military equipment too). Provided chip manufacturing facilities are still operating in Zelenograd, their output will be prioritised in the current political environment, and it will receive a priority funding in the local currency. One ought not to underestimate the adversary and ought to be wary of the creativity they may come up with once having been cornered.
Emperor Poo of All Russia has been demonstrating the world that he is willing to drive his never be, imaginary empire into the ground at any cost – in order to fulfil his ultimate wet dream of crowning himself as the first Galactic Emperor Poo, and, since Russia has been making their own silicon wafers, the MC manufacturing situation is not all that black or white – until more is known for sure.
And how do they pay for “things”?
Its not like those who are paid in roubles would have any use for any other currency. Everything they need can be paid for in roubles, turtles all the way down.
Sure, you won't get iphone, porsche or gucci wares for that, but those are not necessary to wage the war.
This is where your argument breaks down. Russia imports vast amounts of manufactured goods that it doesn't have the capacity to make itself, including basic military and basic consumer goods, and for which it needs something that their trade partners might conceivably want. Which ain't roubles, for the most part.
They do have capacity to fully cover their entire military needs.
For consumer goods, they are trading with China, India and other countries in a mix of currencies, that includes rouble.
The freezing of their USD and EUR assets was a huge mistake; it demonstrated to the world that such assets are not safe.
Cars and motors are dual use goods (so the collapse of Russian domestic manufacturing of them is militarily relevant), but even setting those aside and looking purely at single-use military goods, there's persuasive evidence that the Russian military is increasingly reliant on Iranian drones and equipment (https://www.al-monitor.com/originals/2022/10/russias-use-ira...). Vast numbers of Russian equipment have been confirmed destroyed or captured by observers such as Oryx, and those are just the visually confirmed losses you can check the evidence for yourself (https://www.oryxspioenkop.com/2022/02/attack-on-europe-docum...). No country would be able to replace those losses without switching to a full war economy, which Russia has not done (and which would only be a necessary but not sufficient condition for replenishing these kinds of losses).
they had their local currency forever. yet they developed very fast exactly at the same time as we started buying their goods. its not a coincidence. and yes China is a third world country by all metrics, its not because you have very modern centers like Shanghai, Beijing and more big cities like that that there is not utter misery in the countryside that would make you blush
Not to defend China, but the west loves their cheap manufacturing, ask Apple, to name one.
You can't blame them only when it suits you.
And that's without even mentioning that who knows which countries will be free and which will be dictatorships in 20-30 years.
[0] https://www.europarl.europa.eu/thinktank/en/document/EPRS_BR...
Sure! France is betting everything with investing for an Intel factory here, the non-fashionable manufacturer that is getting excluded of the market because their chip designs are outdated. If my tax revenue can be used to maintain old actors afloat and create jobs to teach the French how to do things that don’t perform, I’m more than happy.
My read is that China is expansionistic, and military power is just one tool in their toolbox.