WingNews

fabfabfab|4 years ago

Having worked in Fab, the supply chain is already in the US+EU+Japan. About the only change in last 5 years or so is Intel's ability to compete in lithography process and get sufficient yield to stay competitive in pricing. Lithography is one of the 400 or so steps in Fab processing, but arguably the most critical and a bottle neck. TSMC does not have a lead in every single of these 400 steps, in fact quite the opposite.

Anytime someone says "impossible", I would take that opinion with a grain of salt.

tooltalk|4 years ago

According to US Semiconductor Association's recent State of the Industry Report, Taiwan's share in the manufacturing equipment part of the supply chain is almost nil and entirely depends on suppliers in the US, Japan and EU.

  Manufacturing Equipment (12%):
  US: 40%
  Japan: 32%
  EU: 18%
  S Korea: 4%
  Taiwan: <1%

  Wafer Fabrication (19%):
  Taiwan: 20%
  S Korea: 19%
  Japan: 17%
  China: 16%
  US: 12%
  EU: 9%

I guess Apple's decision to leave Samsung's Austin fab back in early 2010's to TSMC in Taiwan had an outsized role in TSMC's lead in tech and rise in revenue -- Apple accounts for 25% of TSMC sales.

[1] https://www.semiconductors.org/wp-content/uploads/2021/09/20...:

SECProto|4 years ago

> Anytime someone says "impossible", I would take that opinion with a grain of salt.

Or to quote Arthur C Clarke:

> When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.

throw0101a|4 years ago

> Lithography is one of the 400 or so steps in Fab processing, but arguably the most critical and a bottle neck.

In their ongoing series on supply chains, the Odd Lots podcast had episodes on both TSMC and ASML:

* https://podcasts.apple.com/us/podcast/the-story-of-how-tsmc-...

* https://podcasts.apple.com/us/podcast/asml-the-obscure-power...

justapassenger|4 years ago

You have to take his words with a grain of salt. Without going into politics, it’s impossible to talk about TSMC without geopolitical context.

It’s essential to TSMC survival for their production to physically stay focused in Asia.

ksec|4 years ago

Morris Chang has been exceptionally clear on this issues when he was still CEO of TSMC, even before the whole politics and TSMC becoming leading edge.

It is impossible with respect to current cost structure, without substantial government money, while getting the same margin. Of course it is entirely possible to throw money at the problem and succeed. Which is what Intel is trying to do right now with the help of US government.

nathanm412|4 years ago

It's essential to Taiwan's survival for production to physically stay focused in Taiwan. I don't know if the US would be as willing to defend Taiwan if our own recovery wasn't affected by the chip shortage.

drawkbox|4 years ago

Once the chip shortage happened, partially due to geopolitical reasons, that changed everything. The West/US will never fully rely on a single point of failure again no matter how hard the HBS MBAs and Chicago thinking push it to trim and be "efficient". Some industries are too important for other industries and leverage on that over those areas is too risky and costly now.

I'd pay double right now for GPUs directly from the source, not from some sketchy third party.

Right now our EV/auto, space and even AR/XR industries as well as gaming and everything that requires chips, we are at the mercy of an external market that has a slant against the West. It will take some years to get out but we'll never not expect that in the future again. If costs go up costs go up, but availability should never be allowed to be used as leverage again, that is too risky and too costly long term.

Availability that is reliable is always more important than efficiency or cost, because right now lack of availability is costing lots of extra time that has the potential to lose entire industries, that is not acceptable in any way.

Very little margin and too much optimization/efficiency is bad for resilience. Couple that with private equity backed near entire market leverage monopolies/duopolies/oligopolies that control necessary supply and you have trouble.

HBS is even realizing too much optimization/efficiency is a bad thing. The slack/margin is squeezed out and with that, an ability to change vectors quickly. It is the large company/startup agility difference with the added weight of physical/expensive manufacturing.

The High Price of Efficiency, Our Obsession with Efficiency Is Destroying Our Resilience [1]

> Superefficient businesses create the potential for social disorder.

> A superefficient dominant model elevates the risk of catastrophic failure.

> *If a system is highly efficient, odds are that efficient players will game it.*

Hopefully that same mistake is not made in the future. It will take time to build up diversification of market leverage in terms of chips for availability. Hopefully we have learned our lesson about too much concentration, with that comes leverage and sometimes a "gaming" of the market.

This chip shortage, and all the supply chain problems during the pandemic as well, will hopefully introduce more wisdom and knowledge into business institutions that just because things are ok while being overly super efficient, that is almost a bigger risk than higher prices/costs. Competition is a leverage reducer. Margin is a softer ride even if the profit margins aren't as big.

[1] https://hbr.org/2019/01/the-high-price-of-efficiency

tooltalk|4 years ago

The Taiwanese gov't was deeply involved in TSMC from its inception in the 80's to what it is today. I'm guessing it's in their best economic, geopolitical interest to keep things in Taiwan as much as possible.

HWR_14|4 years ago

Person who runs billion dollar business says competitors will fail, encourages people to continue to rely on him. News at 11.

dnautics|4 years ago

key phrase:

> a full chip supply chain in the country

(emphasis mine)

TSMC is, after all, ALSO building a fab in the country, so it's not like TSMC doesn't believe in onshoring chips to the US. The fabs are {high capital expense/high recurring expense/high skilled labor} operations so the US is very competitive due to the labor value-add. Not every part of the full supply chain is like that.

To serve (aka reduce risk to) US supply chain interests in the short term, you also don't need access to the full stack domestically. You could potentially send a lot of activites that need low-skilled-labor to, say, Mexico, which is a much lower supply chain risk that Asia (aka thailand, vietnam, china). National security onshoring, which possibly has less tolerance for even outsourcing to Mexico, is likely a different story and more aligns with Morris' statement.

41b696ef1113|4 years ago

I also think people get focused on having a state-of-the-art production. Lots of value in having a domestic facility that can make last N-tier generation chips (10, 14, 22, 32, etc) are all capable of providing significant value.

luis8|4 years ago

This was mentioned in the last meeting held by Biden with the North America group. The Mexican president said that the imports from China should be reduced as much as possible in order to stop China becoming more powerful that it already is. Mexico at least in the mid/near future is a safe bet in terms of supply chain risk.

jvanderbot|4 years ago

Well that sounds about right from the guy who moved it all to Taiwan. I hope the scene has changed a little in the last 40 years. The US is eager to have these businesses, and I can imagine a lot of incentives and regulatory reductions.

kragen|4 years ago

It has changed. That's what makes it impossible.

ineedasername|4 years ago

>dreams for onshoring chip supply chain

Depends on what the dream is. Bulk onshoring? Probably not while the geopolitical situation stays on the status quo.

But I don't think that's the attempt we're seeing here anyway. I think what we're seeing is the foundations built for the capability to bootstrap more robust manufacturing in the West if/when China decides that Taiwan really should stop claiming independence, and perhaps at the same time exerts its local power over that entire region of the world and thus South Korea as well.

JumpCrisscross|4 years ago

Biggest change since then are relative energy costs between Texas and Taiwan. (To say nothing of geopolitical stability.)

dnautics|4 years ago

quote is from oct 2021

(no title)

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