TSMC has always been pure fab company and it pays off now. Samsung and Intel are also in chip design business and do other things. They are less focused. TSMC's lead is not guaranteed. Any new technology node can fail and remove them from competition if they make wrong choices.
I'm not exaggerating when I say that designing a new technology node for mass production is like a moon program. TSMC designs new node every few years, builds a fabs that cost 20+ billion. ASML machines are the most expensive tooling there but they are just part of the whole.
Intel and Samsung are almost as good, but small differences have huge impact in the final result and timing. Small percentages in final yield can make a difference.
We (laymen) have no idea about the incredible complexity behind manufacturing a single CPU chip.
It's been like that for a while. That's why we need everyone else to function as a society.
I've watched a couple blacksmithing videos on youtube but I still don't really know how smelting iron works, and I wouldn't be able to produce a steel if my life depended on it. That's literally 2500+ year old tech.
Most people don't even know where their water comes from. Most people that drive do not know how a combustion engine works. Even people watching TV are only vaguely aware it's a series of static images chained together to make it look like its moving.
https://m.youtube.com/watch?v=ZSRHeXYDLko&pp=ygUmam9uYXRoYW4...
The ASML machines perform the actual photolithography. They expose the die mask to the photoresist coated silicon wafer. Using that technique, you can built up complex 3D materials incorporating different layers and shapes. But the ASML machine doesn’t know how to make a transistor. It’s kind of like a 3D printer in that way.
TSMC had previously used a "spin-on" dialectic technique at a previous node, and reverted to CVD because of problems.
They were able to beat all other manufacturers to market with copper interconnects (including IBM), because they avoided spin-on, which worked well in testing, but not in production.
They had great luck in gaining this prior experience.
It's insane. I had a friend tell me about what goes on in these asml machines. Essentially the targeting system that moves the wafer around cannot have any vibration so I kid you not the platform is floating and controlled by magnets. And this is just the etching machine.
The building those tools were housed in had a foundation that was iirc 30’ of a specialized concrete mix. I was chatting with some of the construction engineers over coffee and the consensus was that 10,000 years from now, some archeologists would be pondering wtf this giant concrete platform was for.
TSMC analysis playlist: https://youtube.com/playlist?list=PLKtxx9TnH76SRC7ZbOu2Nsg5m...
"We all take two years to develop one generation, how come you guys can do it in one or one-and-a-half year?" And they asked if some of your customer transfer technology to you or what not? And I told him, "No," I told him that, "That's not true." I think he probably implied we steal technology from customer, the way he talk.
And I say, "I'll tell you why." I said that, "When we develop one node, basically you have some learning cycles. First, you do some simulation. And you have some idea, then you run wafers to prove that. So, you run a group of wafers according to simulation and you have some splits. The wafer runs through the fab, they come out and you measure them, you analyze them, and you try to improve and you run this again. This again, you run. So, this is learning cycle." At that time, "It takes about six learning cycle, roughly, to complete one generation." Of course, you had some short loops and not just one. I said that, "My R&D wafer in the fab run much faster than yours, because my R&D engineer works three shifts and you only work one shift. So, your R&D wafer move eight hours a day, my work/move 24-hours a day. So, my wafers go three times faster, even if you are twice smarter than me, I still beat you up." <laughter>
https://www.computerhistory.org/collections/catalog/10279267...
1) All RnD fabs move wafers 24/7
2) Intel has consistently been the leader in process technology for 20+ years.
Why did this “3x shift advantage” deliver gains only in the past 5 years?
Keeping the bean counters under leash is good for building long-term value.
From this comment it reads like HBS has no merit at all but I'd imagine that's not the entire picture
And it worked, they got to the point that the US would defend them from a Chinese invention.
https://en.wikipedia.org/wiki/First_island_chain
China is surprisingly confined in its waters. Strange as it seems with all that coast line, China (and thus a huge chunk of world trade) has to transit confined sea pathways before it can reach oceans.
Conversely, should China ever gain control over Taiwan, that fact and the implied retreat of Western navies (US primarily) from those waters would make China's Navy the guarantor of the global (trade) order in its most important economic region. Today, it is the US Navy that fills that role.
Geography remains hugely important in shaping history. Per some views, the very rise of Europe was primarily due to navigational advances. Technologies that allowed circumventing strategic geographical realities that had stood for thousands of years: the land corridors of Asia and the Mediterranian sea & ports.
Frankly, the whole idea that the US is only defending Taiwan because of TSMC is ridiculous.
Losing access to cutting edge nodes will screw some businesses over but it hardly the end of the world.
A customer that is willing and able to ramp to huge volume a small size chip (important for good yield), and even willing to ramp with relatively low yield (due to high iPhone margins).
Time to volume production is generally gated by yield for foundries, and Apple provides an intermediate target with the small mobile chips.
It's like an extreme version of "nobody got fired for going with IBM"
Decision makers, even and sometimes especially in groups are not always rational. There are many cognitive biases that might make going against TSMC too difficult to justify
Also historically they have been the only option for __nm manufacturing, although transistor size is beginning to become irrelevant <10nm with different tricks having more of an impact on performance and efficiency
Most of today's advanced litho (EUV) was actually funded/developed in American labs (Berkeley lab etc). The US was ahead in litho for awhile...but GCA folded and ASML acquired Cymer (based in San Diego, develops light sources for EUV) and SVG.
TSMC has a couple of advantages: 1) Focus exclusively on manufacturing, not design, 2) Large volume customers/products (Apple, AMD, NVIDIA etc), but especially Apple/iPhone. The process technology /manufacturing is tightly coupled to design specs. This provides a faster manufacturing learning curve.
-Intel screwed up by missing mobile / pushing out EUV adoption. Since they also design their own chips, they compete with any potential foundry customers in several markets (ex: data center), which is why they haven't been able to grow their foundry services division that much. TSMC is friendly with everyone and does one thing: manufacture chips in the fab.
Intel is attempting to catch up now by placing several orders for the next version of EUV, High NA EUV. They've also stated that with their planned process innovations ("RibbonFET" and "PowerVIA"), they will have a better process than TSMC at the 18A node (1.8 nm).
-For Samsung, their core business is more memory/displays. Memory lags logic in process technology innovation.
On the logic side, Samsung has made the leap to Gate-all-around transistors (next evolution of transistor, succeeding FinFET) before Intel/TSMC but seems to be facing yield problems.
TSMC is the top dog now, but things are going to get interesting as we go <3, 2 nm...
It was certainly said to be the next big thing for a very long time before it was finally ready to be used in production.
Intel made mistakes and lost its gain and here we are today. Intel has always been a lot more aggressive and risk taken. They might catch up again. It's just a long process.
As to Samsung etc they were never really in the game. They only got remotely competitive by heavy poaching and stealing of trade secrets from TSMC / Intel (and merging IBM fabs).
At the end of the day it's not just ASML machines (that take forever to deliver). It's a huge investment.
And no, TSMC is staying steady no matter what. That's how they've been operating from the start - regardless of if the "opponent" is making mistakes. It's not a strategy in that sense where they're competing. They're doing their own thing and the competitors either died by themselves or failed.
They're not competitive as in they aren't competing with Intel. Otherwise they'd go for counter measures or what not. That's never been their strategy. Cutting edge wasn't their core business originally.
A big part of TSMC's current status is probably Apple. Back in 2015, TSMC was slightly behind. The iPhone 6S was dual-sourced from TSMC and Samsung with the TSMC chips being 16nm and the Samsung ones being 14nm. Intel had launched 14nm parts a year earlier.
We don't know what agreements that Apple has made with TSMC, but it seems reasonable to think that Apple made a big multi-year commitment to TSMC potentially with up-front money that TSMC could use to get to the position it now occupies. Apple's ability to commit years in advance can really change things. TSMC could confidently invest in their future without wondering "will someone pay for it?"
Samsung has been struggling a bit with its foundry and I think part of that is that companies don't want to commit to Samsung. While Qualcomm and others would like an alternative to TSMC, they're not looking to commit to Samsung. They'd rather take a wait-and-see approach, keep their options open, and bail on Samsung at the first sign of trouble. That leaves Samsung unable to make the kind of long-term planning that TSMC can. In a way, this becomes a self-fulfilling prophecy since Samsung simply won't have the same commitment.
Apple decided that they wanted state-of-the-art foundry access and they chose TSMC to become that. That's not to say that TSMC isn't talented - Apple wouldn't choose a company that wasn't. It's simply to note that they have a very symbiotic relationship. Apple has the margins and commitment to pay for new advances so TSMC can confidently spend money knowing it has a guaranteed buyer at high rates. Once it has that advance, it can sell that capacity to other companies a year later at lower rates and make more money. This becomes self-reinforcing.
Now, many companies that have such a great self-reinforcing profit maker end up stumbling or resting on their laurels. Intel did. So it's not guaranteed that being the big fish means you'll continue being the big fish. TSMC seems reasonably committed to continuing to spend the money necessary to remain in its position and keep Apple happy.
Intel got taken over by bean-counters who preferred the short-term profits one could get by not investing as much in the future of their foundry. Even if you have the ability to spend money to remain competitive, that doesn't matter if you decide not to. For a while, this was fine for Intel. They were making good money, AMD was a mess, and x86/x64 was still king. Of course, not investing in the future will eventually bite any company.
With Samsung, there have been complaints from Samsung and AMD about their yields on the latest processes, but I think it's reasonable to think some of that is because Samsung can't confidently invest in new processes like TSMC can. That's not to say it isn't hard work for TSMC, but a lot of work is easier when you know it will pay off. "If you build it they will come," is sometimes true. TSMC hasn't needed to take that gamble since their Apple partnership started - Apple is guaranteed business. When we're talking about stuff that requires very long-term investments, having basically guaranteed business is a huge advantage.
TSMC has executed very well and I don't want to take that away from them. At the same time, they benefitted from an Intel run by bean-counters who wanted to milk profits from x86/x64 dominance rather than investing in their foundry and the fact that Apple doesn't want to use Samsung as much as possible and could make huge commitments years in advance.
I guess I might reframe the question: if you were Samsung, how would you remain competitive with TSMC? Sure, you can spend money, but will the customers come? Likewise, if you're Intel, the question is: how long will it take to regain our competitiveness? TSMC didn't build its company in a day. It was many years of top-notch execution. It will take Intel several years to get back on track - and it's not like TSMC will be resting during those years either.
Intel won.
Everyone else but TSMC gave up in logic. Samsung mostly focused on memory.
TSMC got Apple as a customer.
Intel choked its lead by paying outrageous dividends and cutting R&D expenditure.
TSMC has done well. They've also done a Steven Bradbury.
I will ignore the Tech side of it. ( You dont buy ASML and expect it all to work, that is like saying you buy a computer and the results of the programmers are all the same. ) You should spend a weekend or two on Youtube Channel on Asianometrys, SemiWiki or Semi Engineering.
On the Business Side of things. With what the ex-CEO Morris Chang called the Grand Alliance, meaning TSMC being Foundry only they will have to work with every industry members to get things work.
TSMC also do not have their own product to compete against their customers ( Pure Play ). Compare to Intel and Samsung, do you prioritise your own SKUs first? where you might earn much higher margin, think Xeon and Exynos SoC? or Global Foundry's case, AMD's order. How do you also balance the capacity planning with so many different customers? This is something that TSMC does extremely well compared to all in the industry.
You then have an economy of scale question. New node are now fast approaching $20B capital expenses, and if you do it elsewhere and not in Taiwan. That could easily be $30B simply because you have to replicate some of the infrastructure already in place along with higher operating cost. Add in another $10B+ of R&D. Ignoring the political side of things, could the industry sustain two Fab players both on leading edge? With an expected ROI within 3 years time. And if your answer is somehow yes, given the trajectory of continuing increasing cost of leading edge node, will it be sustainable in 5 years time? ( In case anyone is wondering, Intel are using their Profits from x86 CPU to catch up to TSMC )
TSMC's culture is also very engineering centric. You have people with Dr. in engineering and expect them to learn about Management or Finance. Rather than some Marketing and Sales people. They are also pragmatic enough with technology and advancement not just sticking to their Roadmap aka Intel 10nm. Most of their Marketing and PR were hired in the recent 5 years because the amount of fucking bull shit from Mass Media they have to endure.
They also work long hours. And are organised with much higher efficiency. Most of these are organisational and management problems. You can think TSMC are moving more like Startup speed within compare to Intel with lots of bureaucratic layers. ( Which Gelsinger is trying hard to break )
"Let's just move TSMC to the US" is a naive solution to the problem most people with little industry experience arrive at. No real effort is being made to move any significant portion of final fabrication out of Taiwan and into the US, and the latest and greatest processes are being developed exclusively in Taiwan. Progress on 5nm fabs in AZ will probably be excruciatingly slow, dependent on significant numbers of Taiwanese worker exchanges, and produce a chip 2 generations behind cutting edge by the time it's operational.
There's some backlash in Taiwan over "piercing the silicon shield", but it looks like it could end up being a way to get the US and Taiwan to cooperate even more intensely than they already do.
Seriously, it's really horrible. Is there no competition to force them to improve it?
They are the leader because everybody else dropped out, and went to make money on something easier, like making Wordpress websites.
