A few pictures of the semiconductor industry
2. Shanghai, once ridiculed, now holds up half of China’s chip market!A hundred million, in a chip company can burn how long?4. How many chips can be made on a single wafer?Last year there were a lot of articles about the semiconductor industry: the chip shortage, the CHIPS Act, our dependence on Taiwan and TSMC, our dependence on China and much more.But for all the talk about chips and semiconductors, few understand the structure of the industry.I’ve found that the best way to understand something complex is to chart it step by step.So here’s a quick graphic tutorial on how the industry works.The semiconductor ecosystem what we are seeing in society is that everything is going digital.Semiconductors — chips that process digital information — are almost everywhere: computers, cars, home appliances, medical equipment, and more.Semiconductor companies will sell $600 billion worth of chips this year.As the chart below shows, the industry seems simple.Companies in the semiconductor ecosystem make chips (triangle on the left) and sell them to companies and government agencies (right).These companies and government agencies then design the chips into systems and devices (such as iphones, PCS, airplanes, cloud computing, etc.) and sell them to consumers, businesses, and governments.Revenue from products containing chips is worth billions of dollars.However, given its size, the industry remains a mystery to most people.If you really think about the semiconductor industry, you probably imagine workers in rabbit suits holding 12-inch wafers in a factory clean room (a chip factory).Yet this is a business that operates on materials one atom at a time, with factories that cost billions of dollars to build.(By the way, there are two trillion transistors on that chip.)If you were able to look inside the simple triangle that represents the semiconductor industry, rather than one company that makes chips, you’d see that it’s an industry of hundreds of companies, all dependent on each other.Overall, it’s huge, so let’s describe one part of the ecosystem at a time.(Warning — this is a simplified view of a very complex industry.)There are seven different types of companies in the semiconductor industry.Each of these different industry segments moves its resources up the value chain to the next, until eventually the chip factory (” Fab “) has all the designs, equipment, and materials needed to make the chips.From the bottom up, these semiconductor industry segments are: Chip Intellectual Property (IP) Core Electronic Design Automation (EDA) Tools Specialty Materials Fabs Equipment (WFE) “Fabless” chip companies Integrated Equipment Manufacturers (IDM) Chip foundries The following sections provide more detailed information about these seven semiconductor industry segments.Chip intellectual Property (IP) Core chip design may be owned by a single company, or…Some companies license their chip designs — as software building blocks, called IP cores — for widespread use. More than 150 companies sell chip IP cores. For example,Apple licenses ARM’s IP cores as building blocks for microprocessors in its iphones and computers electronic Design Automation (EDA) tool engineers use specialized ELECTRONIC Design Automation (EDA) software to design chips (in any IP they buy)The industry is dominated by three American vendors — Cadence, Mentor (now part of Siemens) and Synopsys large engineering teams using these EDA tools can take 2-3 years to design a complex logic chip,Such as microprocessors used in phones, computers, or servers.(See the design process below.)Today, as logic chips become more and more complex, all electronic design automation companies are starting to plug in artificial intelligence AIDS to automate and speed up processes for special materials and chemicals. So far, our chips are still in the software phase.But to turn it into something tangible, we’ll have to actually produce it in a chip factory called a “fab.”Factories that make chips need to buy specialized materials and chemicals:Silicon wafers – making them requires crystal growth furnaces that use more than 100 kinds of gases – bulk gas (oxygen, nitrogen, carbon dioxide, hydrogen, argon, helium) and other foreign/toxic gases (fluorine, nitrogen trifluoride, hydrogen arsenide, phosphine, boron trifluoride, eborane, silane, to list on…)Fluid (photoresist, CMP paste) mask wafer handling equipment, Cutting RF Generator Faber equipment (WFE) manufacturing chips These machines physically manufacture chips five companies dominate the industry — Applied Materials, KLA, LAM, Tokyo Electronics andASML These are some of the most complex (and expensive) machines on the planet.They take a piece of silicon ingot and manipulate its atoms up and down on its surface and we’ll explain how to use these machines later. “Fabless” chip companies. System companies that used off-the-shelf chips (Apple, Qualcomm, Nvidia, Amazon, Facebook, etc.) now design their own chips.They create chip designs (using IP cores as well as their own designs) and send them to the “foundry” that owns the “fabs” that make them and they may use those chips exclusively in their own devices, like Apple, Google, Amazon….Or they might sell chips to everyone like AMD, Nvidia, Qualcomm, Broadcom…They do not own wafer fabrication equipment or use special materials or chemicals. They do use chip IP and electronic design software to design chips. Integrated device manufacturers (IDM) design, manufacture (in their own fabs) and sell their ownChip they do not make chips for other companies (a situation that is rapidly changing).There are three types of IDMs — memory (Micron, SK Hynix), logic (Intel), Analog (TI, Analog Devices) — they have their own “fabs.”But you could also use a foundry. They use chip IP and electronic design software to design their chips. They buy Wafer Fab Equipment and use specialized materials and chemicals to stream new lead chips (3nm)Foundries foundries make chips for other people in their “fabs” they buy and integrate equipment from various manufacturers foundries equipment and specialty materials and chemicals and they use this equipment to design unique processes to make chips but they don’t design chips and TSMC logic leads,Samsung’s second fab specializes in chips for analog, power, radio frequency, display, security and military applications.Fabs is short for fab — the factory Integrated Equipment Manufacturers (IDM) and foundries that make chips own Fabs.The only difference is whether they make chips for others to use or sell, or whether they make chips for themselves to sell.Think of Fab as similar to a book printing plant (see picture below). Just as authors use word processors to write books, engineers design chips using electronic design automation tools. Authors contract with publishers who specialize in their genres, and then send the text to a printing plant.Engineers purchase paper and ink from fab-printing plants that are suitable for their chip types (memory, logic, RF, analog).Purchase of raw materials by fabs;Silicon, chemical, gas printers buy printing machinery, printing presses, adhesives, trimmers.Fabs Buy fabs equipment, etchers, deposition, photolithography, testers, and encapsulates a book’s printing process using offset, shooting, stripping, blueprints, plate making, binding, and finishing.Chips are made in a complex process that uses etching machines, deposition, photolithography to manipulate atoms.Take it as atomic offset printing.Then the chip is cut and packaged and the factory produces millions of copies of the same book.The factory produces millions of copies of the same chip, but while that sounds simple, it’s not.The chip is probably the most complex product ever made.Below is a simplified version of the more than 1,000 steps required to make a chip.As chips become more and more densely packed (trillions of transistors on a single wafer),The soaring cost of building a fab-one of the reasons a chip factory now costs more than $10 billion is the soaring cost of the equipment needed to make the chips: an advanced lithography machine from Dutch company ASML alone costs $150 million and has about 500 machines in a plant (not all like ASML)Fabs are very complicated to build.The clean rooms that make chips are just the tip of the iceberg of a complex set of pipes that deliver gas, electricity and liquids all at the right time and temperature to stay ahead of the pack in fabs, which means most companies have pulled out.In 2001 there were 17 companies producing state-of-the-art chips.Today there are only two – Samsung of South Korea and TSMC of Taiwan.What’s next – Technology is getting harder to make chips that are denser, faster and consume less power, so what’s next?Instead of letting a single processor do all the work, logic chip designers put multiple dedicated processors inside the chip. Memory chips are now becoming denser by stacking them 100 stories high. As chip designs become more complex, this means larger design teams and longer time-to-market,Electronic Design Automation companies are embedding ARTIFICIAL intelligence to automate parts of the design process wafer makers are designing new devices,To help fabs make chips with lower power consumption, better performance, optimal area cost and faster time-to-market What’s next – Business The business model of integrated device manufacturers (IDM) such as Intel is changing rapidly.In the past, vertical integration had the huge competitive advantage of having your own design tools and factories.Today, that’s a disadvantage.Fabs have economies of scale and standardization.Instead of inventing it themselves, they can tap into the entire innovation stack in the ecosystem.Focus only on manufacturing AMD has proven that it is possible to move from IDM to a fabless model.Intel is trying.They will use TSMC as a foundry for their own chips and set up their own foundry what comes next — geopolitics may well prove to control advanced chip manufacturing in the 21st century just as it controlled oil supply in the 20th.A country that controls this kind of manufacturing can stifle the military and economic power of other countries.Ensuring a steady supply of chips has become a national priority.(In dollar terms, China’s biggest import is semiconductors — bigger than oil.) Now both the US and China are rapidly trying to decouple their semiconductor ecosystems from each other.China is spending more than $10 billion in government incentives to build Chinese fabs, while trying to create a local supply of fabs equipment and electronic design automation software after the United States moved most of its fabs to Asia in the past decades.Today, we are encouraging the return of fabs and chip production to the United States, an industry that was previously of interest only to technicians and is now one of the biggest parts of great power competition.