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Why can't the United States make the chips it wants?

Why can't the United States make the chips it wants?

Why can't the United States make the chips it wants?

What has happened to American semiconductors?

Since the invention of integrated circuits by Fairchild Semiconductor and Texas Instruments, it has only been a year old, and it has gone from the cradle of semiconductors to almost completely losing the ability of semiconductor manufacturing to the future, and TSMC is needed to continue its life?

Today, let's talk about why semiconductor manufacturing can't go back to the United States.

December 6, 2022, Arizona, USA.

U.S. President Joe Biden, Apple CEO Tim, Nvidia CEO Jensen Huang, AMD CEO Su Ma, and 91-year-old TSMC founder Zhang Zhongmou and other leaders of world-renowned semiconductor companies gathered together.

Why can't the United States make the chips it wants?

Today, they are all gathered here to celebrate their good partner, TSMC.

TSMC's wafer factory planned to be built in the United States has finally waited for its first machine.

President Biden was even more excited to announce that the manufacturing industry is back!

Wait, since the word "back" has been uttered.

That means that to a certain extent, semiconductor manufacturing in the United States is "lost".

There is some truth to this, as we can see from the documents released by the White House in 2021.

The U.S. share of global semiconductor manufacturing has also been declining in recent years, from 37% in 1990 to 12% in '21. Even, if no timely action is taken, this data is likely to continue to decline in the coming years.

Why can't the United States make the chips it wants?

So, what exactly has happened to American semiconductors?

Since the invention of integrated circuits by Fairchild Semiconductor and Texas Instruments, it has only been a year old now, and it has gone from being the cradle of semiconductors to almost completely losing the ability to manufacture semiconductors.

Hello everyone, today let's talk about semiconductor manufacturing, why can't we go back to the United States?

Made in the USA, how is it lost?

Unlike the semiconductor factories that we have now in our impression of being full of yellow lights and automated equipment, the newly born semiconductors are still quite "manual" in the production process, and they are labor-intensive enterprises in a certain sense.

At that time, there was no concept of "integrated circuit", and if you wanted to make a circuit, you needed to make basic components such as resistors, capacitors, inductors, diodes, and transistors.

Why can't the United States make the chips it wants?

Then use wires to connect these most basic components to make the most basic logic circuit.

The circuit that does this is naturally time-consuming and wasteful, and at the same time, due to the complex connection, once it is moved, the stability performance is not too good.

It wasn't until around 1958 that Texas Instruments' Jack When Kilby was researching, he suddenly patted his head and found that these originals could be produced together.

Why can't the United States make the chips it wants?

Is it possible that we can make these components together during production, and the stability will be much better.

After a period of scientific research, they found their own way.

A triode is first fabricated on a germanium wafer, then a small amount of doping in a pure germanium crystal is used to make a resistor, and a reverse diode is used to make a capacitor.

In this way, they made the first integrated circuit in human history: a phase oscillator.

Why can't the United States make the chips it wants?

However, the IC has not yet solved a key problem – that is, the human power is required to connect the wires to these components.

Later, Fairchild Semiconductor's Robert Neuss improved on this and decided to replace the thermally welded wires with the method of evaporative deposition of metal.

Why can't the United States make the chips it wants?

This time, the steps of connecting the wiring have also been solved.

But this also brings some new problems, that is, the cost is somewhat out of control.

Although Fairchild's process was more elegant, it required the use of silicon technology, which was more expensive at the time, and the production demand of the new technology at that time was small, so the price was very difficult to control.

Why can't the United States make the chips it wants?

In the sixties of the last century, an integrated circuit could even be sold for $450, which is equivalent to the current two iPhone 15 Pro max, 1T non-Hainan version of the National Bank of China in terms of inflation.

So, is there any way to save the cost of IC manufacturing?

Since Fairchild, semiconductor manufacturing has begun to shift.

In 1959, Charles J. Spock joined Fairchild Semiconductor, and his job was to find a new place for the company to build a factory, and they had just won a large semiconductor order and needed to significantly increase production.

Spock was looking for a place to build a factory in a place where the trade unions were not so strong.

Because his last job was ruined by the union in New York.

One of the first places he considered was Portland in the northeast corner of the United States, where labor unions were not so developed and labor costs were relatively cheap.

But his colleague Noyce advised him to open his mind, knowing that there was a good place where human resources were cheap and trade unions were weak.

Why can't the United States make the chips it wants?

Moreover, with a certain amount of Western education, it is not much of a problem to communicate when speaking English. And it's also a free port, which can avoid a lot of imports and tax problems.

This place was Hong Kong, a highly industrialized manufacturing center at the time.

For them at that time, making semiconductors was no different from clothes.

According to Spock's recollections, workers were paid about 25 cents an hour that year, a tenth of that of American workers.

Not only that, but " local workers are twice as profitable as American workers and are willing to accept harder work ».

Except for being somewhat sensitive to wages.

If wages in the factory next door had risen by 5 percent, they might have quit their jobs at the speed of light and gone to work in a garment factory across the street.

In such an environment, Fairchild's Hong Kong factory was officially put into operation in 1963, and the United States semiconductor manufacturing officially took the first step to go overseas.

Why can't the United States make the chips it wants?

However, the semiconductor manufacturing that was transferred to Hong Kong at that time was actually not complete.

Fairchild converted a slipper factory in Hong Kong into a semiconductor factory, where it was only responsible for packaging and testing wafers made in the United States. By the way, part of the sales task is solved, and the chips produced can be sold directly in Hong Kong to all parts of East Asia.

In the end, thanks to the efforts of American engineers + thousands of Hong Kong workers working in three shifts, Fairchild produced 120 million semiconductor chips in the factory of this old slipper factory in 1963 alone.

This performance not only made the company very satisfied, but also gave peers a covetousness. Where can you find such cheap labor and such efficient production capacity in the United States?

So everyone followed suit, and later other American companies, including Texas Instruments and Motorola, also began to set up factories in Hong Kong.

Why can't the United States make the chips it wants?

After tasting the delicious taste of industrial transfer, the follow-up development is even more out of control. It also set its sights on Singapore and Malaysia, where labor costs are cheaper.

After all, although Hong Kong's hourly wage was only one-tenth of that of the United States, it was already one of the highest in East Asia at that time.

Why can't the United States make the chips it wants?

At this point, it is already a clear trend to move semiconductor production away from the United States.

Traditional semiconductor manufacturing can be divided into three major links: chip design, wafer fabrication, and packaging and testing.

Why can't the United States make the chips it wants?

At that time, the United States can be said to have transferred packaging and testing, which is the link with the lowest technology content and the highest labor cost, to overseas. But soon, wafer manufacturing was also targeted. After all, it is not an exaggeration to describe the semiconductor industry as alchemy.

This is river sand, the essence is silica, usually sprinkled on the road may not be picked up, if you want to go to the building materials market to buy it, about 170 yuan can get a ton, may not be as expensive as the handling fee.

This is the better kind of high-purity quartz sand in the sand, and the value has increased several times, about 5w US dollars a ton.

And this is Intel's latest 14900k desktop processor, priced at 4999 yuan and weighing 35.7g. That's about 140 million tonnes in translating.

And the raw material for making him is high-precision quartz sand.

Why can't the United States make the chips it wants?

In other words, as long as there is a way to design a chip and make it, you can make a lot of money.

Japan on the coastline is eyeing the chip fat gap.

After all, semiconductor processing did not require much energy at that time, and it did not take up too much space, which was a direct response to XP for Japan, which was relatively short of energy and did not have enough land resources.

It just so happened that the post-war United States also had the idea of using support for Japan to counter the Soviet Union.

Thanks to this, Japan absorbed a large amount of technology from the United States at a low price.

Many of the Japanese companies we are familiar with today also took advantage of the opportunity to rise at that time.

Why can't the United States make the chips it wants?

Whether it is transistors, computers, or integrated circuits, these technologies were quickly studied by the Americans, and then the Japanese put forward imitation products with slightly weaker performance but cheaper prices.

As a result of these reasons, Japan's production technology has not been pulled down much.

Within a few years, Japan had found a way to nibble on more American meat.

In 1966, Japan, as usual, was ready to build a high-performance computer: the HITAC 8000, following the example of IBM in the United States.

Why can't the United States make the chips it wants?

In order to make this system-360, IBM recruited more than 6w new employees, obtained more than 300 patents, and overcame a series of difficulties in operating systems, databases, integrated circuits, etc.

The total cost of the project was about $5.2 billion, which in those days was equivalent to the cost of seven nuclear-powered aircraft carriers.

However, the budget for this imitation project in Japan is less than 1 percent, and ($34 million) is still a five-year phased plan.

In the end, of course, it failed unsurprisingly.

However, during the development of the HITAC 8000, Japan accumulated a lot of experience in developing new memory due to the high memory requirements of the time.

Finally, in 1968, a 144-bit N-channel MOS memory was developed.

This valuable experience helped Japan accumulate a great deal of experience in the DRAM era that followed.

When Intel finally launched a full-fledged DRAM product, the C1103, Japan followed suit with the fastest bowl of soup, and NEC introduced a similar chip the following year

Why can't the United States make the chips it wants?

Many people may have some doubts about the rise of Japanese semiconductors.

Why can a DRAM, which can be seen everywhere now, knock down many major manufacturers in the United States?

But at the time, storing data was a big problem, and older computers were even using core memory, which was not as fast as DRAM, in terms of read and write speed, physical storage, and reliability.

Why can't the United States make the chips it wants?

For example, if a company releases a battery with twice the energy density of today, all other parameters are all advantages, and a revolutionary breakthrough in battery energy storage has been made.

Next year, all friends may want to use this battery.

You can imagine how big this market is, Intel Meimei eats meat, and Japan drinks soup shallowly.

In such a process of research and development, the production process of the semiconductor industry has also transformed from a labor-intensive industry to an asset-intensive industry.

The wire bonding process, which used to require a female worker to hold a microscope, can now be completed with an automatic wire bonder, one factory, 100 machines, or even 10 people.

Why can't the United States make the chips it wants?
Why can't the United States make the chips it wants?

In the follow-up, an ultra-quiet workshop and a clean room were arranged, which directly improved the yield of the product.

The story that follows is the one we are familiar with.

Years of technology accumulation have made Japanese DRAM far superior to American products in terms of yield and price.

Various companies are also showing their magic in cooperation, and this series of technologies has been integrated. In one fell swoop, it occupies 90% of the DRAM market, and those technology companies on the American continent have been beaten and discarded.

Even Intel, which invented DRAM, was beaten out of the DRAM market, and if IBM hadn't pulled it halfway, it might have fallen to the point of bankruptcy or being acquired.

It was only at this time that the U.S. government reacted in hindsight and began to strike hard at Japanese semiconductors.

From the adoption of legislation to determine dumping in the Japanese semiconductor industry, to the promotion of the establishment of a global division of labor in the semiconductor industry to carve up the Japanese market.

We've talked about this content in a video before, so I won't repeat it.

After the operation of the United States, Japan's semiconductor industry cannot be said to have plummeted, but at least the momentum of force has been suppressed.

Why can't the United States make the chips it wants?

But with that comes new problems come the way.

Japan's side has been hammered, and the chip can't be made without man.

It is impossible to build it yourself, it is expensive and troublesome, but you can't let others do the OEM with full authority, so as not to be stuck by others.

At this critical moment, TSMC came out and directly began to shout:

"It's okay, I can build it, and I'm only responsible for OEM, you just need to take care of your own design."

If the high labor costs and strict labor unions in the United States were digging a hole for the relocation of the semiconductor manufacturing industry.

Now that TSMC is leading this model, it can be said that it has covered a cup of soil for the manufacture of new local processes in the United States.

is only responsible for wafer foundry and not chip design, which can be said to be perfectly in line with the appetite of American companies.

He has two obvious advantages, on the one hand, it reduces the internal friction between chip design manufacturers.

In the past, in order to keep the chip scheme made by themselves secret, everyone had to hide it and not design it for others, so they could only build their own production lines.

But now it's different, TSMC is a "non-contentious" wafer foundry, which does not involve chip design, and everyone can hand over the latest chip design to me for foundry without worrying about leaks.

Moreover, TSMC itself has become a practitioner, and each chip is made, and after it is done, you can summarize where the process is not done well this time, what aspects need to be improved, and then use it in the next round of optimization design.

Why can't the United States make the chips it wants?

On the other hand, it lowers the barrier to entry for chip design.

New players who will enter the market in the future do not need to spend a lot of money on research chip manufacturing, as long as they can be designed, and manufacturing problems can be handed over to TSMC.

This model can be said to have worked very perfectly and has been running for decades, but now it seems that the only problem may be that TSMC is developing too well.

This part of the "outsourcing" foundry industry chain has been rolled out of their invisible high technical barriers, making it difficult for new entrants to find a way.

In the early years, the United States moved its industry out in pursuit of low labor costs, but now this part of the industry can blossom and bear fruit overseas, and it has lived a perfect life.

It's fine if there are no geopolitical problems, but this time the United States suddenly came back to its senses after the sanctions, and now there is only one advanced process factory that can be relied on, TSMC.

Why can't the United States make the chips it wants?

Now that you suddenly want to manually transfer TSMC's output, the cost paid is different.

So the question is, even if TSMC really relocates back, can it help the United States solve the advanced manufacturing part?

Why can't the United States make the chips it wants?

To figure this out, we have to look at what factories TSMC has moved over?

According to TSMC Chairman Liu Deyin, it can be seen that the first phase of the Arizona plant is expected to start mass production of 4nm chips in 2024, and the second phase of the plant will also start construction at the same time, and it is expected to start producing 3nm chips in 2026.

It's all wafer fabs, and there is no plan to build a packaging fab.

Ah yes, the packaging was a low-end production line back then, but now it has long been "the return of the dragon king". That's right, "advanced packaging" is also packaging.

To put it simply, the advanced process can determine how well a chip's performance can be played, and what advanced packaging needs to do is to help multiple chips fit together as much as possible, so that they can work together to play better, and achieve the effect that 1 + 1 is greater than 2.

For example, Apple's stunning M1 ultra used advanced packaging technology to connect two chips together to achieve 2.5 TB/s data traffic, which perfectly played the performance of glue chips.

Why can't the United States make the chips it wants?

NVIDIA's computing crown H100 also relies on HBM memory implemented in advanced packaging, so as to obtain better performance and lower power consumption on graphics cards.

Why can't the United States make the chips it wants?

But none of these awesome technologies can be used in the United States, and even if the Arizona fab starts all the way, the chips must be sent back to Taiwan, China for further packaging.

There are not many advantages to this cost, but let's not talk about this packaging and testing factory that has not been skimmed yet, even the wafer factory under construction is actually full of twists and turns.

In the Q2 conference call, Liu Deyin, chairman of TSMC, said that the American workers are not skilled enough.

"Due to the shortage of skilled workers in the United States, companies may have to temporarily transfer experienced technicians from Taiwan, which will delay the start of mass production at the first factory until 2025. ”

The Americans at the scene also began to shake the pot, giving the opposite statement: "Accusing TSMC of messy management in the process of building the factory, and not doing a lot of safety measures, resulting in their inability to start work smoothly." ”

Good guys, no one in the world remembers a fab that started on time, right?

Even if you add a layer of buff to the United States and let the wafer factory land smoothly, I believe that there will be a lot of chaos in the follow-up operation.

Because the core of semiconductor production is actually the most critical thing is people.

From the invention of integrated circuits in 1960 to the automated manufacturing of semiconductor factories in 2023.

Although from the earliest manual welding of wires, manual pouring of resin, to the current automated process production, it seems that it can save a lot of labor costs.

However, saving costs does not mean that people are not needed, after all, people revolve around the equipment, not the equipment revolves around people.

Why can't the United States make the chips it wants?

Poor friends who often carry buckets and run experience should find that the more production line machines that can run with only a small number of simple operations, the more the phenomenon of three shifts will occur.

This phenomenon is especially evident in semiconductor fabs.

If you are a PE (process engineer), in order to ensure that the production line can not have problems, although you do not have to go to the production line to operate in person, but when it is your turn to be on duty, you still have to ensure that you can be on call, and you have to go to the production line to troubleshoot the problem with a phone call.

If you are an OP (operator), you need to wear dust-free clothing every day, and you may only be able to go to the toilet two or three times in 12 hours, watching the overhead shuttle crane, listening to the roar of countless machines around you, smelling the pungent smell of photoresist, and living an isolated work life.

As long as human intervention is required in the process of semiconductor production, it is necessary to recruit people who can accept such a working environment.

Although these technicians are very ordinary, they are definitely not as simple as screwing on the automobile production line.

A very funny contradiction is that TSMC's biggest attraction to the United States is to create tens of thousands of jobs, but the problem is that there are enough people in the United States to find people who can match these jobs.

According to a study by the SIA (Semiconductor Industry Association), the number of jobs available in the U.S. semiconductor industry is expected to increase from 345,000 today to 460,000 by 2030, but according to the current talent development program.

Of those new jobs, 67,000 could go unfilled.

Why can't the United States make the chips it wants?

Moreover, the report also pointed out that there are currently few students studying STEM (science, technology, engineering, mathematics), and even if they are currently studying these majors, they will not give priority to getting involved in the semiconductor industry when they are employed.

Why can't the United States make the chips it wants?

Speaking of which, I believe you already have the answer to whether American semiconductor manufacturing can recast its glory.

Perhaps the U.S. government hopes to use the CHIPS Act to inject a shot in the arm for semiconductor manufacturing.

But as in 2011, Obama did the same question as Jobs asked.

: "Why can't we have Apple's iPhones, iPads made in the United States, and why can't we bring these jobs home?"

: "These jobs won't come back"

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