I like the interview. What I loved was reading it - an old-school interview - as opposed to all those podcasts I can hardly stand listening to (as a non-native speaker) - coming with a computer generated transcript, full of ... errr. emm ... ya know ... incoherent sentences, restarts ... jeeezz. Gimme a break!!! You did. Highly appreciated!
I would be interested to know how this will impact a company like Tesla that is building and selling cars in China using advanced semiconductors and neural nets. Will they be required by CHIPS to use less advanced chips and therefore diminished self-drive capabilities than the same car in the US, or will they continue to build advanced technology in Gigafactory Shanghai thereby outcompeting BYD and other Chinese companies forced to use less advanced chips.
I think this is right: bifurcation is inevitable. I know much ado has been written and said about how it's overly simplistic to think of the world as "authoritarian" vs "democratic", and dollar hegemony isn't really going anywhere.... but still, this framework is incredibly useful for us.
I'm not personally convinced China will have an easy time replicating what ASML and others do any time soon, and I'm also not convinced that they will find a way around this, but I also wouldn't count out a centrally controlled government IF it decides to pivot to a much more open market system. I don't think that's in the cards today, but the winds can (and do) change rapidly in 2023.
Decent overview of the situation... missing a couple of major pieces...
1) Electronics Design Automation (EDA): This is the critical glue which makes the whole distributed supply chain work. This is dominated by US firms and unlikely to change. Without EDA, you cannot design even the simplest chip and a great deal of the most critical "IP" is embedded in these EDA tools. EDA also forms the backbone of the economic interactions which makes a company like TSMC function.
2) Innovation vs Follow-me cultures: There is a fundamentally different machinery one builds when one is behind (china, japan in the past, etc). In a follow-me culture, the key skills are tracking the leader in legal and illegal ways. However, it is entirely a different set of skills to be on the frontier and innovate in open-space. This is the reason one sees a fast catchup in many countries and then a flattening process.
Good interview. During the long stretch of years when ASML progressively developed more advanced EUV lithography machines, something else was happening that people may not know.
• 90% of ASML machines are still working. I’m fact, there is a resale market.
• unlike most companies, ASML continues to support machines with repairs and parts
• nobody has mastered supply-chain management to the extent of ASML, with more than 4,000 vendors
• these days, when you buy a high-end ASML, the service contracts are a revenue source, because ASML engineers/technicians live nearby
• in re security, ASML has an in-house espionage team of more than 100 employees
• only a few key people at ASML understand how the machine works. Employee teams build a certain portion of the machine, not knowing exactly how it integrates/functions together with other portions.
• during the pandemic, ASML engineers guided, via a Zoom call, a client through a successful repair.
• reverse-engineering a machine that requires four 747 Freightliner aircraft to ship all the parts may be a bridge too far for China
• the expertise gap will continue to grow. The 2nm machine begins use toward the end of this year at TSMC
•1nm and smaller is already in development in the R&D lab in The Netherlands.
Excellent interview, thanks! Good overview and seems like a reasonable/thoughtful scenario for the next several years .
Sounds like the US is going to be dependent upon Taiwan and S Korea (and Holland) for years to come (and if I were Taiwanese this is exactly what I would want), unless Intel or a new entrant is able to catch up in leading edge fabrication.
Hopefully China shoots itself in the foot with its “buy China” policies. We’ll see. From a national and industrial security point of view, not sure his idea of importing thousands of mainland Chinese engineers is a great idea, however. The US needs to invest in training (along with immigration).
This is a very thoughtful and intriguing piece but it is missing one key "element". I note element as the article does not address the fact that China basically controls all the elements (critical metals and rare earths). The tech industry at large has not addressed this issue at all nor have North American governments. Despite both the United States and Canada having much of these industry and the capital markets have not invested or looked at this monopolistic bottleneck. Just last week China restricted the export of gallium and germanium. So build away, but underinvestment in the actual mining of the elements that make chips will be the ultimate loss.
Fascinating stuff. The regulation point reminded me of something I heard on NPR years ago about how every US state requires hairstylists to get certified and licensed. Not exactly semiconductor-level stuff but perhaps our culture of regulation has gone a bit far.
Just wanted to know if US companies like Tesla, Apple, Google can build their own CHIP from scratch then why can't Chinese ones like Baidu, Huawei etc. Thank you.
3. TSMC’s 3nm yield rate reportedly just 55%, with Apple only paying for qualified circuits
“TSMC is struggling with the efficiency of its new 3nm manufacturing yield, with the semiconductor giant currently hitting a yield rate of just 55%, far below the standard expected, according to a July 13 report in technology media outlet wccftech. The low yield rate has reportedly led Apple to only pay for qualified wafer batches instead of establishing a standard rate with TSMC. Apple occupies 90% of TSMC’s 3nm process production capacity for its A17 Bionic and M3 chips.” -- Tech Node
Am I the only one who saw the picture of Chris Miller and thought, “how old is this kid?!”
I like the interview. What I loved was reading it - an old-school interview - as opposed to all those podcasts I can hardly stand listening to (as a non-native speaker) - coming with a computer generated transcript, full of ... errr. emm ... ya know ... incoherent sentences, restarts ... jeeezz. Gimme a break!!! You did. Highly appreciated!
I would be interested to know how this will impact a company like Tesla that is building and selling cars in China using advanced semiconductors and neural nets. Will they be required by CHIPS to use less advanced chips and therefore diminished self-drive capabilities than the same car in the US, or will they continue to build advanced technology in Gigafactory Shanghai thereby outcompeting BYD and other Chinese companies forced to use less advanced chips.
This was fascinating, thank you!
> it takes longer to build a fab in the U.S. than in Europe
There hasn't been a SOTA fab built in Europe in over a decade so this is surprising. The last one was opened by GloFo in 2011.
I think this is right: bifurcation is inevitable. I know much ado has been written and said about how it's overly simplistic to think of the world as "authoritarian" vs "democratic", and dollar hegemony isn't really going anywhere.... but still, this framework is incredibly useful for us.
I'm not personally convinced China will have an easy time replicating what ASML and others do any time soon, and I'm also not convinced that they will find a way around this, but I also wouldn't count out a centrally controlled government IF it decides to pivot to a much more open market system. I don't think that's in the cards today, but the winds can (and do) change rapidly in 2023.
Thanks for some great food for thought!
Decent overview of the situation... missing a couple of major pieces...
1) Electronics Design Automation (EDA): This is the critical glue which makes the whole distributed supply chain work. This is dominated by US firms and unlikely to change. Without EDA, you cannot design even the simplest chip and a great deal of the most critical "IP" is embedded in these EDA tools. EDA also forms the backbone of the economic interactions which makes a company like TSMC function.
2) Innovation vs Follow-me cultures: There is a fundamentally different machinery one builds when one is behind (china, japan in the past, etc). In a follow-me culture, the key skills are tracking the leader in legal and illegal ways. However, it is entirely a different set of skills to be on the frontier and innovate in open-space. This is the reason one sees a fast catchup in many countries and then a flattening process.
Thanks for sharing this article. Quite interesting ! Let's see how future unfolds for the industry and what role India really plays down the line
Good interview. During the long stretch of years when ASML progressively developed more advanced EUV lithography machines, something else was happening that people may not know.
• 90% of ASML machines are still working. I’m fact, there is a resale market.
• unlike most companies, ASML continues to support machines with repairs and parts
• nobody has mastered supply-chain management to the extent of ASML, with more than 4,000 vendors
• these days, when you buy a high-end ASML, the service contracts are a revenue source, because ASML engineers/technicians live nearby
• in re security, ASML has an in-house espionage team of more than 100 employees
• only a few key people at ASML understand how the machine works. Employee teams build a certain portion of the machine, not knowing exactly how it integrates/functions together with other portions.
• during the pandemic, ASML engineers guided, via a Zoom call, a client through a successful repair.
• reverse-engineering a machine that requires four 747 Freightliner aircraft to ship all the parts may be a bridge too far for China
• the expertise gap will continue to grow. The 2nm machine begins use toward the end of this year at TSMC
•1nm and smaller is already in development in the R&D lab in The Netherlands.
Excellent interview, thanks! Good overview and seems like a reasonable/thoughtful scenario for the next several years .
Sounds like the US is going to be dependent upon Taiwan and S Korea (and Holland) for years to come (and if I were Taiwanese this is exactly what I would want), unless Intel or a new entrant is able to catch up in leading edge fabrication.
Hopefully China shoots itself in the foot with its “buy China” policies. We’ll see. From a national and industrial security point of view, not sure his idea of importing thousands of mainland Chinese engineers is a great idea, however. The US needs to invest in training (along with immigration).
This is a very thoughtful and intriguing piece but it is missing one key "element". I note element as the article does not address the fact that China basically controls all the elements (critical metals and rare earths). The tech industry at large has not addressed this issue at all nor have North American governments. Despite both the United States and Canada having much of these industry and the capital markets have not invested or looked at this monopolistic bottleneck. Just last week China restricted the export of gallium and germanium. So build away, but underinvestment in the actual mining of the elements that make chips will be the ultimate loss.
Fascinating stuff. The regulation point reminded me of something I heard on NPR years ago about how every US state requires hairstylists to get certified and licensed. Not exactly semiconductor-level stuff but perhaps our culture of regulation has gone a bit far.
Such a fantastic interview, thanks Noah!
Just wanted to know if US companies like Tesla, Apple, Google can build their own CHIP from scratch then why can't Chinese ones like Baidu, Huawei etc. Thank you.
I enjoyed reading through this interview. Thanks for doing it and leaving it as free to read.
3. TSMC’s 3nm yield rate reportedly just 55%, with Apple only paying for qualified circuits
“TSMC is struggling with the efficiency of its new 3nm manufacturing yield, with the semiconductor giant currently hitting a yield rate of just 55%, far below the standard expected, according to a July 13 report in technology media outlet wccftech. The low yield rate has reportedly led Apple to only pay for qualified wafer batches instead of establishing a standard rate with TSMC. Apple occupies 90% of TSMC’s 3nm process production capacity for its A17 Bionic and M3 chips.” -- Tech Node