11–16 of 16 posts
no mention of the SMIC sanctions?
SMIC is entirely "trialing edge" process technology-wise. If you want 7 nm or lower for competitive advantage, you don't go to SMIC. Also you can NOT trust your IP to remain secure if you use them.
I don't get it. My mental model is this: In 2019, all the fabs combined made $X chips per year, and projected a growth of $delta_X for the next year. By the end of 2020, $X + $delta_X is significantly less than the actual demand. There are only three possible expectations: 1. The fabs made less than $X + $delta_X chips 2. There has been an explosive growth in sales of existing electronic devices exceeding $delta_X th…
M1 is 5nm, those are all factored in 5nm capacity planning. i.e It is part of $delta_X.
>Is there another equally interesting story in the chip fab business that would explain this shortage?
1. I have always thought the toilet roll incident in pandemic would give every one a lesson in commodity and supply chain. The Chip shortage is no different. One can also look Lumber, Steel or any other commodity. But basically instead of having a negative impact on demand, COVID actually make huge increase in demand. PC industry saw ~15% increase than previous projection. One only need to look how a 5% misprojection of Smartphone shipment in ~2018 lead to an avalanche of NAND and DRAM pricing.
2. Old mature node ( sub 28nm node ) has always been in short / tight supply for nearly a whole decade. You just dont hear about it in mainstream media because they are not headline worthy and doesn't drive clicks. Generally speaking the older you are and the more you know about an industry, the more you realise how news are always very late to the cycle.
3. None of these factored in trading. If any market is a simple game of supply and demand one could always balance things out. But you have people betting / trading these commodities. Which are not actually "demand" as in usage but investment. Considering the premium / profit one could gain from chip trading could easily be multiple if not in some cases order of magnitude. This also has a negative feedback loop, as wholesale or channels see difficulty in getting hold of something they will want to stock pile more of it. Something similar to what is described as Bullwhip effect.
4. One often overlooked sector is Crypto. It basically absorb any sort of capacity as long as the Crypto dollar is profitable. Right now this doesn't seems to add much to the constrain. But at one point Crypto players could buy up whole patch of wafer capacity at a much higher premium.
5. Supply will always be much slower to react, the higher capital investment, the more risk there is in over supply. There used to be an old Intel joke about The most expensive Fab isn't leading edge Fabs, but will always be an empty Fab. This is just as true today. It is the same with DRAM and NAND, that is why you see vendors reluctant to build additional capacity until absolutely necessary. ( Whether it is a cartel or not depends on your perspective, so I will leave that part out. But it is absolutely common for any commodity industry to meet and discuss these issues. )
TSMC is likely to evacuate out of Taiwan to Phoenix, AZ in the next 12-24 months https://www.maritime-executive.com/article/tsmc-may-charter-...
TSMC is likely to evacuate out of Taiwan to Phoenix, AZ in the next 12-24 months https://www.maritime-executive.com/article/tsmc-may-charter-...
Earlier quoted context omitted.
M1 is insignificant, or at most just a very small piece of the puzzle. There are currently huge shortages of parts that are made on 10 year old silicon processes. Those share almost nothing in terms of supply chain or manufacturing capabilities with state-of-the-art CPUs like M1 or what Intel makes. Except maybe at the very lowest levels, like wafer and reagent suppliers. My reading of this whole thing is that we jus…
It's lean manufacturing and just-in-time inventory. When you cancel orders or people can't work for days/weeks/months due to a pandemic, it creates a massive backlog. We've created incredibly fragile supply chain.
Everybody drained down their inventory heading into Covid assuming demand was going to crash. Simply replenishing that was going to take time even under the best of circumstances.
And, to be fair, there likely has been a bit of uptick in semiconductor demand--lots of people needed webcams, new monitors, new mice, new graphics cards, etc.
Also, fabs are normally running pretty close to capacity in general. An idle fab is a waste of money. This leads to the famous "feast or famine" in the semiconductor industry--either your fab is running full out and people are scrambling to build more, or you have oversupply and your fabs are completely idle. There is basically no middle ground.
I suspect there is also some overbuying going on that is going to unwind on December 31 when a whole bunch of CFOs realize that there is a big tax bill for a bunch of overbought inventory.
It's lots of things all coming together, but, at the end of the day, it's simply the fact that nobody holds inventory, and nobody will get fired for not holding it.
I don't get it. My mental model is this: In 2019, all the fabs combined made $X chips per year, and projected a growth of $delta_X for the next year. By the end of 2020, $X + $delta_X is significantly less than the actual demand. There are only three possible expectations: 1. The fabs made less than $X + $delta_X chips 2. There has been an explosive growth in sales of existing electronic devices exceeding $delta_X th…
Well, all THREE of those scenarios (and sub-scenarios) are routinely happening. And add in some other reasons as well. 2019 was predicted to be a "low cycle point" going back to market projections in 2016. So fabs were already dialing back production. This then was amplified by COVID. So production volumes were dialed down and the boom was not expected because it didn't follow decades established cycles of supply and…