My understanding is that 1 company in Taiwan makes the greatest chips in the world and no one else can replicate them. How is that possible?
In: Engineering
Most nations know the broad strokes of how to make a nuclear weapon but the how is so nuanced that it’s almost impossible to reverse engineer without incredible financial resources.
Same with chips. They have insane in-house knowledge curated over decades that is so sensitive, should China attack Taiwan, they would more likely destroy their processes rather than let them fall into CCP possession. We can see the final result, but trying to reverse engineer it without access to the process is challenging
The US is now committing huge financial resources to try to catch up with state-side competition.
Let’s say you wanted to make a fishing pole. First, you’d go find a stick in the woods and put a string on it. Then, you’d learn that it’s gotta be stronger or it’ll snap because fish are strong. So you find a stronger stick made of oak. But now you notice it’s too stiff, having some flex is needed. And you go on learning the failings of your current version and improve upon it.
Same thing with *micro*chips. We are approaching a point where transistors are the size of a single atom. The tech, the expertise needed to build that isn’t very common. Even the lithography machine that builds the chips is only made by one company in the whole world and it takes a whole train to deliver it. Then you need employees that even know how to do this stuff. Then just bringing up a factory will cost many, many billions.
That’s not entirely true
TSMC (Taiwan Semiconductor Manufacturing Company Limited) is one of the premiere chip manufacturing companies in the world but they are hardly the only one.
They are of note because they make everything from common chips used in everything from cars to cellphones to AMDs processors. Apple, Nvidia, AMD, and Qualcomm for example all use TSMC to manufacture their chips.
But Samsung (Korea) and Intel (US) also have chip foundries of that caliber.
TSMCs secret is just that they have large numbers of highly experienced people working for them and have developed very good processes. Samsung and Intel are similar in that regard, but TSMC is special in that the Taiwanese government has in a sense made semiconductor manufacturing the countries primary industry.
Other companies like Texas instruments can also make microchips and have facilities all over the US but can’t make chips as complex as Computer microprocessors. Importantly though there’s nothing stopping them from investing capital to build such a facility, they just don’t want to. (Developing an in house microprocessor to compete with AMD and Intel at this point would require an outrageous investment)
Israel is also another big up and comer in chip manufacturing.
Why TSMC is of note is the Pandemic showed just how vulnerable the US and the West are to losing access to TSMC production. If China for example were to invade Taiwan it could be a really big problem for the economy and availability of these chips.
This is why TSMC is building a Chip Foundry in Texas right now so chip production can happen domestically in the US.
It’s not that other companies can’t replicate them, it’s that the amount of startup money needed to get a top of the line chip manufacturing facility running is immense. In the 80s, the Taiwanese government put up a large amount of that startup money believing that it would pay off later, and it did. Lots of companies decided they’d rather pay Taiwan’s company to manufacture their chips for them instead of build their own facilities.
It’s the special salt and seasoning. Plus they use a special oil for frying. Best chips you can find.
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TSMC is the largest semiconductor foundry the market share was 59%, the are followed by Samsung Foundry at 13% and UMC, GlobalFoundries , SMIC each at 6%. This is just foundries that make semiconductors for others, Intel that make many chips for themselves is not included.
Samsung production technology is quite close to TSMC. According to them “Samsung’s 4 nm technology is two years behind TSMC’s, and our 3 nm is about a year behind. But things will change when TSMC enters the 2 nm process,” So quite similar and the difference will become smaller over time.
The reason one or a few companies are dominant is because of the cost. The cost to develop a process at a smaller scale is billions of dollars. The cost to build a factory for it is billions. Whe a process changes to a smaller scale the upgrade cost is almost the same as a new factory, the buildings are not the most expensive part, it is the equipment in them.
TMSC built a new factory in Phoenix, Arizona The initial investment was $12 billion and when the factory grows the total investment will be around $40 billion. The construction of the first parts started in 2021 and production is expected at the end of 2024.
Because of the high development cost a single company that can build many factories has the advantage, It can spread out the development cost over all factories and chips made.
If you try to create a competitor you will first need to get people, the ones that know how to do it and already work at the other funders. You would also need to do a lot of research to get to the level they were when the new process development started, the you will need to repeat what they did. The complied that is first and developed new technology will get lots of patents and can stop you from doing some parts exactly like they do. This makes it harder if you are late.
Fo there is one part of the semiconductor manufacturing industry only one company can do that is ASML in the Netherlands. They mate the photolithography machins that is used to project the pattern onto the wafers other processes is to add and remove material. No other company can make machines that project them for the smaller processes.
Pretty much the biggest reason is that there isn’t enough volume in chip manufacturing to justify it. If we added similar chip manufacturer, it wouldn’t double the amount being produced because there aren’t enough people to consume all of them. That means the investment would likely not be returned. All it would do is hurt TSMC, but it would hurt the investor more.
Man. I wanted to know about these top secret amazing Taiwanese potato chips and/or French fries.
Like other people said, they’re simply the most advanced right now in terms of practical semiconductor manufacturing. You start running into a LOT of problems at the insanely small scales modern chips work at. Companies have a lot of trade secrets and/or patents related to ways of working around those problems. So either you need to pay to license their tech, or spend a lot of time and money figuring the not-publicly-known bits out yourself. Plus, building a modern semiconductor fab (or upgrading one to work on the latest kinds of chips) costs billions. So there’s a high barrier to entry even if you know what you’re doing.
The Taiwanese government made the strategic economic and military decision that relying on other people’s inate love freedom and philosophical support for western-style democracy was all well and good, but being as indispensable to what they thought the modern global economy would be as possible was better.
As such the Taiwanese government invested *metric fucktons* of money and resources and social capital in promoting the growth of the semiconductor industry and a few other sectors.
Others *could* replicate their success, but they would have to be able to, if not match their drive and intensity, at least match (or more likely exceed) their resource expenditure in order to even have a chance at succeeding. TSMC was a very large bet for the government of Taiwan, and it took decades of investment before it really began to pay off. If you aren’t under the same sort of existential pressures that they are ,it is probably a lot more difficult to maintain that level of investment for decades before seeing results.
The US used to be the world leader in semiconductors, and it is beginning to reinvest there, but even in such historically fertile grounds and even with the resources of the US, results are not guaranteed, especially given how fractious our political process has become.
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