Why are we so dependent on Taiwan for microchips? Why couldn’t these be manufactured elsewhere, in addition to Taiwan?
In: 1601
Imagine you want to open a woodworking shop. Strictly speaking, all you need is a few basic tools, like planes, saws, measuring instruments and so on, and a moderate amount of training for someone to begin making simple things. Good to go, right? We’ve been doing woodwork for tens of thousands of years, in some capacity.
Now, maybe woodwork isn’t enough for everything. So, maybe you turn to metal work. Cool, right? The only issue is, you need more specialized training as metal is more difficult to work with, and you need tougher tools, especially to handle something like stainless steel. If there’s one million places that could make a woodworking shop, there’s maybe a hundred thousand that could open a metalworking shop.
Now, metalwork’s awesome! You can do tons of stuff with it, from vehicles, to decorations, to analogue computers, but as a society gets more and more advances you need more advanced ways to track things, do accounting, process word documents and perform simulations, so you probably need a computer, and that’s where it gets tricky.
A lot of the parts of a computer are pretty easy to make. Cooling systems are pretty much universal, PCBs are also pretty easy to make in the grand scheme of things, and cases aren’t bad, either. The issue is the silicon.
Early silicon nodes were pretty easy to start with, but as they got more and more specialized we started needing more and more special tools over time, and many people in that market started dropping out because it just took too much funding. In contrast, because economic independence is very important for Taiwan, the government invested very heavily into TSMC, so that they could making new “nodes” or “ways of making silicon smaller and faster” every year for decades, until it was basically just TSMC and Intel left, at this point, and even Intel is still kind of behind.
If one million places could make a woodworking shop, and one hundred thousand could make a metalworking shop, and ten thousand could make an early silicon node, well, maybe only ten or so could make a high end silicon manufacturing plant nowadays. And even then, if you choose to make one, they take probably five or so years to really get into working order, and it takes two or three generations before people will trust you as a supplier of silicon, so it really takes about 10 years to react to the market in this space.
We’ve recently had some really big changes in silicon demand in the last two years, and I suspect in the next eight we’ll see a different landscape in terms of who is offering silicon nodes for high quality semiconductors, as many players in the space are able to react to recent shortages.
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