In graduate engineering lectures, we mainly focus on the technical, physical, and system-level aspects of the different issues, rarely broadening the view to the global economic or industrial scenario.
But in recent times semiconductors (and the geopolitics of semiconductors) are often in the News, so I decided to dedicate to the topic some time in class last week.
This is a surprising graph: it is the 2020 production of chips (in total area of silicon dies [1]) subdivided by country or geographic area of fab location e type of technology. Technology is expressed as a number of nanometers, which indicate an equivalent scale factor [2].
Today, the most advanced available technology is the “5 nanometers” (5 nm), available only in Taiwan (TSMC) and in South Korea (Samsung), maybe soon in the US (Intel). In the graph, it is indicated in red (“< 10 nm”): it is the technology required for advanced processors for smartphones (Apple, Qualcomm), laptops, game consoles (Sony, Microsoft), advanced graphics (Nvidia). Europe, China, and the USA do not have this technology and must buy from Taiwan and Korea. The US is trying to be back in the game and to keep China out. European countries are only hoping that a big company from abroad builds a fab.
For this technology, there is a global production scarcity, as everybody trying to buy a PS5 PlayStation in the last year has noticed. Why: a single fab has a cost of 1-20 B$, years to have it in operation, with great risks associated to technology, infrastructures, and market.
The technology used of chips in cars and advanced mechanical equipment is mostly from 40 nanometers and up, a set of technologies introduced between 10 and 20 years ago. They are the orange and blue bars in the graph. They are relevant in Europe and in the whole world, because they require smaller CAPEX (< 1 B$) and are old, and because the main customers (the Auto and Mechanics Industry) are in Europe.
Also chips fabricated with these mature technologies are scarce: we all have read the news of carmakers that have reduced car production because chips are not available. How is it possible? Because too many are increasing inventory, I am afraid, in order not to find themselves without chips the next time. Basically, the same mechanisms according to which toilet paper disappeared from supermarkets at the beginning of the pandemic. It is not a structural scarcity, just a panic moment, we need to wait that the inventory is full.
I do not want to add anymore because the post is already too long, but there is a lot more. The semiconductor sector is hot from the scientific point of view, from the technological point of view, and from the points of view of economics and politics.
As usual, the feeling is that TV and politics use slogans and do not have a clear picture of the issues (and I fall again in Gell-Mann amnesia [3]).
[1] The unit of measure of the plot is a wafer – a thin silicon pizza – with a diameter of 200 mm on which hundred or thousands of chips are fabricated.
[2] Up to 15 years ago the name of the technology node used to indicate the main transistor length (the gate length), but now is only a scale factor: the number of transistors per centimeter squared of silicon is inversely proportional to the scale factor (therefore, for example, the “10 nm” technology contains four times the number of transistor per square cm than the “20 nm” technology).
[3] https://iannak1.medium.com/i-have-crichton-amnesia-e31bf3b75326
