[HN Gopher] Ask HN: Why is there a chip shortage?
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Ask HN: Why is there a chip shortage?
I've heard the reason that global automakers cancelled chip orders
in the early months of the pandemic and then decided to order them
anyway a few months later and that caused a backlog.But I also hear
that those are 120nm chips. So why are graphics cards, gaming
consoles etc out of stock? Why is Apple attributing fewer iPhones
sold to semiconductor shortage? Can automakers not use a 7nm fab?
How much of the chip shortage can be attributed to AMD and Apple
taking the laptop market away from Intel? And if this is true, does
this mean that Intel now has unused capacity?
Author : mohanmcgeek
Score : 168 points
Date : 2022-01-03 14:22 UTC (8 hours ago)
| agumonkey wrote:
| supply chain causing raw material lag altogether ?
| arto wrote:
| https://arstechnica.com/gadgets/2021/11/why-the-chip-shortag...
| chx wrote:
| Even without covid, the change to EUV is a massive bottleneck.
| You see , there is but one company in the entire world who is
| making the EUV machines, ASML in the Netherlands. EUV was on the
| "edge" of roadmaps since, I dunno, mid-90s or something. ASML
| persevered and now reaping the rewards. EUV fabs need a ton of
| capital and investing this much without good institutional
| knowledge in chipmaking is too risky. And TSMC and ASML had a
| very good relationship for a very, very long time including TSMC
| buying 5% of ASML in 2012. So a very very long history culminated
| in TSMC being the sole top dog in the industry. Intel tried to
| make chips with parts similarly small without EUV and it took
| them an awfully long time to ramp it up -- it was supposed to
| ship in 2015 https://www.techspot.com/news/48577-intel-rd-
| envisions-10nm-... and the first desktop processors on this
| process shipped like two months ago, barely making 2021.
|
| So whether automakers could use a 7nm fab is a theoretical
| question -- there is but one 7nm fab, the one at TSMC and they
| already sold every wafer they can start. They would be able to
| sell more if they could start more but there are only so many EUV
| machines ASML can make so there are only so many wafers TSMC can
| make. All the gaming consoles? yeah, that's 7nm chips. With AMD
| and Apple moving to the next line, there'll be some capacity
| freeing up but the demand is still very, very strong.
|
| Also, another effect I do not see here is the container
| disruption. Read https://www.vox.com/recode/22832884/shipping-
| containers-amaz...
| anovikov wrote:
| My opinion: dramatic increase of demand for stuff vs services due
| to covid - as most services involve face-to-face contact and are
| either unavailable due to lockdowns, or people are afraid of
| using them for the fear of getting infected. Because money is
| saved on using services, people pour it into stock market (hence
| bubble) and buying stuff, hence shortages.
|
| People who are more likely to be concerned with covid (more
| educated) are also more likely to consume electronics, so demand
| on electronics is particularly increased.
|
| Supply side issues are secondary and by now they aren't a big
| deal at all.
| h2odragon wrote:
| Indulging paranoia: If there were classified orders taking up fab
| space, would we ever know? Could the entire "supply chain crisis"
| be wartime / state led stock ups and associated coverup
| operations?
| gitgrump wrote:
| Two people couldn't even cover up Bill Clinton and Monica
| Lewinsky. You want tens of thousands of people to cover up
| massive chip orders?
| newsbinator wrote:
| Occam's razor: the simplest explanation is that during global
| disasters (even slow-moving multi-year disasters) supply chains
| have trouble coping.
| unixhero wrote:
| Because of just in time fanatisicm.
| yokaze wrote:
| I think, there is a possible grain of truth there.
|
| >> If there were classified orders taking up fab space, would
| we ever know?
|
| The shortages could have led to larger back-orders, and
| potential "double booking". Those orders is probably a trade
| secret, so it probably won't be easy to find out.
|
| Just before the pandemic, everyone was optimising for zero
| inventory, and probably now you have a feedback loop which
| probably overshoots a bit in the other direction too.
|
| You need something in half a year or a year, you likely order
| it right away instead of doing it just-in-time.
| pjc50 wrote:
| Classified orders from the US government depending on Taiwanese
| fab space?
| cosentiyes wrote:
| No
| TrueDuality wrote:
| From what I remember of various new articles over the past three
| years (I'm not going to go find all these articles over such a
| broad time span, I'll leave verification as an exercise to the
| reader) there are a large number of contributing factors.
|
| - Long time push for "just in time" supply chains. A lot of
| manufacturers stopped keeping a local stock of chips they needed
| for the next 6 months of manufacturing to save on storage costs.
| This is fine as long as there are no hiccups in any earlier part
| of the supply chain (this transition has been happening over the
| last 15-20 years).
|
| - Crypto-coin mining and the sudden extreme demand of graphics
| cards. This has been going on for a long time. A lot of low-
| nanometer demand goes to a large number of graphic cards and
| ASICs for mining crypto-currency. This led to the graphics card
| bottleneck that existed for the last 3 or so generations of
| graphics cards.
|
| - pre-COVID there were several (I want to say Taiwanese) fab
| plants that were destroyed due to Typhoons. This led to reduced
| production capacity.
|
| - There was contamination of shipments of silicon wafers which
| disrupted production in several fabs. This was a pretty short
| delay more than anything but it was a contributing factor.
|
| - At least one US based Fab was closed. I believe some other
| international fabs also closed down either temporarily due to
| COVID or permanently for other reasons. Some fabs were acquired
| by major companies and likely switched their production pushing
| more pressure on other fabs.
|
| - Global politics. There was a lot of aggressive changes to
| global policy during this time frame that forced a redistribution
| of where certain chips were being manufactured adding more work
| for all fabs (retooling, reworking designs, getting a design
| working in a new fab).
|
| - The canceling of car chips actually relieved the pressure on
| the fabs as they were able to take other fab orders. I don't
| think this slowed down fabrication in general, but when the car
| manufacturers realized they actually did need that capacity and
| more, the capacity had already been sold to other customers. This
| is entirely on the car manufacturers and is only kind of related
| to the overall chip shortage.
|
| - Global distribution issues. This isn't just in the final stage
| of consumer products that has been affected but also raw supplies
| affecting the rate some chips can be manufactured.
|
| - Increased demand overall. Consumer consumption of chips has
| increased pretty dramatically over the last decade pretty
| consistently as everything wants to be connected to the internet
| now from your toaster, to your butt plug.
|
| - Complexity and difficulty in building up a new fab. These are
| incredibly specialized facilities costing in the 9 figures to
| setup the facility. The people that work in these facilities are
| highly specialized not just in the profession but to the
| intricacies of that specific facility and their pipeline.
| Training up these extremely skilled labor tasks can't be done
| quickly.
| chasd00 wrote:
| > - The canceling of car chips actually relieved the pressure
| on the fabs as they were able to take other fab orders. I don't
| think this slowed down fabrication in general, but when the car
| manufacturers realized they actually did need that capacity and
| more, the capacity had already been sold to other customers.
| This is entirely on the car manufacturers and is only kind of
| related to the overall chip shortage.
|
| iirc this was the root of it. i think the whole chip shortage
| began in the car industry.
| baybal2 wrote:
| > Ask HN: Why is there a chip shortage?
|
| Most shortage todays is on 200mm.
|
| Why? Trump's sanctions on SMIC brought down like half of world's
| 200mm capacity.
|
| > Can automakers not use a 7nm fab?
|
| No, process, and cell libraries are incompatible. Chips will have
| to be redesigned.
| Kliment wrote:
| Graphics cards and gaming consoles are heavily affected by
| availability of many other things than their headline processors.
| There's a ton of other parts in there, power management ICs,
| level shifters, muxes, switches, all sorts of tiny cheap parts
| that are out of stock. Suppose you're making a game console.
| You're missing one power management chip, and suddenly you can't
| produce any units unless you redesign your board for another
| part, assuming you can get it. It's enough for a single part in
| your bill of materials to be out of stock and you can't
| manufacture _anything_. This dependency means you will tend to
| buy as much as you can of all the parts you might need, draining
| the market of any excess capacity. Apple needs lots of chips
| other than their SoC - they have chips for power management,
| radios, digital microphones, sensors, antenna amplifiers and
| switches. Even if supply for their SoC is guaranteed for years,
| they can 't build a single device unless they have every single
| part that device needs.
|
| Automakers caused this. The issue is not just that they fucked up
| and ruined the market that one time in mid/late-2020. The issue
| is that that one fuckup destroyed the _confidence_ in the market.
| So you can no longer rely on stock being there when you need it,
| meaning you need to buy as much as you will ever be likely to
| need, because you don 't know when you'll be able to buy again.
| So you buy as much stock as you can afford to, and if you can't
| afford to you borrow money and buy it anyway. This is a big
| problem, because the signaling mechanism of the market is broken.
| Any stock that shows up now will be gone instantly, but the
| aggregate demand for parts hasn't really moved - people don't
| need significantly more parts, but they do need to be certain
| they'll have them when they need them, which is why they buy more
| than they need now. At some point you have enough stock and don't
| need to buy again for years. This is why it doesn't make sense
| for semiconductor manufacturers to build out additional capacity
| - by the time it's up and running 14-18 months from now, there's
| no guarantee anyone will be buying parts in anywhere near the
| volumes that are needed right now. So this demand shock at the
| moment is temporary and nobody can predict how long it will last,
| but you need to know demand way out if you're going to set up a
| fab expansion. This is why the bullshit move that automakers
| pulled is having so much outsized impact on the entire industry.
|
| To answer your other questions:
|
| All complex devices with large number of parts in them are super
| vulnerable to one tiny part halting the production of the entire
| device. This is why complex devices are poorly available. For
| GPUs and game consoles in particular there's an extra market-
| distorting factor of bitcoin fuckers and scalpers, respectively.
| Apple builds complex devices with large numbers of parts in each.
|
| You can't use a 7nm fab to build things you would normally build
| on 120nm. Not only is there way too little 7nm capacity, and it's
| much more expensive per chip, but the smaller the node size the
| higher the defect rate is going to be, and the lower voltages
| your parts are going to be able to handle. Automotive and power
| electronics need to handle high voltages. You will never see 7nm
| process parts being used for switching mains voltages, for
| example, or driving 600V motors. In addition, designing parts for
| newer processes is a lot more work and has very long setup times.
|
| None of the chip shortage can be attributed to AMD or Apple or
| Intel. They are a totally different category of part/process than
| the ones that are currently most affected. Intel is still
| operating near their capacity and selling countless server and
| laptop CPUs. I don't think this is a factor at all here.
| splistud wrote:
| m-app wrote:
| Was about to link to your older comment I have bookmarked[1],
| glad to see you sharing your experience once again, Kliment!
|
| 1: https://news.ycombinator.com/item?id=26931498
| PaulDavisThe1st wrote:
| There's also the confounding issue of the AKM factory fire. AKM
| made the majority of the DAC chips used for consumer electronics
| and automobiles, and their factory burned to the ground in 2020.
| Then another company that tried to step up production to fill the
| gap (somewhat mysteriously) also caught fire.
|
| https://www.prosoundnetwork.com/business/akm-factory-fire-sh...
|
| There are other companies that make similar chips, but in much
| smaller quantities, and they are really in no better position
| than AKM to fill the void.
|
| A recent "update" : https://evertiq.com/design/51031
| jimt1234 wrote:
| Is there anything to the theory that this situation is, at least
| in part, artificially created by businesses looking for an excuse
| to raise prices and increase margins? I've heard that, but I've
| never seen any actual supporting data. I'm not even sure what
| data would/could support that.
|
| I guess I'm asking if this theory has _any_ credibility outside
| of the various conspiracy theory blogs /sub-reddits?
| majormajor wrote:
| Business can't make more money by _not_ delivering product. If
| demand and capacity were both the same, but prices were simply
| raised, things wouldn 't be out of stock. So either demand
| increased, or supply decreased, or both - but simply saying
| "businesses wanted to increase prices" can't explain the
| shortages for things that are hard to find.
|
| Even for most of the hard-to-find things, many of the hardest-
| hit businesses haven't significantly raised their own prices.
| E.g. in-demand new cars have dealer markups but largely haven't
| seen huge bumps in MSRP even when sold out like the Ford
| Maverick or Kia Telluride. PS5/Xbox/Switch prices have been
| flat. Apple device prices haven't seen any unusual spikes due
| to shortages.
|
| There's the interesting question for the conspiracy folks: why
| _aren 't_ many of these businesses raising prices? Why is Sony
| letting resellers sell PS5s for over $100 over MSRP still (e.g.
| https://stockx.com/sony-ps5-playstation-5-blu-ray-edition-co...
| ) instead of meeting demand where it is?
|
| Probably those businesses see the PR hit of big MSRP bumps as
| worse than the short term boost in revenue from capturing more
| $$$ from the high current demand.
| rossdavidh wrote:
| If you mean, would companies take advantage of the situation to
| raise prices and increase margins, then yes of course they do.
|
| If you mean, this whole problem wouldn't even exist if the
| businesses weren't trying to create it, no that is not the
| case. They were fully as greedy and deceptive before 2020.
|
| It should also be pointed out that some businesses involved
| had, in fact, too low of a profit margin to invest in new
| capacity, so trying to raise prices and increase margins, while
| self-interested, isn't always bad from the perspective of the
| entire economy. If you want new capacity, it needs to have
| money put into it to make that happen.
| Enginerrrd wrote:
| Something I haven't seen anyone mention yet is demand-pull
| inflation. I think the reality is a lot of manufacturers and
| distributors have been reluctant to raise prices, feeling that
| the demand surge is temporary. In truth, I think it's likely that
| prices just haven't caught up yet. That means demand has outpaced
| supply for that whole period.
|
| I think there are other reasons for the shortage, but they've
| been exacerbated by the inflation issue.
| shmerl wrote:
| Very short version - new plants for making more chips aren't
| ready yet (but they are being built) and demand still outnumbers
| supply.
| cokeandpepsi wrote:
| consistently manufacturing some of the most complicated machinery
| (themselves composed of many thousands of dependencies) on earth
| is hard during normal times and these are not normal times
| Kinnard wrote:
| crypto
| badrabbit wrote:
| Covid
| vmception wrote:
| Basically demand is increasing by orders of magnitude, supply was
| barely keeping up but there was a symbiosis. _Any_ disruption
| created a massive backlog.
|
| Its just a bottlenecked queue, that then became closed off, which
| amplified the size of the queue so much faster.
| mrkramer wrote:
| My understanding is too much demand in a short period of time.
| Demand outruns supply. Factories can pump as much chips as they
| can. Overall there is huge demand for electronics, cars and all
| other stuff that's using chips. Lockdowns contributed to this
| because majority of demand shifted from equilibrium(balance of
| goods and services) to goods and no services or very little
| services. Or another version of the story is people were saving
| money in order to buy goods when lockdowns were over.
| eunos wrote:
| When the chip demands (by the downstream companies) went down on
| the early phase of global pandemic, Chinese companies gobbled up
| the capacity because they were recovering first and also feared
| that the Trump would trash more Chinese companies.
| [deleted]
| foft wrote:
| Intel doesn't seem to have enough capacity, there are no in stock
| intel fpgas under $2000 at Digi-Key. Try and get any cyclone v or
| max 10 chips.
| jwlake wrote:
| Older generation fabs for major manufacturers (Samsung, TMSC,
| others) were heavily impacted by staffing shortages due to
| covid/lockdown/etc. When staffing is low, the new fabs run 100%
| and the oldest ones just shutdown.
|
| This caused a bunch of chips that are old and cheap to be
| complete unattainable, due to a lack of safety stock across the
| industry. Cars, power supplies, and other "large" things are
| highly dependent on these older chips, and have very long
| redesign timelines.
|
| Newer generation is actually simpler, its just demand growth
| outstripping supply. I'm sure 2020/2021 also impacted the ability
| to bring more capacity online but probably only to a small
| extent, these are long term investments that aren't responsive to
| instantaneous demand.
| 11thEarlOfMar wrote:
| This is correct. Shortages of new generation chips can
| generally be resolved by new capacity. We are seeing record
| levels of capacity spend by the chip companies.
|
| However, older chips are difficult to increase capacity for.
| The tools are not available, and the profit from legacy chips
| from them is many times insufficient to make the business case
| for.
| blihp wrote:
| In addition to the manufacturing and logistics mess the pandemic
| has created globally for everyone, the semiconductor shortage is
| even more of a special case. Just looking at graphics cards,
| we're in a perfect storm from a demand standpoint:
|
| 1) The pandemic resulted in a significant increase in demand by
| businesses buying laptops/PCs for employees so they could work
| from home. Lots of GPUs there and they are still buying.
|
| 2) Lots of people as individuals buying gaming PCs and consoles
| since they were spending much more time at home and wanted
| something to do. They too are still buying in record numbers.
|
| 3) With AI being a hot field right now, lots of GPUs being
| purchased for deep learning by researchers and businesses. Maybe
| this is a permanent increase in demand, maybe not... time will
| tell.
|
| 4) With cryptocurrencies being white hot right now, lots of GPUs
| being purchased for mining.
|
| So you might say 'well why not just build more
| fabs/factories/whatever and they can all make lots of money?'
| Well sure, for now. Fabs cost billions of dollars and take a
| couple of years to come online. The companies that have to invest
| in them likely spent much of 2020 and 2021 doing everything they
| could to increase production in the short term while asking
| themselves 'how much of this demand is long term?' as all of the
| items listed above are relatively recent changes, rather than
| things proven to be structural changes. It sounds like by mid- to
| late-2021 companies like TSMC decided to take the plunge after
| securing some up front payments and volume commitments from major
| customers.
|
| In addition to concerns by companies like AMD and nVidia about
| how long term items 1 and 2 are, they know for a fact that 4
| isn't likely to be sustainable given that there was a major
| crypto crash in the last 5 years and likely to be another one
| soon. When this happens, this will not only decrease demand as
| crypto miners stop ordering, but it will likely also increase
| supply as miners dump their GPUs on the used market (Ebay etc.)
| to cut their losses. If you follow the GPU news, you'll notice
| that AMD and nVidia are being very strategic in releasing new
| mining-specific GPUs. This is partially to offer products that
| specifically target the needs of miners, but I suspect more to
| minimize how much of this product can be dumped on the used
| market hurting GPU demand from consumers down the road.
|
| In addition to all this going on _specific_ to their industry,
| they 're dealing with all of the other manufacturing and
| logistical issues everyone else is. So they're also having to
| figure out how to get that PITA power/memory/whatever controller
| that they need manufactured in quantity and in time to build
| their own products and so on.
|
| So these companies are responding: they probably did as much as
| it financially made sense for them to in the short term while
| also adjusting their longer term plans. I'm expecting them to
| come online with significant new supply (for the new products
| released in 2022) just in time to see it dry up soon after (at
| least in the short term) since that's typically how these things
| go.
| 11thEarlOfMar wrote:
| Several factors:
|
| 1. There was real and relatively sudden increase in demand:
|
| a. COVID-driven in part, all students and many additional
| employees had to buy computers to study/work from home,
|
| b. a., driven by video, lead to increased demand on Internet &
| telecom infrastructure.
|
| c. Electric vehicles consume an order of magnitude more chips
| than ICE cars. EV demand is also skyrocketing.
|
| 2. There were fabs (semiconductor factories) shut down due to
| COVID. This one in Malaysia [0] makes power chips and was
| particularly problematic for ICE auto makers.
|
| 3. The first indication of problems manifested in chip lead times
| pushing out. As buyers started to see more and more of this, they
| started increasing orders and soon adopted a hoarding mentality,
| similar to why many of us couldn't find toilet paper in stores
| early in the pandemic.
|
| Result: As a personal anecdote, a chip that sells for $0.47 from
| that fab in Malaysia recently sold for $75 on the broker market.
|
| Note that no, the state of the art fabs cannot be re-outfitted to
| make legacy chips. The old equipment they were developed on is
| generally no longer available and the profit from making those
| inexpensive chips would not justify the capital spend on new
| equipment.
|
| [0] https://www.reuters.com/article/infineon-results-
| malaysia/in...
| eb0la wrote:
| True, but I believe there is also a missing factor: When people
| wasn't able to get outta home, demand for cars plummeted. And
| whoever made ICs as for cars just had the opportunity to fill
| the gap from automakers with more lucrative parts.
| jasonwatkinspdx wrote:
| Ironically enough demand for cars went up during COVID. I
| can't tell you why, but I know it's a fact. Lack of supply is
| certainly a factor but I think there's probably more going
| on. Go check how insane the market is right now. It's nearly
| impossible to buy a new car, and used cars are selling at way
| above the notional blue book value.
| jcadam wrote:
| We sold two cars and bought one new one. Remote work and a
| move to a rural area meant we had more cars than we needed,
| and that we needed to replace our city cars with something
| more rugged/utilitarian.
| frutmonkey wrote:
| Demand did go up, after the market adjusted to projections
| that with everyone in lock-down, demand for cars would go
| down. Demand for in home entertainment was projected to go
| up. Auto makers sold their capacity to people who were
| projected to use it in lock-down friendly ways. Once
| reality set in it was to late to get the capacity back.
| midjji wrote:
| One thing I heard from a guy working on chip for a big German
| car company was that they used to have a decades old contract
| with a major Taiwanese chip manufacturer which had extremely
| good terms for the Germans. In particular with terms to
| delivery times, and fees for late deliveries, and price. This
| deal had apparently been used as a framework for the purchase
| of not just the then used chips, but pretty much all latter
| ones too. In retrospect the deal seems to have been at the
| very least partially politically motivated by Taiwan, but the
| chip manufacturer could not cancel the framework agreement
| without significant penalties. There was however an option
| for the car manufacturer to cancel quite freely, and when the
| news of the pandemic hit, they did. It seems like no one in
| the department quite understood just how extremely good the
| conditions had become over the decades, and after they
| canceled it, and decided they wanted the same deal back...
| Well lets just say they are at the back of the line despite
| paying substantially more than they used too.
| chrischen wrote:
| Non EVs also need a lot of silicon for infotainment, driver
| assist, etc. it's not just EVs demand that is skyrocketing. All
| cars are.
| x0x0 wrote:
| Also, the Texas storms caused hard power cuts to multiple chip
| factories, erasing, in the best case, a full month of chip
| production as they slowly restart the factories [1]. These
| chips are, btw, generally built on such old tech that Intel is
| refusing to fab them [2]. So I would have thought a chip was a
| chip, but apparently car chips can only be sourced from a
| handful of specific fabs.
|
| Car manufacturers are clearly going to start building huge
| inventories of them though:
|
| > _"Because of a 50-cent chip, we are unable to build a car
| that sells for $50,000," said Murat Aksel, head of procurement
| for Volkswagen Group, during a press briefing in Munich last
| week._ [2]
|
| Ouch. Though honestly, this probably ought to result in some
| execs being fired... If you sell 100k cars a quarter, imagine
| telling the board that you saved the interest on $200k and the
| rent on a small room and that's why you're not selling a
| vehicle.
|
| [1] https://www.reuters.com/business/autos-
| transportation/texan-...
|
| [2] https://fortune.com/2021/09/17/chip-makers-carmakers-time-
| ge...
| bsder wrote:
| > Ouch. Though honestly, this probably ought to result in
| some execs being fired
|
| It should, but it won't because _everybody_ failed the same
| way.
|
| It was just like the 2008 banking crisis. _Lots_ of people
| saw it coming, but reasoned "If I predict doom and mistime
| it, I'm an outlier and get fired. If I simply keep my head
| down and cash out and it all goes pear-shaped, I'm simply one
| of the masses and nobody will notice me."
| jnwatson wrote:
| Good list. Also, Taiwan drought and Texas freezing impacted
| some fabs last year.
| tuatoru wrote:
| And the fire in Ajinomoto's factory that makes Ajinomoto
| Buildup Film, used in high-end chips, briefly cut production
| of those.
|
| I vaguely recall a shortage of epoxy resins as well. (For
| packaging chips, and for printed-circuit boards). It seems
| like more went wrong than usually does in 2020-21, even
| leaving aside the pandemic.
| Tarragon wrote:
| Regarding #3: We had an FPGA that is normally in stock or at
| most a few weeks lead time push out to a 56 weeks lead time.
| (Side note: This is for machine used to in chip
| manufacturing... uhm, oops.)
|
| What happened then is that the vendor prioritized larger more
| expensive parts. They use more silicon per part but the over
| all profit per wafer is higher. It's not a terrible decision,
| it's possible to move designs to an over provisioned FPGA but
| usually not the other way. The lead time for higher end parts
| started coming down, not to normal, but less than a year.
| Meanwhile lead-times for the low end parts kept getting longer.
| r-bryan wrote:
| This scenario is very reminiscent of the leadup to the
| Innovator's Dilemma. The dinosaurs grow taller and fatter
| seeking and thriving on the juicy foliage higher up the tree,
| while the scrappy little mammals claw away at its soft
| underbelly.
|
| Nobody's going to fabricate semiconductors in their garage.
| But couldn't someone make a modest profit without first
| investing $2.0e10, like Intel? Or is it just that the
| profitability scale is such that if you had an extra $2.0e7
| to invest, you're better off buying Intel stock?
| riskneutral wrote:
| I don't think that you can build a new semiconductor
| factory for $20 million (2e7), especially not when there is
| a chip shortage happening and you need factory equipment
| containing such chips.
| 11thEarlOfMar wrote:
| State of the art fabs retail for US$10 Billion. TSMC,
| Samsung, Intel & China can afford to build them.
|
| (for context, Freedom Tower cost US$2 Billion.)
| baq wrote:
| I think in 2022 it's more like 15B. 10 sounds very
| early-2020.
| amelius wrote:
| Perhaps you could do it at a 1000nm node, at very low
| volumes.
| analognoise wrote:
| EBeam lithography will get you sub 10nm, but it's one at
| a time.
| amelius wrote:
| This is close to how they make the mask-sets, very slow.
| bluGill wrote:
| There is the volume vs cost problem. You could put a fab
| together for under a million - but to do so your would
| trade labor for automation. A simple chip that a large
| fab can make for a profit (amortized) selling for 5 cents
| each would cost you more than $50,000 each to make. If
| you only need one chip that price is worth it, but most
| users of a chip are thinking a lot more and it typically
| turns out that getting a large fab to do your part is not
| only cheaper, but faster. Still you can do the highly
| manual process of making a chip if that is what you want
| to pay for.
| jfoutz wrote:
| It's a little weird to me. I see in the comments 50 cent
| chips going for 75 dollars. The old process chips _seem_
| diy able - http://sam.zeloof.xyz/first-ic/ Obviously it
| would take me, like, a year or two to get anything to
| work. But I'd guess there are folks out there that could
| spin up far far faster.
|
| I guess I don't understand why there isn't much, or any,
| labor intensive fabs combining on line, with a plan to
| automate away parts of the line as money comes in.
|
| I suppose, the chemicals are so toxic, and the skills are
| so rare you can't get any production for months, even at
| the small scale. and perhaps even at the crazy high
| prices it's still not worth taking on the risk.
|
| I know I don't know what I'm talking about. But golly it
| does _seem_ like I could make chips in a couple of years,
| and there's bound to be thousands of people out there
| that could do it in weeks. It seems like the kind of
| thing you could scale out with more labor and training,
| and improve process with automation as you go.
|
| _edit_
|
| Most trying to understand. Is it too toxic? are the
| skills so rare? Is the risk that high? Is that what's
| keeping low end chips from using a more expensive process
| even though they command higher prices - it's not enough
| to offset?
| rossdavidh wrote:
| 1) technically, someone is fabricating semiconductors in
| their garage, but as regards the world economy your point
| is still valid: https://hackaday.com/2021/06/29/garage-
| semiconductor-fab-get...
|
| 2) the equipment used in older fabs, is in many cases not
| even made any more. It's much like why the vinyl record
| manufacturing took a decade or more to ramp back up when
| the demand for vinyl records began going up instead of
| down. Nobody was making that equipment any more. The older
| fabs don't use the same equipment as the new fabs, except
| less of it; they use quite different equipment, and in some
| cases newer equipment actually wouldn't be able to make the
| older chips. I don't work in semiconductors, but I did from
| 1989 to 2004, and worked on several cases of trying to move
| old processes into newer fabs. It's not easy or quick, and
| in some cases you have to move the old fabs' equipment into
| the new fab.
| midjji wrote:
| Something is very weird with intel. Compared to fang pe
| around 30 or nvidia, amd around 100, intel has 10. Which
| combined with long term stable decently high profits is
| insane for an am tech company. Intel has been offered
| gigantic subsidies to build american fabs, and more
| recently just fabs period, but they arent, and at least one
| of these is approaching the point where they might get sued
| for not having even tried.
|
| The answers I hear range from a deeply embarrassing and
| complete loss of competency on all levels, but primarily on
| the fab side, to an utterly incompetent and out of touch
| leadership. I favor the latter explanation as intel has
| been underperforming for nearly two decades now. My best
| guess is that intel has entered its cash cow phase, and
| will simply phase out product after product as they become
| obsolete, ending up as a half dead zombie barely supporting
| a few rare products in a few decades. Problem is, even if
| thats what is happening, their stock is surprisingly cheap.
| So it seems analysts seem to know something important I am
| completely missing.
|
| Not to say they are the only company that fucked up, amd
| has been offered the same subsidies for building more fabs,
| and we arent talking 2020, we are talking for more than a
| decade, and they also havent for very unclear reasons. Amd
| also fucked up and completely missed machinelearning due to
| being unwilling to make a convenient interface or even just
| halfassed support for cuda. But they did that while nvidia
| went, ah fuck it, well let amd get every major console, and
| basically only make gpus with graphics ports as a side
| project.
|
| Amd and nvidia is havent acted optimally and both have
| failed to exploit what seems like low hanging fruit, but
| they are highly valued in a way which matches market demand
| (which has been increasing quickly since 2014, not just
| 2020), and their improving technology. Intel however, does
| not even appear to have tried. Performance improvements
| have been incremental at best, and some "features" like the
| built in gpus are so terrible they mostly degrade
| performance.
| sliken wrote:
| No argument on the fab side, but that's easy to
| outsource. Samsung, TSMC, and Global Foundries will
| happily make Intel chips.
|
| Alder lake is a good example, from what I can tell it's a
| market leading core, generally faster than the AMD
| competition, and a good basis to make future products.
| Future Intel GPUs seem likely to compete on price/perf,
| at least when any GPU from the last 3 generations seems
| to sell out instantly.
| bsder wrote:
| > I favor the latter explanation as intel has been
| underperforming for nearly two decades now.
|
| Remember "Only the paranoid survive"?
|
| Well, people steeped in Intel took that to heart. So,
| when they retired or died, a _lot_ of them had no heir
| apparent and their knowledge went with them.
| sliken wrote:
| > c. Electric vehicles consume an order of magnitude more chips
| than ICE cars. EV demand is also skyrocketing
|
| Source? My impression is just the opposite. Batteries and an
| electric motor is a relatively simple device compared to a gas
| motor. So you replace a fuel pump (and related sensors), cat
| converter (and sensors), transmission (and sensors), and a
| hugely complex (1000s of parts) engine (and sensors). Managing
| maximum efficiency, torque, and HP across the entire RPM range
| while minimizing emissions is quite an intensive process. Not
| to mention the interaction between the engine and the (compute
| controlled) transmission. Especially these days when the simple
| rules are gone and managing turbos, heat management, etc means
| that you might give maximum HP, but only for 5-10 seconds or
| even idling unneeded cyclinders, stopping the engine at
| redlights, etc.
|
| Tesla in particular as moves many distributed chips into a
| highly integrated single board, various people (like Monroe on
| Youtube) claim the Tesla model3 has a market leading level of
| integration replacing dozens of distributed CPUs with a custom
| board/ASIC.
| phkahler wrote:
| I used to work in EVs (and tangentially still do). They
| really only require some power electronics - gate drivers and
| IGBTs - in addition to the normal bunch of chips all over the
| vehicle. So even if demand was "skyrocketing" rather than
| being a tiny fraction of the market, they shouldn't impact
| the demand for chips on regular cars.
| 11thEarlOfMar wrote:
| EVs require 2.3x the chips of ICE. (not orders of
| magnitude, apologies for the hyperbole)
|
| https://www.idtechex.com/en/research-article/ev-power-
| electr...
| sliken wrote:
| Interesting, and weird. Although that's measured by $,
| not per chip, per per mm^2 of silicon. I suspect electric
| cars (being newer designs) tend to use much newer chips,
| where the traditional ICE manufacturers are often using
| many generation old processes and paying rock bottom
| prices. So during shortages the cheap chips don't get
| made as fabs migrate production to the most
| profitable/newer chips.
|
| Based on the tear downs I've seen I believe the 2000+
| chips in the model S/X, but would be surprised if a model
| 3/y even had as many as 1000 (the number in a ICE
| vehicle). The model S/X were crazy complex, CPUs for each
| door lock, each window motor, each windshield motor, etc.
|
| As a result VW, Ford, GM, Chevy, etc have to halt
| production lines, while Tesla has a record year.
| bonestamp2 wrote:
| > The model S/X were crazy complex, CPUs for each door
| lock, each window motor, each windshield motor, etc.
|
| A lot of ICE cars have similar complexity in these
| systems. It's much easier to put a module in each
| component and just send messages on the bus to control
| them. Most newer cars also detect objects in the path of
| the window and will stop/reverse the window to prevent
| pinching.
|
| While EVs might have more $ in chips, I also suspect they
| have a lower chip count as more indicators and
| interactions are handled on screen. Meanwhile, most ICE
| vehicles still have analog gauges, analog gear shifters,
| physical gear selection illuminators, etc. and all of
| these need chips.
| sliken wrote:
| I compared a 2019 Model 3 to a BMW i3, Chevy Bolt, and a
| Nissan Leaf (as well as a fair number of ICE cars like
| subarus, bmw 335, VW Golf R). I did notice that the
| entertainment system/nav/music, etc where worlds apart.
| The Tesla felt like a current smartphone, pinch/zoom,
| fast UI, easy to use, and pretty good speech recognition.
| The others felt like 5-10 year old phones, similar in
| feeling to even my ancient nokia 770 with Maemo mapper.
|
| Monroe (on youtube) did a breakdown and said that the
| only other place he say CPU/ASIC/Sensor integration like
| on the model 3 was in satellites. Apparently there's a
| large CPU with a ton of pins that handles quite a bit of
| cars needs. Even the usually Bosche supplied
| ABS/Stability management/traction control functionality
| has been merged into the Tesla chip.
| bonestamp2 wrote:
| > Even the usually Bosche supplied ABS/Stability
| management/traction control functionality has been merged
| into the Tesla chip.
|
| That's interesting... that's usually it's own ECU on most
| cars.
| mywittyname wrote:
| I can see why they might do it this way. ABS/SC in ICE
| cars tend to focus mostly on the braking system. Since
| most ICE cars are two-wheel drive with an open
| differential, there's not much that can be done from a
| stability point of view besides cutting power. Even AWD
| cars with computer-controlled differentials have response
| times that are too long to really be of much use in an
| emergency situation.
|
| EVs, OTOH, can apply or reduce torque to the wheels much
| faster than even the brakes can respond. And being able
| to not only apply stopping force to a wheel, but also
| apply torque to another wheel makes for a totally
| different approach to stability management.
| [deleted]
| Manuel_D wrote:
| I suspect it's more the case that electric vehicles ship with
| more "smart" features (touchscreen consoles, mobile phone
| connectivity, etc.) which in turn leads to larger chip
| requirements.
| sliken wrote:
| Dunno, I don't think so.
|
| Streaming music, maps for nav, top down views that
| integrate numerous camera/utlrasound etc sensors, onstar
| (and similar), traffic updates for maps, bluetooth
| connections/app for phone, etc seem common on pretty much
| all new cars. At least they were in the subaru, honda, bmw,
| and VW cars I was test driving. A center console mounted
| screen for entertainment/maps/music is becoming very common
| on pretty much all new cars I looked at.
| rubidium wrote:
| Can confirm. Anyone working in supply chain is now told to buy
| 1-4 year supply of as many of the critical chips needed as they
| can. It used to be all about how JIT could it be. When the
| whole chip supply chain shifts from JIT to "get all you can
| while you can" it causes the shortages. 2nd hand market is
| seeing astounding mark-ups.
| jnwatson wrote:
| If everyone buys 4 years of supplies, that exacerbates the
| problem. The supply chain bullwhip effect will be massive.
|
| For the next 3 years, fabs will be swimming in profit. After
| that, I expect a major correction.
| xxpor wrote:
| Will the fabs have the discipline to actually use the extra
| cash injection wisely?
| monocasa wrote:
| They're the best positioned to do that, they're one of
| the last classic long tail, high capital investment
| portions of the industry. Each node is only competitive
| for a short while, but they have multiple nodes in the
| development pipeline because of how long it takes, and a
| misstep on a single node can devastate the whole company
| if you're not in the #1 spot originally.
|
| So the answer is we don't know it, depends on the
| management currently at the fab, but they have the right
| external incentive structure to handle it well.
| nickff wrote:
| Everyone is suggested to place scheduled orders for the
| future. Nobody (that I've heard) is suggesting that you
| immediately purchase and carry four years of inventory.
| People in this market are generally very intelligent, and
| there have been a number of booms and busts in
| semiconductors in the last 30 years.
| mohanmcgeek wrote:
| Does that mean most companies will be using 2020 generation
| chips until 2024?
|
| Sounds they'll dump it in trash eventually and it'll be a
| terrible waste of resources
| [deleted]
| rubidium wrote:
| Companies in my industry have products they sell for 10-20
| years. The chips will get used. Product updates often keep
| the same chip, and the same chip is used across multiple
| product lines.
|
| EOL for these chips usually means a bunch of firmware
| engineers in sustaining need to scratch their head and read
| 10-15 year old documentation to find a viable replacement.
| HWR_14 wrote:
| For the vast majority of things I buy that use chips
| (obviously not consoles, phones and computers) they could
| easily be using chips from 2010 and the only difference
| might be a slightly higher electricity draw.
| monocasa wrote:
| Where I worked that I participated in the board design
| process, we'd get "lifetime buys" of chips on a many year
| cycle anyway for design stability reasons. Who cares if the
| microcontroller is using a couple more watts than it could
| be from aggressively respinning if it's sitting next to a
| 500w motor?
| mrtweetyhack wrote:
| 41b696ef1113 wrote:
| Chips are performing an astounding number of tasks these
| days. Microwaves, vacuum cleaners, toasters, etc. None of
| these applications require advanced chips and could settle
| for something from 20 years ago.
| [deleted]
| baybal2 wrote:
| I became 3400 dollars richer buy selling few old unused stm32
| reels
| UncleOxidant wrote:
| Also 4: There's been underinvestment in the sector for years
| now. Lots of money got plowed into stuff like social media,
| crypto/blockchain & ML but semiconductors just weren't sexy to
| the investors.
| dymk wrote:
| I don't really buy this idea that chip fabs were being
| starved of money because of blockchain. Do you have any
| evidence to back your claim up?
| haneefmubarak wrote:
| It's not so much that chip fabs were starved by blockchain
| as much as the fact that many investors generally chase
| high short-term low-risk yields, which primarily results in
| major investments being in software-based ventures.
| Hardware can yield quite large gains too, but the upfront
| risk is much higher and. the growth rate is slow (if at all
| nonzero) for a long time before actually growing.
| rossdavidh wrote:
| The chip fabs of Intel, Samsung, TSMC, and a couple other
| companies were not being starved, no. But, nobody was
| starting new semiconductor fab companies like they did in
| the early days of Silicon Valley (hence the "silicon" part
| of the name). That hasn't been happening for a couple
| decades now.
| UncleOxidant wrote:
| > The chip fabs of Intel... were not being starved,
|
| Maybe, but consider that Intel stock was pretty flat for
| a long time in the 2000s/2010s especially compared to the
| amount of money that was flowing into the FAANG stocks
| and other social media companies during that time. If
| Intel's stock had rising at something like those rates
| they probably would have been able to invest quite a bit
| more into fabs.
| tzs wrote:
| > Note that no, the state of the art fabs cannot be re-
| outfitted to make legacy chips. The old equipment they were
| developed on is generally no longer available and the profit
| from making those inexpensive chips would not justify the
| capital spend on new equipment.
|
| Interesting. I had assumed that the difference between state of
| the art fabs and older fabs was that state of the art fabs
| _can_ make smaller things, and perhaps more geometrically
| complicated things, but that they don 't have to. If they
| wanted to make a design that only uses bigger things and
| simpler geometry they could.
|
| Where does this assumption break down?
| RicoElectrico wrote:
| CMOS devices scale in all 3 dimensions, including gate oxide.
|
| It is quite unlike, say, PCB fabrication, which is way more
| flexible with regards to layer stack-up.
| belltaco wrote:
| >Interesting. I had assumed that the difference between state
| of the art fabs and older fabs was that state of the art fabs
| can make smaller things, and perhaps more geometrically
| complicated things, but that they don't have to. If they
| wanted to make a design that only uses bigger things and
| simpler geometry they could.
|
| >Where does this assumption break down?
|
| Why would they want to? There is heavy and overbooked demand
| for the 'smaller and complicated things' that make more
| money, and add the extra cost of the design to make the
| 'bigger and smaller' things, and it's a no brainer.
| tzs wrote:
| They wouldn't _want_ to. What I 'm curious about is if they
| _can_ without retooling or purchasing equipment. Say due to
| chip shortages affecting the US military the government
| invoked the Defense Production Act to require some company
| with only state of the art fabs to make an older chip.
|
| From what I've read, the way a layer on a chip is made is a
| coating is deposited on the surface that is sensitive to
| light at certain wavelengths. They then use light of
| wavelengths that the coating is sensitive to in order to
| transfer a pattern from a photomask to the surface, making
| some change to the coating at those places where the light
| is not blocked by the photomask. Then they can treat the
| surface to remove the coating at those places were it was
| changed by the light.
|
| They then can deposit thing onto or remove things from
| those parts of the surface not still protected by the
| coating. Then they can use something that can remove the
| coating. The result is a layer on the chip with things
| deposited or removed right where they wanted them to, as
| determined by the pattern on the photomask.
|
| Repeat for more layers.
|
| The major improvements from generation to generation are
| the ability to use shorter and shorter wavelengths of light
| for the photolithography which allows for transferring
| patterns that have smaller features, and maybe the ability
| to make thinner layers so you can make chips with more
| layers.
|
| I don't see anything in the photolithography process that
| requires using small feature size. If for some reason you
| wanted to build an older chip that only used much larger
| features, I'd expect that it would just be a matter of
| using the photomasks for that older chip, and setting the
| layer thickness to what the old design called for.
| darksofa wrote:
| Only the most critical layers use the most advanced litho
| tools. The other layers use n-1 and n-2 litho tools and
| print larger geometries. You are correct that it is not a
| problem to print larger geometries.
|
| However, there is more to it than just litho. Many thin
| films, implants, etching, polishing. A product is
| designed to a specific fabrication process flow. The real
| showstopper is that the process flow guarantees the
| electrical parameters of the transistors and passive
| devices will be with a certain range -- the product
| circuits are designed based on these parameters' values.
| A different process flow has all different electrical
| characteristics and the product won't work without
| redesign.
| showerst wrote:
| I think the deal breaker is "without retooling".
|
| For one thing there's a lot of steps involved in
| photomask -> repeat. If your masks are all built for a
| smaller wafer size, or a different focal length setup or
| physical process diameter, then they literally won't fit
| in the die, or won't focus correctly.
|
| You'll run into similar issues all up and down the chain.
| If your doping and prep all assumes a smaller wafer or
| different geometry, you're out of luck either physically
| because things don't fit, or because your chemistry needs
| to be redone. Your various deposition, bake and cure
| steps will necessarily also assume a process geometry,
| because some of the processes diffuse out from the
| center, or at different angles relative to some source
| that's bombarding them.
|
| It's sort of akin to saying "well if we can build a vw
| bug they can build a model-T". Generations of equipment
| changes make things incompatible.
| lief79 wrote:
| As someone with no experience in this area, I think
| you're ignoring the option of making the equivalent parts
| on the newer equipment.
|
| The design costs would be higher (based on what I read,
| the new methods are more complex and costly), but if
| you're legally required to do so ... this would possibly
| be faster and cheaper then redesigning the factory.
| Larger wafers, larger yields, etc ... once working they
| could probably meet the required output quickly(month
| long delay?), provided the demand / legal punishments are
| great enough to justify the costs.
| 11thEarlOfMar wrote:
| State of the art machines are used to make state of the art
| high-value chips. FPGAs, GPUs, CPUs, RAM, SRAM
|
| As those chips run through their life-cycle, their value
| drops. After 15 years, the price the chips can sell for will
| drop 90% or more.
|
| If there is a spike in demand at that point, there is no ROI
| on purchasing brand new equipment.
|
| The demand spike is seen as temporary. Hence, the chip makers
| are telling the buyers to design out the old chips and
| upgrade to new. Many companies can do this. But some are
| constrained by industry regulation (aerospace) or industry
| practice (semiconductors).
|
| I've mentioned before the irony that companies that make
| semiconductor equipment are struggling to ship more tools
| because they can't get enough (of certain chips) to complete
| building them.
| thallavajhula wrote:
| Linus Tech Tips, a reputed YouTuber made a video about this a
| while ago, where he explains it really well. If you're
| interested, check this out:
| https://www.youtube.com/watch?v=3A4yk-P5ukY
| bellyfullofbac wrote:
| To nitpick, the YouTuber's name is Linus Sebastian and Linus
| Tech Tips is his channel...
| zeckalpha wrote:
| The drought in Taiwan is also a factor:
| https://www.taipeitimes.com/News/feat/archives/2021/04/22/20...
| ju-st wrote:
| > "TSMC has always maintained contingency plans for each stage
| of water restrictions... So far there's no impact on
| production," it said in a statement.
| bloodyplonker22 wrote:
| The drought was a factor for a very short while, but it is
| completely over after rains that caused flooding a few months
| later.
| enchiridion wrote:
| I thought fabs were mostly closed loop at this point, and
| occasionally just need a small sip of water after the initial
| fill.
| TedShiller wrote:
| Inflation is the real reason. If you pay enough, there is no
| shortage of anything
| pjscott wrote:
| It can take time for supply to increase. Chip fabs can't be
| built instantly no matter how much money you're willing to
| throw it the problem, any more than babies can be made in five
| months if the mother really tries hard.
| TedShiller wrote:
| Trust me, if you pay enough for that chip, it will be there
| first thing tomorrow morning
| dymk wrote:
| I don't understand. Are you saying there's no shortage
| because _technically_ you can get whatever you want, given
| infinite cash? Is that particularly insightful?
|
| If it's due to inflation, why did chip prices skyrocket a
| few orders of magnitude more than inflation?
| TedShiller wrote:
| It's a spectrum, not black and white. But "supply" is
| being used as an excuse to mask the much bigger problem:
| inflation. Everything is more expensive, and unless
| people are willing to pay more for it, they won't get it.
|
| A lot of people don't want you to understand that.
| Matthias247 wrote:
| Think about what happens if half of the factory personal is in
| home office or can only work at reduced capacity due to Covid
| concern => production capacity will be reduced. Then consider
| this happens transitively. Each supplier in the chain will work
| only at reduced capacity, and therefore the overall shortage can
| be even stronger.
| soared wrote:
| In addition to the answers you'll receive about this specific
| shortage, it's good to remember that chip shortages are common.
| Consumers aren't usually this aware, but they happened commonly
| prior to Covid. So it's worth asking, why did chip shortages
| happen historically, and how did the current situation affect
| those previous issues?
| pjc50 wrote:
| There has been a colossal shift to home working and home
| entertainment. So many people have bought themselves better gear
| to do this with, especially if they got more stimulus cheque than
| they needed.
|
| Meanwhile the cryptocurrency boom provided a means to turn
| graphics cards into virtual money, so those all got bought out.
|
| All while staffing, mobility (can't fly troubleshooters out so
| easily!) and other aspects of working have got harder, and a
| related physical shipping crisis is causing an increase in
| inventory both at factories and in transit.
| blincoln wrote:
| I'm sure there are a lot of significant factors, especially for
| different types of chip, but also pretty confident the shortages
| related to GPUs and similar are due in no small part to the
| massive buildouts of digital Chuck E. Cheese token factories,
| e.g.:
|
| https://twitter.com/wired/status/1335445557788233728
|
| https://twitter.com/BitcoinMagazine/status/14149943888208977...
|
| https://twitter.com/dmgblockchain/status/1438547780646019086
|
| AFAIK, the cost to add significant additional manufacturing
| capability for most products means that increased demand has to
| be forecast for a really long time to be worthwhile. Hence why it
| was still hard to find quality nitrile gloves, isopropyl alcohol,
| and Clorox wipes during 2020 even though everyone knew there was
| a bigger market for them for potentially quite awhile. I'm sure
| the chip and hardware manufacturers don't want to invest millions
| or billions in assembly line machines and then have buying levels
| drop back to pre-cryptocurrency-mania levels.
| pygy_ wrote:
| The market has decided that entertaining meatbags was worth
| less than evading taxes and stifling regulations.
|
| It seems its invisible hand is a bit self-serving, go figure...
| downrightmike wrote:
| Good news about all those chucky tokens is that gpus will
| iterate and innovate much faster than otherwise.
| pjc50 wrote:
| This does not follow at all; the GPUs were already iterating
| basically as fast as they can go - after all, why would it
| be, it's not sped up by putting more on the production line
| or more engineers on the design side.
|
| NVIDIA at least have been trying anti-cryptomining measures
| in their firmware. A form of defensive innovation, I suppose.
|
| The crypto advocates really do not want to hear it, but their
| proof-of-waste scheme has big negative externalities for
| other people.
| howdydoo wrote:
| >it's not sped up by putting more on the production line or
| more engineers on the design side
|
| Of course it is.
|
| If revenue fell by 90%, nvidia would spend much less on R&D
| and progress would be much slower.
|
| If revenue doubled, nvidia would spend much more on R&D and
| progress would speed up.
|
| If revenue fell to $0, nvidia would go out of business,
| spend $0 on R&D, and progress would halt.
|
| There's a direct, although not linear, relationship. The
| more money there is, the faster progress is (as long as you
| trust nvidia to spend it wisely and execute)
|
| I don't mine crypto, but I like fast tech, so I say let the
| money keep flooding in so we all benefit.
| idiotsecant wrote:
| Proof-of-work is not the only workable consensus mechanism,
| as Ethereum moves from a PoW to a PoS model Soon(*) that
| should improve.
|
| (*) {currentDate} + 18 months*
| missedthecue wrote:
| according to Intel's CEO, chip demand in 2020/2021 was 25% higher
| than it was in 2019. The typical annual growth for the industry
| over the last thirty years is 4 or 5 percent a year.
|
| This massive jump in demand has caused backlogs. Covid supply
| chain issues didn't help.
| c7DJTLrn wrote:
| >Covid supply chain issues didn't help
|
| It would be nice to get to the bottom of these issues I keep
| hearing about. Yeah, COVID was/is a big thing but when it comes
| to feet on the ground, what's the impact? Not this much surely.
|
| Not to be conspiratorial but is this a cover story we're being
| given? Why does it feel like there's suddenly this massive void
| in productivity?
| thanatos519 wrote:
| On the contrary. It's a cover story being blown. The system
| was already operating at the edge of its capacity, and now
| it's toppling over.
| capableweb wrote:
| There has been 5,443,453 deaths from COVID-19 so far, with no
| end in sight. Just counting the deaths, that's a pretty large
| impact from something that just appeared two years ago. Not
| to mention the psychological impact the pandemic has on
| humans, which is even more than just counting the deaths.
| This is why productivity is falling off a cliff. Everything
| changed underneath our feet and people are starting to feel
| the long-term effects of having a virus lurking around every
| corner.
| rubidium wrote:
| Perhaps... but has nothing to do with the chip shortage.
| vineyardmike wrote:
| I'm sure no one in the chip industry died (or got sick).
| And no one in an industry that supplies chips. And no one
| in an industry that buys chips. And no one in a service
| industry that services the employees of the above
| industries.
|
| /s.
|
| Its global. Its everywhere. Every industry will have
| impact simply due to huge disruptions to everyone. Tons
| of people got died, and many more got sick, and subject
| to lockdowns, and saw their purchase patterns change (eg.
| toilet paper). Directly, the IC industry changed when
| people had to purchase laptops and monitors and webcams
| for their at-home employees. That is a huge surge in
| demand that was a 1-time thing, but all those office
| supply orders are still depressed, so anyone making
| things has to re-tool their factory.
| capableweb wrote:
| How can you be so sure about that? COVID, either by
| first-order effects or by second-order effects, is
| affecting almost everything in the world right now, why
| not the chip shortage too?
| martin_a wrote:
| To add to this: Even if you're not killed by Covid,
| infections will usually result in you being quarantined for
| two weeks (speaking of 2020 numbers) which created HUGE
| problems with DHL for example. There were simply no drivers
| for all their trucks to get stuff moving around (in Germany
| e.g.). This had a huge impact on logistics, for example.
| akimball wrote:
| Accounted deaths are a fraction of actual. The Economist
| used a pretty good model to estimate 15.3mm excess deaths
| globally back around November
| noodle wrote:
| > what's the impact? Not this much surely.
|
| Yes, this much. I saw someone explain this well enough on
| reddit, but I can't find a link so I'll try and paraphrase
| it.
|
| Let's say you're a lumbermill and you run at 100 boards a day
| in normal times, with enough capacity to do 110 boards a day
| if you stretch. COVID shut you down for 3 months. You now
| have a 9000 board deficit from your normal production, with
| people lined up to buy the boards before you've produced
| them. Once you get started again, you crank up capacity to
| 110/day - it takes you 900 days - almost 2.5 years - to
| recover that original shutdown deficit, without accounting
| for any of the increased demand for your product.
|
| This is roughly what other industries are experiencing. "Why
| don't you just make a new factory to increase your
| production?" well, it would take a long time to do that,
| would take a lot of capital, the shortages impact you too,
| and there's no guarantee that once COVID passes, demand won't
| go back down to 100 boards/day leaving you with a huge
| unnecessary capacity.
|
| A simple example, of course, but this kind of thing is
| happening in some form or another in most industries, and
| will just take some time to work itself out.
| vineyardmike wrote:
| Great example! Easy to understand, and clearly away from
| any "conspiratorial" answer.
|
| Just to tack onto it...
|
| > Once you get started again, you crank up capacity to
| 110/day - it takes you 900 days - almost 2.5 years - to
| recover that original shutdown deficit, without accounting
| for any of the increased demand for your product.
|
| This is best-case scenario. Likely is that a few % of your
| workforce will have been out sick with covid (or even
| passed away), and a few % of your workforce may have quit
| to care for family, or quit for better pay elsewhere, etc.
| So your "work extra hard to hit 110/day" is more likely
| "work extra hard to stay at 100% or even 90%". _Especially_
| limiting if you need to buy parts for your output that may
| be delayed due to others who are behind.
| noodle wrote:
| For sure - my example is just a very basic one to show
| how easily most industries can slide into a hole that
| takes time to dig out of even under good conditions. The
| reality is even more complex.
| manwe150 wrote:
| There was a large spike in unemployment in the US/worldwide.
| Combining that with drastic shifts in consumption patterns,
| causing a ripple effect in delayed production changes. And
| perhaps also shortages are just getting more attention right
| now, simply because people are looking at them more?
| chasd00 wrote:
| imagine a quickly moving but congested highway. anyone even
| tapping the breaks will cause a massive slowdown. I think the
| chip supply chain is similar.
| HWR_14 wrote:
| > what's the impact? Not this much surely.
|
| A few months ago there were seventy billion dollars of goods
| anchored off of LAs docks alone. Some of those were finished
| goods, but some are intermediate goods.
|
| It's so bad that it's cheaper to make new shipping containers
| in China than spend the time to return them once they've been
| used once. We have a glut of practically new containers
| clogging up our infrastructure.
|
| Even as COVID stopped causing the direct backups, backups
| propagate all on their own. Like a giant traffic jam and you
| get to the front and the accident was cleared hours ago.
| wldcordeiro wrote:
| A lot of it has been that COVID exposed how many industries
| were relying on Just In Time fulfillment so then when the
| demand spiked because people were home isolating the supply
| wasn't there. I recall a particular story about the toilet
| paper industry explaining that.
| yokaze wrote:
| My guess: It is lowered expectations, and people accept the
| excuse.
|
| So, what would you tell your customers, if you can't deliver
| on time?
| c7DJTLrn wrote:
| Same thing with Brexit really. An easy excuse to reach for.
| gabriel_fishman wrote:
| In 2020 I was working for a consumer electronics company and
| went to some presentations on how our supply chain and
| operations teams were dealing with the pandemic. I'm far from
| an expert on this, but this is what I heard from people who
| were working on this.
|
| First, you had a massive lockdown in China in January 2020,
| which shut factories temporarily. Then when those factories
| came back online, the production lines had to be reconfigured
| so that stations were 2 meters apart. At the same time, a lot
| of the collaboration that typically happens by people from a
| company flying out to China to meet with the supplier face-
| to-face were shifting to video, which frequently met that at
| least one side of the call was early in the morning or late
| at night. And as all of that was happening, there were also
| large shifts in demand as some products saw spikes in orders.
| That pattern then repeated itself across the world - a
| company might move production from China to, say, Indonesia,
| only to see the new factory have to temporarily shut down.
|
| I can imagine that two years of this would create major
| backlogs and disruptions.
| kube-system wrote:
| We have just-in-time inventory at all levels of the supply
| chain. China was shutting down highways between major cities
| and forbidding people to go out on the street in the earlier
| parts of the pandemic. I'm surprised the ripple effects
| haven't been worse.
|
| To turn silicon crystals into a PS5 requires multiple steps
| in the supply chain which, when running smoothly, have
| multiple steps where people may be planning years in advance.
|
| Sony builds their products out of dozens of components from
| different suppliers, which themselves may be made out of
| finished materials provided by other manufacturers, which in
| turn may be made out of chemicals or raw ingredients from
| other companies. The dependency tree is quite big, and if any
| of them are messed up, you can't finish your product.
|
| Normally all of these dependencies are planned well in
| advance (quarters or years) so that everything is ready when
| the time comes to ship. Mess it up one level deep, and you're
| a quarter to a year behind. Mess it up two levels deep and
| you're two quarters to two years behind.
|
| On top of this, semiconductor production was already stressed
| to its limits before COVID.
| [deleted]
| mariuolo wrote:
| > Can automakers not use a 7nm fab?
|
| Intel offered car manufacturers 16nm chips "as many as they
| wanted", but they'd have to be re-engineered from, from what I
| read, 150nm and certified for harsher conditions (temperature,
| humidity, acceleration, probably noxious fumes if installed under
| the hood) than consumer electronics, which adds to the cost.
|
| In addition to that, with the upcoming switch to electric cars
| they probably wouldn't produce enough of them to recoup the
| investment.
| _rend wrote:
| This is _far_ from a complete answer, and not unique to the chip
| shortage, but some context about some markets and industries in
| general for those wondering about "how could this be related to
| COVID?"
|
| It's important to understand that many manufacturing industries
| operate on a "JIT (just-in-time) manufacturing" model[0], where
| goods used in a manufacturing process are only ordered and
| received as needed, minimizing inventory and storage costs.
| (e.g., instead of having a warehouse full of screws sitting
| around waiting to go into products, you order X screws from
| _another_ manufacturer every month to fulfill Y number of
| effective orders) This means that many industries (especially the
| automotive industry) operate on a constant stream of supplied
| products, in many interdependent chains.
|
| There are two downsides to this approach:
|
| 1. The JIT model has to be at least partially predictive. You
| can't necessarily order components right as you receive orders,
| because it takes time to produce those components (remember, no
| one has warehouses full of those components ready to ship,
| because it's often JIT all the way down) and you don't want to
| keep customers waiting as components get shipped to you. Instead,
| you need to at least somewhat predict how many orders you expect
| to fulfill in order to balance between keeping customers waiting
| ("shortage") and having excess stock laying around which might
| never sell (waste)
|
| 2. The other main downside is that JIT production is highly
| interdependent on other industries and can be fragile. If you
| expect to be able to order X screws this month from your
| supplier, but some external event causes them to only be able to
| supply you with Y screws (Y << X), you're shit out of luck. You
| literally cannot produce your product because the underlying
| components simply do not exist, which leads to a shortage of your
| product
|
| Both of these downsides come to a head in the presence of some
| global event that causes uncertainty and inefficiency. If a low-
| level JIT process depended upon by many industries suffers from
| an inefficiency (e.g. workers can't come in because they're
| sick), many higher-level processes start to slow down (e.g., _no
| one_ has screws to build their products with). This effect is
| multiplicative across industries, since many manufacturers
| specialize in specific products and downtime can affect many
| "downstream" clients.
|
| Along with this, such global events can dramatically change
| customer demands, and when you've only predicted needing to
| produce X products but you now have Y demand (Y >> X), customers
| are out of luck because the products literally do not exist to be
| sold (shortage).
|
| Considering that computer chips are now present in almost _all_
| major consumer products these days, it doesn 't take much
| uncertainty and inefficiency at the "base" for a domino effect to
| significantly slow down a lot of industries.
|
| [0]: https://en.wikipedia.org/wiki/Lean_manufacturing
| mohanmcgeek wrote:
| Surely this would explain the initial supply chain shock.
|
| But it has been two years, why isn't the backlog from the
| initial shock diminishing. I understand that supply is not
| elastic but two years should have been enough for the producers
| to ramp up the production.
|
| Do they think that this is a temporary spike and building
| capacity would be unprofitable?
| bsder wrote:
| > Do they think that this is a temporary spike and building
| capacity would be unprofitable?
|
| Ayup.
|
| A lot of the previous decades of chip manufacturing is all
| about how superior it is to be a "fabless" company. You don't
| have those nasty capital expenditures and your upside is
| basically unlimited--while owning a fab means you have to
| employ a ton of people and your profit margin is effectively
| capped.
|
| The fab folks know that as soon as this shock is over, owning
| a fab goes back to being crap. So, you make hay while the sun
| shines, and you don't even _think_ about doing capital
| outlays.
|
| Even if they could find the equipment and people (not at all
| an easy thing), there is _ZERO_ incentive for the fabs to
| expand. To first order, it 's actually more profitable for
| them to maintain this shortage. Nobody is going to pass up a
| sale just to keep a shortage going, however.
|
| Eventually, things will equilibrate. However, I suspect that
| there's going to be a lot less choice in semiconductors for
| quite a while afterward.
|
| The only short-term thing that I'm interested in tracking is
| how many companies were hoarding and are going to panic now
| that inventory tax is coming due. That's going to move some
| commodity microcontrollers back into the system from the
| hoarders. It will be interesting to see how much comes back
| into the system in the next quarter or two.
| _rend wrote:
| > two years should have been enough for the producers to ramp
| up the production
|
| Along with what Kliment said about not investing in building
| capacity, I don't think this specific statement is
| necessarily true. Many of the original factors that caused
| these setbacks in the first place are still ongoing:
| _everyone_ is still trying to catch up, and demand is still
| outstripping supply almost everywhere, for many, many
| products; worker mobility is still extremely limited (across
| countries and regions) because of the ongoing pandemic, so it
| 's not trivial to ramp up.
|
| Short of investing in that capacity and expanding into new
| regions, I'm sure it hasn't been easy to actually ramp up
| production again, and changes in customer demand and patterns
| are still shaking out. (And even for those companies which
| _have_ been investing into ramping production, two years can
| be the low end to start seeing returns on investments: plants
| take time to build, resources need to be allocated and
| transported, new employees may need to be trained, etc.)
| Kliment wrote:
| See my other comment in this thread - it makes no sense to
| ramp up production because the current demand increase is
| almost entirely due to lack of market confidence and there's
| no guarantee it will last long enough for new capacity to go
| online. That's why ~nobody is building new capacity for the
| affected nodes.
| tyingq wrote:
| The shortest explanation is that COVID changed customer demand,
| in both directions. And switching from one fab to another, even
| if they are the same process size, requires significant work.
|
| This caused a scramble where customers found alternate paths to
| satisfy requirements. Buying up stock of other, similar chips
| (which now creates a shortage of chip "b"). Reserving time with a
| new fab. Or deciding not to have navigation in certain car
| models. Or halting sales for a while. All of which drives another
| cycle of churn into the schedule.
|
| This repeats itself over and over, like an earthquake with
| aftershocks, until things smooth out.
| nebukadnet wrote:
| Trump is also partially to blame.
|
| When he placed that trade embargo on China, many companies were
| forced to change their orders to factories in other locations,
| such as Taiwan. These factories were already running at capacity.
|
| Edited for source:
| https://www.theverge.com/2020/9/26/21457350/us-tightens-trad...
| the-dude wrote:
| From your source it seems to be an export ban, not an import
| ban.
| lysecret wrote:
| from an eagle eye point of view. A shortage always means, Demand
| is higher than supply and prices and or supply cant adjust quick
| enough.
|
| Price cant adjust: Long term contracts, regulation etc.
|
| Supply cant adjust: Move to newer chips (so essentially
| misplaning), shortage of people, congested supply chains etc.
| TradingPlaces wrote:
| 1. During the pandemic, consumer durables went from ~10-11% of
| consumption to ~13%. 3 percentage points of consumption is about
| half a trillion dollars annually. Many of these durables come
| with cheap microcontrollers or even high end SoCs now. New
| vehicles have dozens of cheap microcontrollers.
| https://fred.stlouisfed.org/graph/fredgraph.png?g=Ktkq
|
| 2. If you look at that chart, you will see that the decade
| previous to the pandemic was the worst ever for durable goods
| demand. Supply chains had adjusted to that.
|
| 3. Supply chains had also all gone to a JIT model to keep
| inventories lower. This was a huge source of efficiencies, but
| made them vulnerable to a demand shock.
|
| 4. There are new sources of chip demand in EVs.
|
| 5. There are new sources of chip demand for very cheap ARM and
| RISC-V chips. High volume, low margin stuff that has been
| underinvested for manufacturing, like the entire auto chip chain.
|
| 6. 2019 was a down cycle, and companies were idling capacity.
|
| 7. When the pandemic hit, companies projected lower demand, and
| idled more capacity. This put them in a huge hole from which they
| still have not extricated themselves.
|
| 8. COVID outbreaks in Asian factories complicate things
|
| 9. Transportation bottlenecks complicate things
| Cromation wrote:
| Maybe its a stretch but I was doing research into North Korean
| hacks from APT38 and noticed that TSMC had been hit by WannaCry
| in mid/late 2018 shutting down some of their chip manufacturing
| facilities. Would it be possible to believe this snowballed
| into what we have today with a series of bad situations?
| fragmede wrote:
| 8b. Flooding in Malaysia where the factories are located. Some
| may attribute this to ordinary flooding, others may attribute
| it to global warming.
|
| https://techwireasia.com/2021/12/malaysian-floods-devastate-...
| TradingPlaces wrote:
| Also, to answer your other specific questions...
|
| 1. Yes, everyone cancelled orders and idled capacity. Everyone
| was anticipating a deep and long recession until the
| fiscal/monetary bomb of March/April 2020. See #7 above.
|
| 2. The 120nm legacy nodes and similar are right at the center
| of the whole shortage. This has been underinvested for years
| because it has been low demand growth and low margin.
| Automakers are particularly vulnerable, because for years,
| every new feature has gotten its own cheap microcontroller to
| run it. There are now dozens in new cars.
|
| 3. Graphics cards have been affected by crypto miners sucking
| up supply at any cost, and everyone not named "Apple" competing
| for TSM's top end processes.
|
| 4. iPhones don't just come with Apple A-Series chips made on
| TSM's top-end node, but a host of others, some made on legacy
| processes where the shortage is. Likely we are talking about
| some cheap analog power chips or something like that. Apple has
| decided to push as much supply chain problems to iPad as they
| can.
|
| 5. For the vast majority of what automakers want, 7nm is
| overkill. Once there are more high end SoCs running multiple
| systems including self/assisted-driving, that will come into
| play. But that is not where the shortage is concentrated.
|
| 6. Apple was Intel's 4th biggest customer before they left, so
| it has had a small impact, but only at TSM at their top node.
| Samsung has picked up Qualcomm and AMD as a result.
|
| Crazy times in the semi world.
| noveltyaccount wrote:
| What does this mean? "Apple has decided to push as much
| supply chain problems to iPad as they can." Starve iPad so
| everything else can thrive?
| marcusklaas wrote:
| Indeed. I think iPads are their lowest margin product.
| saxonww wrote:
| > 2. The 120nm legacy nodes and similar are right at the
| center of the whole shortage. This has been underinvested for
| years because it has been low demand growth and low margin.
| Automakers are particularly vulnerable, because for years,
| every new feature has gotten its own cheap microcontroller to
| run it. There are now dozens in new cars.
|
| > 5. For the vast majority of what automakers want, 7nm is
| overkill. Once there are more high end SoCs running multiple
| systems including self/assisted-driving, that will come into
| play. But that is not where the shortage is concentrated.
|
| There was a discussion about this a few months ago. It's not
| just that newer nodes are overkill, it's that auto components
| apparently have very long and expensive validation
| requirements, which would be another explanation for why they
| are still depending on these older manufacturing processes.
|
| https://news.ycombinator.com/item?id=28728965
| CyanLite2 wrote:
| Tesla, for the most part, is skipping that validation and
| just shipping cars. The warranty issues from Tesla have
| been notorious, but their business model is to ship cars as
| fast as possible and deal with warranty issues later. They
| were able to side-step much of the chip supply issues by
| either shipping cars without certain features (no
| adjustable seats, no USB-C ports, etc.) and also switching
| to newer 7nm+ parts, like the AMD Ryzen x86 chips that
| they've started shipping in the past few weeks. Their
| direct sales model allows them to easily change the price
| on the website, and so far, they still have unbelievable
| demand.
| csours wrote:
| Disclosure: I work for GM, what follows is solely my own
| opinion and perception of reality.
|
| On #1 also bear in mind that the supply chain is deep and
| complicated. OEM (GM, Toyota, Tesla, Ford etc) orders a
| number of COMPONENT X that contains a chip from a Tier 1
| supplier. Tier 1 supplier order subcomponents from other
| suppliers. (Continue this until you have built a very
| confusing interdependent supply web).
|
| At any level of this, anyone could have (and did) cancel
| their orders in 2020. As in OEMs cancelled some orders, Tier
| 1 suppliers cancelled some orders, Tier X suppliers cancelled
| some orders, etc.
| criticaltinker wrote:
| Also known as the "bullwhip effect":
|
| https://en.m.wikipedia.org/wiki/Bullwhip_effect
| ramses0 wrote:
| And: https://en.wikipedia.org/wiki/Beer_distribution_game
| rossdavidh wrote:
| I was very disappointed that the Beer distribution game,
| as described in the Wikipedia article anyway, is not a
| drinking game.
| PragmaticPulp wrote:
| I would add: Many chips were becoming difficult to source
| _before_ the pandemic hit. The pandemic-related demand and
| supply shock only made it worse.
|
| Source: Spent many weeks fighting supply chain issues and
| leading redesigns in 2018-2019 due to the beginning of the chip
| shortage.
|
| I know the shortage is associated with the pandemic because
| that's when most people started hearing about it, but it was a
| growing problem even before COVID came along.
| TradingPlaces wrote:
| Curious, what were you trying to source, and in what volumes?
| roughly wrote:
| > 3. Supply chains had also all gone to a JIT model to keep
| inventories lower. This was a huge source of efficiencies, but
| made them vulnerable to a demand shock.
|
| I think it's worth emphasizing this - all of the other issues
| you describe are correct, but what's allowing individual
| disruptions to turn into a global crisis is a lack of buffering
| between components of the individual systems. This is a known
| issue with JIT, and in some ways it's factored into the models
| - assuming one bad year in ten, 9 very good years can still be
| more profitable than 10 pretty good years - but it widens the
| possible set of outcomes and allows for these kinds of
| cascading failures, which makes it harder for one institution
| to model or plan around.
| rossdavidh wrote:
| It's also the sort of thing where if you're the first one
| using it, the costs of it are not nearly as large as when the
| whole economy is using it. Your buffer is, in effect, being
| stored at other people's factories. This is logically
| predictable, but was not in fact widely appreciated before
| the current problems, perhaps because this is the first shock
| to come after JIT was almost universally used.
| csimon80 wrote:
| I'm curious, was any of the shortage due to Chinese companies
| preparing for sanctions?
| zerop wrote:
| I am curios to know right reason(s) for this because I hear
| different answers from different people.
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