Steve Clean The Semiconductor Ecosystem – Defined

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The final yr has seen a ton written in regards to the semiconductor trade: chip shortages, the CHIPS Act, our dependence on Taiwan and TSMC, China, and so on.

However regardless of all this speak about chips and semiconductors, few perceive how the trade is structured. I’ve discovered the easiest way to know one thing sophisticated is to diagram it out, step-by-step. So right here’s a fast pictorial tutorial on how the trade works.

The Semiconductor Ecosystem

We’re seeing the digital transformation of every part. Semiconductors – chips that course of digital data — are in virtually every part: computer systems, automobiles, house home equipment, medical tools, and so on. Semiconductor corporations will promote $600 billion price of chips this yr.

Wanting on the determine under, the trade appears fairly easy. Corporations within the semiconductor ecosystem make chips (the triangle on the left) and promote them to corporations and authorities companies (on the correct). These corporations and authorities companies then design the chips into techniques and units (e.g. iPhones, PCs, airplanes, cloud computing, and so on.), and promote them to customers, companies, and governments. The income of merchandise that comprise chips is price tens of trillions of {dollars}.

But, given how giant it’s, the trade stays a thriller to most. Should you do consider the semiconductor trade in any respect, you could image staff in bunny fits in a fab clear room (the chip manufacturing unit) holding a 12” wafer. But it’s a enterprise that manipulates supplies an atom at a time and its factories value 10s of billions of {dollars} to construct. (By the best way, that wafer has two trillion transistors on it.)

Should you had been in a position to look inside the straightforward triangle representing the semiconductor trade, as a substitute of a single firm making chips, you’ll discover an trade with a whole bunch of corporations, all depending on one another. Taken as a complete it’s fairly overwhelming, so let’s describe one a part of the ecosystem at a time. (Warning – it is a simplified view of a really complicated trade.)

Semiconductor Business Segments

The semiconductor trade has seven various kinds of corporations. Every of those distinct trade segments feeds its sources up the worth chain to the subsequent till lastly a chip manufacturing unit (a “Fab”) has all of the designs, tools, and supplies essential to manufacture a chip. Taken from the underside up these semiconductor trade segments are:

Chip Mental Property (IP) Cores
Digital Design Automation (EDA) Instruments
Specialised Supplies
Wafer Fab Gear (WFE)
“Fabless” Chip Corporations
Built-in Gadget Producers (IDMs)
Chip Foundries
Outsourced Semiconductor Meeting and Check (OSAT)

The next sections under present extra element about every of those eight semiconductor trade segments.

Chip Mental Property (IP) Cores

The design of a chip could also be owned by a single firm, or…
Some corporations license their chip designs – as software program constructing blocks, referred to as IP Cores – for large use
There are over 150 corporations that promote chip IP Cores
For instance, Apple licenses IP Cores from ARM as a constructing block of their microprocessors of their iPhones and Computer systems

Digital Design Automation (EDA) Instruments

Engineers design chips (including their very own designs on prime of any IP cores they’ve purchased) utilizing specialised Digital Design Automation (EDA) software program
The trade is dominated by three U.S. distributors – Cadence, Mentor (now a part of Siemens) and Synopsys
It takes a big engineering group utilizing these EDA instruments 2-3 years to design a fancy logic chip like a microprocessor used inside a telephone, laptop or server. (See the determine of the design course of under.)

Right now, as logic chips proceed to develop into extra complicated, all Digital Design Automation corporations are starting to insert Synthetic Intelligence aids to automate and pace up the method

Specialised Supplies and Chemical substances

To date our chip continues to be in software program. However to show it into one thing tangible we’re going to must bodily produce it in a chip manufacturing unit referred to as a “fab.” The factories that make chips want to purchase specialised supplies and chemical substances:

Silicon wafers – and to make these they want crystal rising furnaces
Over 100 Gases are used – bulk gases (oxygen, nitrogen, carbon dioxide, hydrogen, argon, helium), and different unique/poisonous gases (fluorine, nitrogen trifluoride, arsine, phosphine, boron trifluoride, diborane, silane, and the record goes on…)
Fluids (photoresists, prime coats, CMP slurries)
Photomasks
Wafer dealing with tools, dicing
RF Mills

Wafer Fab Gear (WFE) Make the Chips

These machines bodily manufacture the chips
5 corporations dominate the trade – Utilized Supplies, KLA, LAM, Tokyo Electron and ASML
These are a number of the most complex (and costly) machines on Earth. They take a slice of an ingot of silicon and manipulate its atoms on and under its floor
We’ll clarify how these machines are used a bit afterward

“Fabless” Chip Corporations

Programs corporations (Apple, Qualcomm, Nvidia, Amazon, Fb, and so on.) that beforehand used off-the-shelf chips now design their very own chips.
They create chip designs (utilizing IP Cores and their very own designs) and ship the designs to “foundries” which have “fabs” that manufacture them
They might use the chips solely in their very own units e.g. Apple, Google, Amazon ….
Or they might promote the chips to everybody e.g. AMD, Nvidia, Qualcomm, Broadcom…
They don’t personal Wafer Fab Gear or use specialised supplies or chemical substances
They do use Chip IP and Digital Design Software program to design the chips

Built-in Gadget Producers (IDMs)

Built-in Gadget Producers (IDMs) design, manufacture (in their very own fabs), and promote their very own chips
- They don’t make chips for different corporations (that is altering quickly – see right here.)
- There are three classes of IDMs– Reminiscence (e.g. Micron, SK Hynix), Logic (e.g. Intel), Analog (TI, Analog Units)
They’ve their very own “fabs” however might also use foundries
- They use Chip IP and Digital Design Software program to design their chips
- They purchase Wafer Fab Gear and use specialised supplies and chemical substances
The typical value of taping out a brand new modern chip (3nm) is now $500 million

Chip Foundries

Foundries make chips for others of their “fabs”
They purchase and combine tools from quite a lot of producers
- Wafer Fab Gear and specialised supplies and chemical substances
They design distinctive processes utilizing this tools to make the chips
However they don’t design chips
TSMC in Taiwan is the chief in logic, Samsung is second
Different fabs focus on making chips for analog, energy, rf, shows, safe navy, and so on.
It prices $20 billon to construct a brand new era chip (3nm) fabrication plant

Fabs

Fabs are quick for fabrication crops – the manufacturing unit that makes chips
Built-in Gadget Producers (IDMs) and Foundries each have fabs. The one distinction is whether or not they make chips for others to make use of or promote or make them for themselves to promote.
Consider a Fab as analogous to a ebook printing plant (see determine under)

Simply as an writer writes a ebook utilizing a phrase processor, an engineer designs a chip utilizing digital design automation instruments
An writer contracts with a writer who specializes of their style after which sends the textual content to a printing plant. An engineer selects a fab acceptable for his or her sort of chip (reminiscence, logic, RF, analog)
The printing plant buys paper and ink. A fab buys uncooked supplies; silicon, chemical substances, gases
The printing plant buys printing equipment, presses, binders, trimmers. The fab buys wafer fab tools, etchers, deposition, lithography, testers, packaging
The printing course of for a ebook makes use of offset lithography, filming, stripping, blueprints, plate making, binding and trimming. Chips are manufactured in a sophisticated course of manipulating atoms utilizing etchers, deposition, lithography. Consider it as an atomic degree offset printing. The wafers are then minimize up and the chips are packaged
The plant seems hundreds of thousands of copies of the identical ebook. The plant seems hundreds of thousands of copies of the identical chip

Whereas this sounds easy, it’s not. Chips are in all probability essentially the most sophisticated merchandise ever manufactured. The diagram under is a simplified model of the 1000+ steps it takes to make a chip.

Outsourced Semiconductor Meeting and Check (OSAT)

Corporations that package deal and take a look at chips made by foundries and IDMs
OSAT corporations take the wafer made by foundries, cube (minimize) them up into particular person chips, take a look at them after which package deal them and ship them to the shopper

Fab Points

As chips have develop into denser (with trillions of transistors on a single wafer) the price of constructing fabs have skyrocketed – now >$10 billion for one chip manufacturing unit
One cause is that the price of the tools wanted to make the chips has skyrocketed
- Only one superior lithography machine from ASML, a Dutch firm, prices $150 million
- There are ~500+ machines in a fab (not all as costly as ASML)
- The fab constructing is extremely complicated. The clear room the place the chips are made is simply the tip of the iceberg of a fancy set of plumbing feeding gases, energy, liquids all on the proper time and temperature into the wafer fab tools
The multi-billion-dollar value of staying at the forefront has meant most corporations have dropped out. In 2001 there have been 17 corporations making essentially the most superior chips. Right now there are solely two – Samsung in Korea and TSMC in Taiwan.
- On condition that China believes Taiwan is a province of China this may very well be problematic for the West.

What’s Subsequent – Expertise

It’s getting a lot tougher to construct chips which can be denser, sooner, and use much less energy, so what’s subsequent?

As a substitute of constructing a single processor do all of the work, logic chip designers have put a number of specialised processors within a chip
Reminiscence chips are actually made denser by stacking them 100+ layers excessive
As chips are getting extra complicated to design, which implies bigger design groups, and longer time to market, Digital Design Automation corporations are embedding synthetic intelligence to automate elements of the design course of
Wafer tools producers are designing new tools to assist fabs make chips with decrease energy, higher efficiency, optimum area-to-cost, and sooner time to market

What’s Subsequent – Enterprise

The enterprise mannequin of Built-in Gadget Producers (IDMs) like Intel is quickly altering. Up to now there was an enormous aggressive benefit in being vertically built-in i.e. having your individual design instruments and fabs. Right now, it’s a drawback.

Foundries have economies of scale and standardization. Slightly than having to invent all of it themselves, they will make the most of the whole stack of innovation within the ecosystem. And simply deal with manufacturing
AMD has confirmed that it’s potential to shift from an IDM to a fabless foundry mannequin. Intel is attempting. They will use TSMC as a foundry for their very own chips in addition to arrange their very own foundry

What’s Subsequent – Geopolitics

Controlling superior chip manufacturing within the twenty first century might properly show to be like controlling the oil provide within the twentieth. The nation that controls this manufacturing can throttle the navy and financial energy of others.

Guaranteeing a gentle provide of chips has develop into a nationwide precedence. (China’s largest import by $’s are semiconductors – bigger than oil)
Right now, each the U.S. and China are quickly attempting to decouple their semiconductor ecosystems from one another; China is pouring $100+ billion of presidency incentives in constructing Chinese language fabs, whereas concurrently attempting to create indigenous provides of wafer fab tools and digital design automation software program
Over the previous couple of many years the U.S. moved most of its fabs to Asia. Right now we’re incentivizing bringing fabs and chip manufacturing again to the U.S.

An trade that beforehand was solely of curiosity to technologists is now one of many largest items in nice energy competitors.