Wednesday, November 30, 2022
HomeStartupSteve Clean The Semiconductor Ecosystem – Defined

Steve Clean The Semiconductor Ecosystem – Defined

The final 12 months has seen a ton written in regards to the semiconductor business: 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 business is structured. I’ve discovered the easiest way to know one thing difficult is to diagram it out, step-by-step. So right here’s a fast pictorial tutorial on how the business works.

The Semiconductor Ecosystem

We’re seeing the digital transformation of all the pieces. Semiconductors – chips that course of digital data — are in nearly all the pieces: computer systems, vehicles, dwelling home equipment, medical gear, and so on. Semiconductor corporations will promote $600 billion value of chips this 12 months.

Wanting on the determine beneath, the business 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 precise). These corporations and authorities companies then design the chips into techniques and gadgets (e.g. iPhones, PCs, airplanes, cloud computing, and so on.), and promote them to shoppers, companies, and governments. The income of merchandise that comprise chips is value tens of trillions of {dollars}.

But, given how massive it’s, the business stays a thriller to most.  When you do consider the semiconductor business in any respect, chances are you’ll image employees in bunny fits in a fab clear room (the chip manufacturing facility) 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 way in which, that wafer has two trillion transistors on it.)

When you had been in a position to look inside the straightforward triangle representing the semiconductor business, as a substitute of a single firm making chips, you’ll discover an business with a whole lot 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 advanced business.)

Semiconductor Trade Segments

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

  1. Chip Mental Property (IP) Cores
  2. Digital Design Automation (EDA) Instruments
  3. Specialised Supplies
  4. Wafer Fab Gear (WFE)
  5. “Fabless” Chip Corporations
  6. Built-in System Producers (IDMs)
  7. Chip Foundries

The next sections beneath present extra element about every of those seven semiconductor business 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 broad 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 high of any IP cores they’ve purchased) utilizing specialised Digital Design Automation (EDA) software program
  • The business is dominated by three U.S. distributors – Cadence, Mentor (now a part of Siemens) and Synopsys
  • It takes a big engineering staff utilizing these EDA instruments 2-3 years to design a fancy logic chip like a microprocessor used inside a telephone, pc or server. (See the determine of the design course of beneath.)

  • Immediately, as logic chips proceed to grow to be extra advanced, all Digital Design Automation corporations are starting to insert Synthetic Intelligence aids to automate and pace up the method

Specialised Supplies and Chemical compounds

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

  • 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 listing goes on…)
  • Fluids (photoresists, high coats, CMP slurries)
  • Photomasks
  • Wafer dealing with gear, dicing
  • RF Turbines

Wafer Fab Gear (WFE) Make the Chips

  • These machines bodily manufacture the chips
  • 5 corporations dominate the business – 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 beneath its floor
  • We’ll clarify how these machines are used a bit in a while

 “Fabless” Chip Corporations

  • Methods 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 could use the chips completely in their very own gadgets e.g. Apple, Google, Amazon ….
  • Or they could promote the chips to everybody e.g. AMD, Nvidia, Qualcomm, Broadcom…
  • They don’t personal Wafer Fab Gear or use specialised supplies or chemical compounds
  • They do use Chip IP and Digital Design Software program to design the chips

Built-in System Producers (IDMs)

  • Built-in System 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 compounds
  • The common 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 gear from quite a lot of producers
    • Wafer Fab Gear and specialised supplies and chemical compounds
  • They design distinctive processes utilizing this gear 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 technology chip (3nm) fabrication plant


  • Fabs are quick for fabrication vegetation – the manufacturing facility that makes chips
  • Built-in System 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 e book printing plant (see determine beneath)
  1. Simply as an writer writes a e book utilizing a phrase processor, an engineer designs a chip utilizing digital design automation instruments
  2. 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 applicable for his or her kind of chip (reminiscence, logic, RF, analog)
  3. The printing plant buys paper and ink. A fab buys uncooked supplies; silicon, chemical compounds, gases
  4. The printing plant buys printing equipment, presses, binders, trimmers. The fab buys wafer fab gear, etchers, deposition, lithography, testers, packaging
  5. The printing course of for a e book makes use of offset lithography, filming, stripping, blueprints, plate making, binding and trimming. Chips are manufactured in an advanced course of manipulating atoms utilizing etchers, deposition, lithography. Consider it as an atomic stage offset printing. The wafers are then lower up and the chips are packaged
  6. The plant seems thousands and thousands of copies of the identical e book. The plant seems thousands and thousands of copies of the identical chip

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

Fab Points

  • As chips have grow to be denser (with trillions of transistors on a single wafer) the price of constructing fabs have skyrocketed – now >$10 billion for one chip manufacturing facility
  • One cause is that the price of the gear 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 advanced. 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 gear
  • The multi-billion-dollar value of staying at the vanguard has meant most corporations have dropped out. In 2001 there have been 17 corporations making probably the most superior chips.  Immediately there are solely two – Samsung in Korea and TSMC in Taiwan.
    • Provided that China believes Taiwan is a province of China this might be problematic for the West.

What’s Subsequent – Expertise

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

  • As an alternative of constructing a single processor do all of the work, logic chip designers have put a number of specialised processors inside a chip
  • Reminiscence chips at the moment are made denser by stacking them 100+ layers excessive
  • As chips are getting extra advanced to design, which implies bigger design groups, and longer time to market, Digital Design Automation corporations are embedding synthetic intelligence to automate components of the design course of
  • Wafer gear producers are designing new gear 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 System Producers (IDMs) like Intel is quickly altering. Previously there was an enormous aggressive benefit in being vertically built-in i.e. having your individual design instruments and fabs. Immediately, it’s an obstacle.

  • Foundries have economies of scale and standardization. Reasonably than having to invent all of it themselves, they’ll make the most of the complete stack of innovation within the ecosystem. And simply concentrate on manufacturing
  • AMD has confirmed that it’s doable 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 nicely 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 grow to be a nationwide precedence. (China’s largest import by $’s are semiconductors – bigger than oil)
  • Immediately, 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 gear and digital design automation software program
  • Over the previous couple of many years the U.S. moved most of its fabs to Asia. Immediately we’re incentivizing bringing fabs and chip manufacturing again to the U.S.

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



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