> "Automotive semiconductors will continue to be a limiting constraint on the automotive market through the first half of 2022, but barring any unforeseen shutdowns or semiconductor manufacturing issues, supply should gradually improve through the second half of the year," she said.
Probably a good idea to wait til the end of the year to buy a new car then. The market is simply and truly insane right now. The best price you can get for a used car is now the MSRP of the new version. And the best price you can get for a new car is $5-6k over MSRP. It's just insane. If you're spending $40k on a RAV4 or CRV, you might as well just spend that same $40k and get a Tesla.
What has happened with all those cars that weren't sold during 2020 and 2021 due to pandemic? I remember seeing photos of huge parking lots filled with new cars? Did they all get sold in the end?
My recollection is that only happened during the first month or two of the pandemic. When everyone thought we were surely plunging into a recession or depression. The stock market dropped quite a bit during that same period.
After the initial few months, it all reversed. I don't recall ever seeing any stories like the one you linked past 2020.
I know that here in Australia its damned hard to get a car.
5 months ago I placed an order, would have been happy with a 2021 model but they don't have any... so I'm stuck waiting till October THIS YEAR... over a years wait. for one of the most popular cars on the Australian market.
Looks like a similar situation to car sales in Eastern Europe in the 1980s. You had to wait for years to be able to buy a new one, even if it was the popular model of the day. Some people made money by registering to the queue and selling their spot.
Trabant, Wartburg, Moskvitch, Zastava, Lada, Skoda,... I guess all of them had a long waiting lists. I don't know if it was a joke but I've heard that people would leave their spots in last will and testimony to their kids.
Not sure about others but in the '80s nobody waited for Zastava. All over the country foreign cars were "assembled" (Opel, Renault, Citroen, WV Golf...) so while Zastava priduced cheaper cars they weren't the only game in the town and they kinda produced enough to satisfy demand (actually I believe that they would prefered that demand for their cars was even larger). Not sure about 60's and 70's though.
It might be fairly easy to get a second-hand hail-damaged-but-mechanically-fine bargain. The flipside of that is the potential insurance hell invited by that situation.
Can you say what you are getting? I got a RAV4 which I ordered in Nov 2020 and collected in late Mar 2021. Not long after the wait list blew out to 8 months.
If I remember correctly rental businesses were offloading cars at a crazy rate to survive the pandemic, but then once people were travelling again they needed to buy them back up at a crazy rate.
> The market is simply and truly insane right now.
It's ridiculous. I was very fortunate to get a CPO near the end of 2019. Whenever I take it in for service, I get both a text and an in-person request to have my car's value appraised.
They're offering 2-5K over carfax value, no questions asked -- which is currently more than I paid for the car 3 years ago! Frankly, if I lived in a more walkable/bikable area, I might do it.
I just got a new car at msrp in Canada so it is possible, a Toyota. However there was no bargaining and was more “call everyone and find the dealer with one coming in soon and grab it”
It's interesting that you managed to get a Toyota. Toyota until very late on wasn't affected by the chip shortage [0]. Toyota practically invented lean manufacturing and are the only business that seems to do it right, I guess it's because they didn't need to bring in a bunch of lean consultants, that either miss the nuance or can't effectively communicate that nuance.
Lean manufacturing and JIT are like DRY in software development. Those that are just learning think don't repeat yourself is a rule, "DRY means DRY" whereas experts have learnt that "DRY means DRY except in all of those situations where it is better to repeat yourself".
Toyota knew prior to the pandemic that their chip supply chain was vulnerable, being filled with single points of failure, and they stocked accordingly. But those stocks were only going to last so long, and, thanks in part to the panic buying of the other car manufacturers, Toyota is also facing a shortage.
The above is a really long winded way to say, I'd be interested to know if MSRP Toyota's will remain available in the near term, mostly because I'm in the market for a new car, I'll put the local Toyota dealers at the top of the list.
I know they went up a little over the last couple years, but they (at least tacomas) hold their price really well, and they are generally solid and will last. Driven Toyotas all my life and 100% recommend them. My only advice is to just call all your local dealers and find one with a vehicle already on its way to claim
Also in Canada. We ordered a new Rav4 back in early October and just got word that it's 'scheduled' to arrive in the middle of April. When we first placed the order it was thought that we'd have it by Christmas/New Years. Definitely major delays and shortages but the MSRP doesn't seem to have been affected (but time will tell when we actually go to sign the paperwork)
I called about a dozen dealers to find an unclaimed one that was already enroute to the dealer. From what I understand you do not go onto “Toyota’s” list you go onto the dealers list, and they will not send you elsewhere, thou a really good/honest dealer can query what dealers are getting what. Took me about a week to find one, and another week to pickup my Tacoma, however I did have to spend a few hours each way on a ferry. I’ve been told “if you don’t have a vin you don’t have a date” but not sure how true that is.
Tesla's been growing like crazy, but the demand is crazier still. I ordered a Model Y in September. It's currently set to arrive in March, in the mean time the price of a new one has gone up almost 10% since I ordered.
I was at a honda dealer last friday and they didn't have a single new car on the lot. I person I knew there told me they sold every car in their allotment before it shipped and at a hefty markup. They haven't had an unsold new car hit the lot in months. There were selling used cars for more than they sold for when new. I was on the edge of buying a new Camry in the summer of 2019 and decided to wait one more year. That didn't work out very well.
There are a several factors that conspire to make the shortage worse:
- These legacy chips fabbed at legacy nodes are made with legacy equipment. In many cases, that equipment is a) fully depreciated and b) no longer available. Yes, most chips can be made with new equipment, but the profits with a new tool set are not going to justify the expense. You wouldn't buy a new $8 million CVD tool to make a 180 nm microcontroller that might sell for $2.
- Many chips are fabbed at 1 place only. The chip company owns the IP and has a defacto monopoly on the features of that chip, or even class of chips. If that fab is shut down, no more are being produced and customers have to buy up what brokers can scrounge. The more warehouses get picked out, the higher the prices go. In one extreme example, a chip made at Infineon's Kulim fab in Malaysia, that sold for $0.47, was purchased for $100 @ by (ironically) a chip equipment company.
- Hoarding has made the issue far worse. Companies are instructing buyers to order more than 1 year ahead, and seeing lead times exceed 1 year as well. The more these lead times extend, the farther into the future buyers extend their horizon and lead times just keep rolling.
- It may actually be the case that organic demand growth is not the main problem. More likely, it was the successful (and therefore vulnerable) just-in-time supply chain that collapsed as soon as COVID interrupted the choreographed flow of material.
Paging a semiconductor engineer. Isn't it not necessarily possible to do die shrinks and get drop-in compatibility, particularly for Q rated automotive chips? Moreover, some of these chips eat 5 volts by design and I don't think 28nm or 14nm or 7nm will provide enough resistance for that. Plus, some have pmic or internal power mosfets that are specific to various processes.
It's almost never possible to do a function-compatible die shrink for anything that needs to work over a large voltage and/or temperature range. Many automotive chips operate at 80V or more, 5V and 12V parts are ubiquitous, and indeed lots need bulk area to be able to switch large currents. Making them on small processes is not only an enormous design effort where it's possible at all, it also doesn't make sense because there's still way more capacity on larger processes than on smaller ones, and the only way small processes win is by packing so many dies on a wafer that they can get away with their terrible per-wafer cost and awfully bad defect rate.
Think of it this way. You could probably design something logic-compatible, voltage-compatible, speed-compatible... but a chip is fundamentally an analog device with sensitivity. You can't change the mask, let alone the process, and still have the same device. Something will be different. Certification is the process of saying the difference is OK.
Right right. I see a lot of pmic parts, newer MCUs, 3.3V and 5V tolerant parts, as well as various FPGAs out of stock. All of these are fabbed on >40nm or more, sometimes much more.
100% on the hoarding thing. Everyone I know of is making larger buys than ever, enough for years or production if not a products lifetime worth. This has t have an impact on the available supplies.
While you could use newspaper as a substitute for toilet a paper some company has nothing as as a replacement. New part means costly re-certification of the whole product. No parts means one is out of business. So buying everything that is available on the market looks like very good decision from business perspective.
If you're that dependent on components that there is no replacement for, then perhaps buy enough stock to last you through a redesign and recertification is in order. Having a contingency plan for such scenarios seems like a no brainer.
There are sooo many no brainers, that bureaucratic monstrosities also known as Big Corps just can’t get right. I work for one and more than half of the daily problems are home made and were simple no brainers elsewhere.
I got all my electronic parts on time for my private development and first small manufacturing run. It is indeed no brainer.
I'm pretty sure that whatever business you work for has no planned replacement for their local power company ceasing to provide electricity.
This doesn't mean they should go out and build their own gas peaker plant.
We live in a society, and no man is an island. You can't control everything you depend on. Sure, you can control some things you depend on, but that's a long, and expensive rabbit hole. Hoarding twenty years of canned food and seventy thousand rounds of ammuniton is all well and good, unless doing so puts you in a situation where you can't pay rent.
I don’t know that massive datacenters are truly a good investment for my employer, but at least we have several zones in two regions in case of power/network/natural disaster issues.
Nice straw man. But I'll go with it for no other reason that I hope no one believes in that absurdity as an argument against planning for component supply issues. Issues that businesses have experienced time and time again since we began mass producing transistors.
That is because it's a utility that source power from several producers. The risk of no power what so ever for a prolonged time is not something to even be considered. Should that happen, society as we know it is probably at risk and my job is no longer important at all. Oh, and someone actually do plan for intermittent power delivery failure including having two different outside sources for power, a battery backup and diesel generators, data centers come to mind.
Just like toilet paper, hoarding is just game theory in action. If you don't take part in the madness, you're at a disadvantage as the "sucker".
For toilet paper, the cost of that disadvantage is having to wash your backside with the shower head and the benefit is the warm fuzzies of doing the right thing. For a business with no chips, it could be an existential threat. Warm fuzzies don't pay salaries.
The only way to avoid it is to have every company in the world to agree to not hoard, and harshly punish "defectors" somehow. Or have the supplier strictly ration supply, which doesn't work if the supply is coming from existing stock in the hands of distributors unless they also cooperate (or collude, depending on how you look at it).
None of that is remotely possible in the global industrial system. JIT is often blamed, but to avoid it, trillions of dollars worth of material would need to be hoarded constantly, which is its own problem: storage costs money, logistics and space, and its a substantial risk if you end up not needing it or the goods expire or become obsolete on a shelf and overproduction is a waste of resources. Going bust because you hoarded 5 million components that you never actually needed and couldn't offload is still going bust.
What is really needed is expose the JIT pipeline to upstream. We are buying 10,000 parts but need 100 per week, figure out what works with your production pipeline to deliver at that rate or above.
Issue is that people will skew the numbers reported upstream. This way they can affect what their 'fair share' would be. This tends to devolve into everyone mis-reporting numbers in the same direction, causing the reported numbers to be useless upstream.
The other way to avoid it is to have the government step in and impose rationing, as done in times of war... at least, back when war meant the common American citizen was actually expected to sacrifice for the greater effort.
If the semiconductor shortage continues to worsen, I think we'll start to see calls for this type of intervention. One step that could be taken immediately is to prohibit sales from the distribution channel to overseas brokers, which are currently resulting in stupidity like $800 FPGAs that used to cost $20. But it's also true that this sort of market manipulation has downsides of its own.
I honestly don't know what the right thing to do here is. But I do know the industry had best unfuck itself, and that right soon, or this situation is going to have major consequences in everyday life.
You reading the same page that the GP linked? It says YoY car prices are up 36%... which is enormous.
That's got a huge ripple effect across the market, as best as I can tell, because it pushes people to buy older/lower cost cars across the board. Either that or they continue driving their old/potentially unsafe car even longer.
For most of the world, bidets are a thing an it is a curious thing as to why the toliet paper industry is so powerful in the west.
I prefer the bidet, and seeing normal reams of toliet paper cost now $30 for the "mega" value pack, I'm amused at the production of something, the trucking of something, the retailing of something that is ultimately discarded . The whole thinking and execution of it is backwards.
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It is remotely possible, the governments can set immediate import/export restrictions and also guide manufacturing as they did during Covid for incubators and such. While it won't be effective, it can either help the stock/supply rebound, or throw into more fear...
> For most of the world, bidets are a thing an it is a curious thing as to why the toliet paper industry is so powerful in the west.
At least in America, my Grandmother's generation (great depression) grew up with outhouses. When homes were renovated to add an indoor bathroom, they were done on the cheap.
Heck pre-pandemic the idea of a bidet was crazy, I had to work hard to find one that was reliable and at a good price. Now they are super available and advertised all over the place, but when I went to get one installed 10 years ago it was not easy just finding a reliable, cold water, model! Warm water models were obscenely priced in the US.
It was likely a chicken/egg thing. Consumers didn't know about them, so no one made them for the US market, which meant the few that did exist cost an arm and a leg, so no one bothered to buy them so no one bothered to mass produce them.
On top of that, when I inquired about getting an outlet installed behind my toilet for an electric bidet, my plumber and electrician thought I was crazy!
Same question in 2021, "sure we do that all the time".
Same here, they all come from the Far East, though they have at least started fitting the right plugs rather than a deathtrap adaptor.
Pretty sure mine didn't make them much money since they didn't include a pair of stainless steel mounting brackets, and they FedExed them to me. From Korea. In a box 100 times the necessary volume.
Here in the US, Home Depot now sells an affordable heated bidet, under $200 IIRC. Doesn't have all the features of nicer models, but it gets the job done and it is available all over the place.
The best case would be somebody keeping a big stockpile and selling from it at a premium. “Anti-gouging” laws prevent that for toilet paper, so each of us has to hoard it instead.
The thing with toiler paper is that we never actually ran out of it. Only the last part of the chain did (the shops). Toilet paper just takes a lot of space and sells for relatively little so shops in general do not want to stock much of it.
Basically even during the worst of the panic it only ran out for the duration it takes for a truck to be driven to the manufacturers warehouse, load it, drive to the shop and unload it.
With semiconductors we are actually running out of stock/capacity at the very beginning of the chain instead of last mile delivery.
Hoarding is just client side caching. Once the initial shock wears off it’s actually a benefit and prevents future shocks. Keeping a stock of critical components on hand keeps business from needing to place emergency orders.
> Many chips are fabbed at 1 place only. The chip company owns the IP and has a defacto monopoly on the features of that chip, or even class of chips. If that fab is shut down, no more are being produced and customers have to buy up what brokers can scrounge. The more warehouses get picked out, the higher the prices go. In one extreme example, a chip made at Infineon's Kulim fab in Malaysia, that sold for $0.47, was purchased for $100 @ by (ironically) a chip equipment company.
Perhaps this is an opportunity for FOSS silicon? Everybody understands that currently FOSS tooling/PDK's/etc isn't up to the task of creating a cutting edge CPU on a leading edge fab process, which is the usual retort when somebody brings up FOSS silicon.
It's the tooling you're making that chip with, not the chip design.
You can buy used equipment from a few nodes back for basically scrap value, but building that machine today would cost more than building it when it was new.
You'd need to bootstrap a whole "old nodes" industry that does nothing but build obsolete machines to build obsolete chips once all the second/third/forth hand old node machines are gone.
In short: we've climbed the ladder and set it on fire behind us.
I think in retrospect you can use the former eastern bloc as a metric for how this can go. They built a whole semiconductor industry from scratch and were never financially competitive. Parts were significantly more expensive and generally less reliable than the western made ones. You’d be doing the same as them but with less budget and fewer customers.
The risk really is entirely that we single source parts.
A few years back I designed something using only generic multi sourced parts and it was large and inferior. So there’s trade offs everywhere.
If you, for instance, only 3D printed plastic parts you could find in stores, you'd also find that your prints were generally significantly more expensive and less reliable. The upside is the ability to get anything you want at any time, as long as it's sufficiently far from the cutting edge, whether production setup for it exists or not.
The point here would not be to replace traditional manufacturing but to augment it by acting as a backstop for total supply failure.
That's true, but given the original design collateral it would be easier to design a version that could be manufactured on present-day processes by re-doing the layout and timing than by starting from scratch.
Still not free though. I think people underestimate how niche all the skills are here.
Perhaps (re)bootstrapping the old nodes industry is exactly what's needed?
So traditionally, the chip industry worked such that that the high-end products moved first to a new process node, and less demanding equipment was fabbed on equipment a couple of generations old before that equipment was thrown on the scrap heap. Rinse and repeat, everybody was moving towards smaller and smaller nodes, just that some could trail the leaders by a few years.
But it seems these days the world is different, in that the cost per transistor has actually been going up for the leading edge processes, and power consumption has remained roughly flat. So for anything that doesn't need the latest gen process, there's really no upside to moving. Depending on who you ask, it seems the cheapest cost per transistor is somewhere in the 20-40nm ballpark. If so, it would imply there would be a long-time demand for these process nodes, and there is a need for an industry to supply tooling for these nodes, once the existing crop of second-hand equipment (left over when the leading edge users moved on to smaller nodes) is in need of replacement.
> Isn't this just because of overall chip shortage?
AFAIU, no. The basic problem, again AFAIU and I'm not an expert on this topic so take with a grain of salt, is that while the marginal cost of each transistor might still be less than at the previous generation, the R&D and capital costs have grown so immense that once you amortize those costs over the stuff produced for the lifetime of that process generation you end up with a higher per transistor cost compared to the previous generation.
> Any source for this? Anything I've saw contradict that.
Just search the web for articles about the breakdown of Dennard scaling, plenty of stuff to read on the topic. Even wikipedia mentions it https://en.wikipedia.org/wiki/Dennard_scaling
The cost per transistor is going up because the latest nodes require too many process steps. An older node might require 90 steps, the lastest nodes require 900 steps. Every step requires a "tool" and every step has a chance of yield loss. The transistor is getting harder to make faster then it is getting smaller.
The new EUV steppers with soft x-ray wavelength can do in one shot what took 4 shots with 193nm ArF tools. And for each shot you have to apply, bake, develop inspect and strip the resist. This was supposed to help but the EUV steppers are so expensive it is kind of a wash price wise.
> Depending on who you ask, it seems the cheapest cost per transistor is somewhere in the 20-40nm ballpark.
While correct, this is only true because of all the old infrastructure sitting out there that has been fully depreciated but still works fine. It used to be the latest and greatest thing and paid for itself back then. Nowadays it is just sitting on the asset sheet of a bunch of companies who are all going "if it still makes money, keep running it!".
The paradox of this all is what you identified: "if so, it would imply there would be a long-time demand for these process nodes". No one is going to invest in developing old nodes because the ROI isn't there. The demand is, but there probably isn't much cost differential between building a nearly leading edge fab and a 60nm fab.
If you could sell a turnkey 60nm fab right now that was delivered and setup quickly the demand would be insane. But no one can because fabs have never really been turnkey. When you factor in the cost to develop all of this, the capital you'd have tied up, etc. the ROI suddenly fails to compete with interest bearing bonds I'd guess.
> In short: we've climbed the ladder and set it on fire behind us.
This is a really good description of what JIT does when no one considers economic reflexivity. The time duration for problems to surface is long enough that no one can "do the right thing" and last past next quarter's or next year's financial performance assessment (whether internally or by financial analysts). So everyone participates in a game theoretic sensible fashion, and gets burned either an SKU at a time as single source or limited source manufacturers burn out their legacy equipment, or all at once with black swans like this pandemic.
I'm certain no one who modeled JIT in business school research has worked out if it was more cash efficient to put up with and pay the piper when (not if) the disruptions happen, or to JIT only specific items that meet supply robustness criteria. The purchasing people mania for single sourcing plays into this dynamic. Supply chain management is enormously complex, but I fear they're still way behind the eight ball as they find out it gets fractally more complex than they had bargained for when they set out to cost rationalize it all.
This is worrying really. Back when I used to work as an engineer consuming parts it wasn’t unusual for some parts to disappear entirely with no notice. This usually turned out to be some legacy piece of equipment that broke at the manufacturer for which there was no replacement. There was no replacement because the whole manufacturer had been limping along with 1980s equipment.
One of the parts was devastatingly expensive to substitute. It was a very low noise JFET which was being used as a high impedance amplifier buffer. We had to evaluate ten different parts from other manufacturers then hand select a suitable part with the right curve and noise figure parameters.
To get 10 usable parts meant we had to buy 10,000 parts in, buy $40k worth of kit (HP FTW) and spend a month doing it. The BOM cost went to $6000 a FET from $50. Fortunately being in defence sector they just burned the cash while we redesigned the entire front end of the device which took months of qualification and test.
Automating this test process actually started my software career.
Edit: also I’ve got to stab Six Sigma and other process methodologies in the face here. They pushed elimination of waste and metrics that drove that to the front of business success. This meant eventually relying entirely on just in time manufacturing and supply chains. Coming from a defence background this was a disaster from the old days of buying in stock for the entire lifetime of the devices in the field.
I also had defense background and the the idea of buying enough components for lifetime of the device comes up regularly as part of the project obsolescence process. There are teams that would look at the supply of materials, and if one was going obsolete/limited availability, we would buy up as many as we need for the project plus safety margin and just store them.
Agreed on Six Sigma. I also worked at a major defense contractor for awhile and Six Sigma was a blight on us all. Not only did it cause the problems you listed but we also wasted so many hours from required "quality meetings" every week.
Oh god. Kill me with a spoon. I’d buried those meetings in a secret space in my mind along with all the other horrible things that happened in my life.
I picked up a book on it many years ago. The first chapter talked about needing to attack anyone that believe in six sigma, as in make an example out of them.
Realized it was a cult mentality and avoided working for anyplace that used it.
> One of the parts was devastatingly expensive to substitute. It was a very low noise JFET which was being used as a high impedance amplifier buffer. We had to evaluate ten different parts from other manufacturers then hand select a suitable part with the right curve and noise figure parameters.
This is relatable even to hobbyist electronics tinkerers, at least to those dabbling in low-noise measurements.
Wouldn’t it make a lot more sense to have ICs that aren’t space-constrained be modular in these applications?
In a phone or laptop, obviously it would take too much physical space to have such components be changeable, but for vehicles and machinery couldn’t you regulate that common boards/chips/memory be easily accessible and interchangeable to a standard? (Kind of like how you have a fuse panel for your car or a fuse box for your house).
I get that this wouldn’t solve this issue, but it would certainly help by making parts that are susceptible to supply shocks be easily recoverable and reusable.
They’re pretty much doing this with MCUs and power at the moment apparently. Designs are moving to modular so you can respin a carrier board for the available stock rapidly rather than have to respin the entire product and stock.
Not really. You can't reliably make large features with a small process node, and because the smaller processes are dramatically slower and more expensive and have lower yield, unless you can counter all that with more dies per wafer you end up with a whole lot of defective parts at enormous expense. The bigger the die, the higher the chance of a defect landing on it, and making it useless. Also small feature processes have much lower capacity than larger feature processes, so even if you were able to switch there wouldn't be nearly enough wafer capacity. The fact it's 4-5 orders of magnitude more expensive doesn't help either.
Because (very very roughly) the way you make small features is by scaling down your projection area to a tiny size and then stepping it across the wafer. Your projection area boundaries are where errors are most likely, and the bigger your features the more such boundaries they cross. The details are quite involved, but this is the general problem.
But then the errors are only along the boundaries of a very large feature, which was originally designed for a less precise process.
Also, you could use the design files from before any compensation you apply (to compensate for lithography errors), and use those files to derive a new compensation.
No, the errors are inside the feature itself, since it doesn't fit on a single mask. You can't reuse design files on a new process. Everything will be wrong. You have different material properties, different gate capacitances, different parasitics. No matter what you do, you have to redesign to move to a new node. The problem with large features is, even if you do all that work, you still can't reliably make them with the smaller process, and all the benefits of the smaller process (smaller die size, faster switching, higher speeds, shorter interconnects) go away if you use large features.
Aren't the necessary changes relatively "local", though?
That is - timing closure is hard, and it's a "global" problem - if your design fails timing closure, you might have to re-do the entire layout and/or design itself.
However, if you change the gate capacitances, then I would expect that you'd just have to make a lot of small changes in a lot of different (but unrelated) places - which seems like, while tedious, would be immensely parallelizable with the number of engineers, and not risk any complete re-layouts like meeting timing closure would. So, a "redesign" more than a redesign.
You're missing that large feature sizes are often used because they need to handle particular voltages and temp ranges. If you change the material properties those characteristics are no longer viable with the original spacings and dimensions, so you get to relayout anyway.
Not a chance, while you can stretch out horizontally to make a 7nm look like a 180nm (conceptually, still has problems in reality), you can't do that vertically. For example, the gate oxide at 7nm works differently than at 180nm.
Once the chip shortage happened, partially due to geopolitical reasons, that changed everything. The West/US will never fully rely on a single point of failure again no matter how hard the HBS MBAs and Chicago thinking push it to trim and be "efficient". Some industries are too important for other industries and leverage on that over those areas is too risky and costly now.
I'd pay double right now for GPUs directly from the source, not from some sketchy third party.
Right now our EV/auto, space and even AR/XR industries as well as gaming and everything that requires chips, we are at the mercy of an external market that has a slant against the West. It will take some years to get out but we'll never not expect that in the future again. If costs go up costs go up, but availability should never be allowed to be used as leverage again, that is too risky and too costly long term.
Availability that is reliable is always more important than efficiency or cost, because right now lack of availability is costing lots of extra time that has the potential to lose entire industries, that is not acceptable in any way.
Very little margin and too much optimization/efficiency is bad for resilience. Couple that with private equity backed near entire market leverage monopolies/duopolies/oligopolies that control necessary supply and you have trouble.
HBS is even realizing too much optimization/efficiency is a bad thing. The slack/margin is squeezed out and with that, an ability to change vectors quickly. It is the large company/startup agility difference with the added weight of physical/expensive manufacturing.
The High Price of Efficiency, Our Obsession with Efficiency Is Destroying Our Resilience [1]
> Superefficient businesses create the potential for social disorder.
> A superefficient dominant model elevates the risk of catastrophic failure.
> If a system is highly efficient, odds are that efficient players will game it.
Hopefully that same mistake is not made in the future. It will take time to build up diversification of market leverage in terms of chips for availability. Hopefully we have learned our lesson about too much concentration, with that comes leverage and sometimes a "gaming" of the market.
This chip shortage, and all the supply chain problems during the pandemic as well, will hopefully introduce more wisdom and knowledge into business institutions that just because things are ok while being overly super efficient, that is almost a bigger risk than higher prices/costs. Competition is a leverage reducer. Margin is a softer ride even if the profit margins aren't as big.
There's no organism called "humanity" - there's a bunch of individuals with indirect, lossy access to the past through the study of "history" - which is useless if said individuals don't study it.
This is why you see so many older and/or young-but-learned people telling you to read history - and yet, it's really hard to listen to them until you start getting personal, emotion-laden experiences that convince you to do so (such as this pandemic).
There is a formal name for what is going on with the hoarding and an eventual collapse of demand. It is called the "bullwhip effect" and it will be brutal:
While a lot of people are saying the main issue is the "lean manufacturing" or "just-in-time manufacturing" supply chains, they do not understand manufacturing supply chains. These types of solutions (JIT or Lean) are designed to prevent the bullwhip effect and ensure that suppliers have predictable and constant demand, rather than feast or famine.
Without just-in-time manufacturing, there is significant waste and it is even harder for suppliers to predict what they should be making.
This current bullwhip is going to be horrible on suppliers after the supply catches up with demand and then the demand collapses as so many have bought years in advance.
I think that the components being hoarded have little effect on the final car price, but are critical to the car working -- e.g. required but not sufficient. These are like $0.50 microcontrollers or similar.
I think there isn't a bullwhip effect on batteries, which is the main cost associated with TVs.
The 72 month loan for a $50,000, 2019 F-250 will be completely underwater, and the car owners may decide to literally send the cars “underwater” to get out of the loans.
This doesn't sound right? I thought the value of the collateral had no bearing on the loan, except as a condition for the lender to call the loan if the collateral loses too much value?
Defaulting has a cost though. If you default on your car loan, how likely is it that you're getting a loan for the next car? What kind of interest rate are you going to get?
This seems trite, but the reason EVs aren’t affordable now is that not enough are being produced to satisfy demand. The actual cell cost (not price) is crazy low, like under $80/kWh for the LFP type cells in the base Model 3. But the price goes higher because demand is so incredibly high, even though Tesla is making 1 million EVs per year and growing rapidly year on year.
Used EVs used to be pretty dang affordable already (I got a Leaf and a Volt for under $10k each) before all used cars became more expensive and the price of gasoline increased, increasing the demand for EVs.
China is turning out so many EV cars, dealers are buying back old one's to keep the price up. This is what BMW did (and possibly other German car manufacturers), in the late 80's/90's.
Another thing I see China doing, is pegging their currency to the dollar, now when the UK did this to the stronger German Deutsche Mark, the UK under Lord Norman Lamont crashed out of the Exchange Rate Mechanism and the UK saw interest rates hit 12/13% so I wonder if this chip shortage has more to it other than investment reasons only?
Trust is the thing that keeps the entire global economy going. Sure, it is attenuated at many points and has to be back-stopped at others, but all division of labor is expression of trust in the work and promises of others.
Now, the whole world is trying to get TSMC to invest in other locales in advance of Chinese invasion of Taiwan at the same time that NATO is funneling arms and personnel to Ukraine ahead of Russian invasion. Work isn't getting done on expected timelines because of unprecedented disruption caused by responses to covid.
Meanwhile, down at the bottom of the pile, when airlines cancel my flights for unprecedented problems, I wait 3 hours on hold because they don't have enough people working support.
All this to say that, yes, the bullwhip is going to be horrible, but so is not being able to perform your function in the economy because your required inputs are unobtainable. There's no graceful path for a system with so much volatility. Hopefully we can all stomach the creative destruction.
This is a fatal mistake that the Automotive (and many, many others) who live, breath and preach JIT/6sigma/lean have made. The methodology simply doesn't work when the lead time for design-to-delivery is 18 months and you need your orders in and volumes committed in order to hope to see them on the market next year.
Fabs do not work on jit/lean order principle - if you up your order volume, you can't simply scale it up on demand the next month - even if your design is done and taped out. Fabs aren't sitting around idly waiting for orders nor are they overprovisioned "just in case".
An example of this would be AMD and TSMC. AMD books capacity 3 years in advance for which TSMC designs the entire fabrication facility around, orders the lithography machines (which have a 12 month lead time and can't scale up on a dime) and assembles and staffs those same facilities to produce the wafers. It's not a general-purpose fab as most think. There are rumors that Apple booked m1 fab capacity (on TSMC 5nm) in 2018. For the chip inside a car for example, it is built on much older process, and when 5 of your biggest customers "JIT" reduce their order volume for the next 3 months you simply put those staff elsewhere (probably on the 6x higher margin cutting edge fab you just got booked and prepaid for) since anyone else who might want that process and capacity has already has their orders being produced.
Due to the sheer capital requirements (and consequent commitments required) and multi-year forecasting involved in simply getting what you think you'll need, let alone having extra, it's not hard to see why a small increase in global demand would cause a dramatic shortage. JIT works in Automotive supply chain where you can request that your bearings get made 10 days before they're delivered to the factory, but not when there is an 18 month latency on "scale up" request/response.
It's applying JIT principles to inherently non-JIT supply chains.
This is correct. Every type of suppler has different adjustment time based on their own systems. Tooling & upfront design is actually common in a lot of industries, chips just have extreme tooling & upfront design requirements.
One way to deal with the bullwhip effect is to build robust futures markets around the underlying components. This improves the market two ways. 1) It allows both suppliers and demanders to hedge their exposure in the futures market, which gives them more confidence to plan the rest of their business without uncertainty. 2) It enables professional speculators to engage in price discovery and telegraph credible signals to the rest of the market about the long-term trajectory of supply and demand.
>> One way to deal with the bullwhip effect is to build robust futures markets around the underlying components.
These chips are not fungible commodities. In the automotive space chips are selected based on a number of things including feature set - how many CAN interfaces does it have, how many GPIO, how many PWM, what kind of brown-out handling, what voltage range, thermal rating, etc... Software is then written where a portion of the code is specific to that chip. There are cases where an OEM get really good pricing on a bigger (overkill) chip and helps a supplier get those at good prices too, but usually they just beat you over the head for the lowest cost. Even if everyone adopted a few larger parts and used just those, they're still usually made by a single chip company.
I think in time chips should be fungible commodities. A lot of components, such as DRAM, NAND are fungible. As we move towards more open source tech, like RISC-V, for microcontrollers, maybe many of them become completely fungible as well. Especially if there isn't an infinite variety of them -- I guess the completely custom RISC-V chips won't be fungible, but if one can use an off-the-shelf standardized module, those could be.
This doesn't exist now for the same reasons it probably wouldn't work in the future: You can save significant amounts of money if you cut the pieces out of the "standard" that you don't actually need. Chips are cheap to make, in bulk. It's almost entirely a fixed cost/area. That's the magic. So, it's almost always cheaper to make a custom chip than to pay for some bloated standard containing large sections that will never see power, especially when chips are something like 40% of the BOM, for modern cars.
Aren't these sort of year-out agreements basically futures contracts? Especially the ones that don't allow you to back out. I know at least in the business I'm involved in, the deals are tradeable in the same way futures contracts are.
> These types of solutions (JIT or Lean) are designed to prevent the bullwhip effect and ensure that suppliers have predictable and constant demand, rather than feast or famine.
If that were true, they would have ensured the chip manufacturers had constant demand, rather than a famine period followed by a huge feast.
The truth is that just in time is being used as a cost minimization procedure, by offloading the demand risks into the suppliers and increasing any feast or famine event. That maximizes profits as long as there isn't an emergency, what seems to be the favorite administration goal of the current age.
If there is an emergency, all the large companies can simply go to the government for free money, why would they care about doing anything but absolute profit maximization.
Ultimately, I think in the automotive sector in particular the management made a conservative decision that ultimately may have been fatal to them. They broke the JIT pipeline because they assumed, wrongly, that the Trump admin would not bail them out.
The lockdowns happened and some lever got pulled. They dusted off the “We love you America, come back and buy a car someday” commercial’s, cancelled everything, and opened the bottle of Scotch.
You mention JIT, and lead times greater than a year. Are these 2 things not at odds with each other?
Are you saying the vulnerable JIT supply chain when interrupted led to hoarding?
The hoarding causing lead times of up to year which is what JIT was supposed to minimise in the first place?.
The other issue that I ran into with printers last year is that the OEMs have to be careful not the sell the future.
Everybody wanted small all-in-one devices last year, and nobody wanted big office printers. Companies like HP, Epson, etc won’t invest too much capital in production because that demand will implode later. Those companies probably sold 3-5 years of demand in a year for some SKUs.
It similar to the issue in the ports where everyone acts I’m their perceived best interest, which often screws over everyone.
My guess is that we’ll see a price collapse in the next 12-18 months for some commodities as the hoarding orders start getting fulfilled and companies are stuck with warehouses and balance sheets full of inventory.
I came here to say exactly the same thing.
I'll go one step further... not only are the equipment/fabs fully depreciated, but they are 8" rather than 12" and so none of the new equipment/processes will work with them. It's a huge fight to even get anything older than 90-110nm in 12". That is why the relatively high volume, but very margin constrained, display industry is stuck at those nodes. It doesn't make sense to build and bring up a new fab with new equipment at margins below 30%, but the entire industry is built on that cost structure.
Further, a lot of the designs for older processes have been iteratively improved (yield, performance, etc), but the older models (simulations) for them are insufficient to design new chips without explicit reuse or iteration. They are effectively stuck on that node at that foundry, unless they want to incur significant (opportunity) costs.
The answer is no. Car companies are doing no electronic designs. They are done by dozen layers of subcontractors like Bosch, Valeo or Continental or myriad others. Car companies depend heavily on them.
There is probably at least 1000 electrical engineers in the Gothenburg, Sweden area alone that would disagree with you. Companies like VCC, Geely, CEVT, Volvo, Polestar and first tier electronics, digital, system and software consultants are sweeping the job market clean to be able to handle all in-house electronic design work.
The pendulum from just sourcing from companies like Bosch, Continental turned hard about five years ago. Now electronic and SW design is critical diversification, and part of what creates core value in automotive.
Sounds logical to me. I never understood this subcontracting thing with many layers. At the end somebody must do the job and has only fraction of original order revenue.
On the other hand if car companies would buy the few remaining components for electrical vehicles from subcontractors… well, all the cars and brands would be exactly the same with minor adjustments.
Going back 10-ish years or so, basically everybody was writing requirement specifications to be included in RFQs. Primarily sent to the multinational suppliers like Continental. Sourcing and integration was the technical focus. And project management etc.
Now it is 100% in the other direction. There are engineers everywhere. Basically, if there is a space (under stairs even), there is a desk with an engineer. Doing serious design work. The new automotive cybersecurity requirements also contribute to renewed need for control and detailed knowledge of subsystems.
That is sort of orthogonal to what we are talking about. Cars are getting more digital based functionality - driver assist, entertainment, connection to third party services. They could be developed by some supplier, or the car manufacturer.
If they are based on open protocols, standards, provide API, is released as open source could happen in either of those two scenarios. I know manufacturers that use, promote and contribute to open source and standards. Do you think the big automotive suppliers are better or worse in this regard?
Also, choice here is kind of fuzzy. Choice in car brand and model? Choice in apps running in the enterrainment system? Choice in what SW is being executed by one or more of all the hundreds of CPUs, MCUs, GPUs, NPUs in the car?
There's nothing difficult about it. If Apple builds a car media/navigation system, I'm sure they can agree with car manufacturers about an interface. The problem is: manufacturers don't want this.
For entertainment, car services like they most certainly do. Look at what VCC, Polestar is doing with Apple in CarPlay and apps. They also provide APIs to allow third party value add services. It is a booming market.
Not quite. You need bigger feature sizes to get good yields and good voltage resistance and performance over wider temp ranges, so a modern design would still need to be built on large-feature nodes. The car industry did cause this, but they caused it with their whims, purchasing practices, nasty contract terms, and general fucking over of suppliers, not with their allegedly outdated designs.
The main problem is that the car industry didn't want to spend the money to safety-certify new microcontroller designs - by law/regulations, that's a requirement for anything that's safety critical.
New microcontroller designs that would meet the requirements for safety certification in those conditions are also manufactured on larger process nodes.
Honestly, the MCU market is not that bad off according to some people in the embedded industry that I know. MCUs can be made, profitably, on newer smaller nodes.
It's the things like power management ICs, that have to deal with much larger currents and voltages, that are problematic, and you can't respin those on smaller node, and that's before you go for automotive grade tolerances.
That new MCU with new safety certification (and there's a lot of those going on, even a layman like me can see a push for equivalent of Integrated Modular Avionic in automotive) is going nowhere if it can't get power.
The demand for leading-edge nodes comes from CPUs and GPUs. Once they move to the newest node, won’t previous capacity be freed to manufacture chips that don’t strictly need the better process but simply need manufacturing capacity? The machines are surely depreciated by then. Or is the cost of porting the design and making the masks prohibitive?
It's usually not technical or capacity usually it's the whole ecosystem surrounding 14, 7, 5nm and lower ecosystems that makes it not really profitable. The initial costs grows exponentially. SOC, CPU and GPU might be one of the few consumer goods the economics work.
I understand that, but is this unavoidable? After all, the old designs don't need the precision of the advanced node, couldn't they (automatically?) translate their existing coarse designs and maybe produce masks more cheaply because a 40nm design doesn't need to be as perfect as a 7nm one?
I'm sure this is nonsense otherwise they would have done that already, I'm just interested in why.
The more recent previous nodes are too new for companies like the autos as they want 20+ year old process nodes like 90nm+. So having excess 14nm capacity, for example, doesn't give them what they want since they can't just retrofit the fab for 130nm. However, not having made arrangements with fabs to keep the older nodes around contractually, they (customers like the autos) may not have an option other than paying to redesign their chips for newer process nodes in at least some cases at this point.
I'll slag Always Late(tm) Inventory as much as anybody.
However, let's also point out that "fabless semiconductor companies" are a significant part of the problem, too.
"Owning a fab" is a capital intensive operation. Shedding the fab and becoming a "pure fabless" design house increases your profitability dramatically.
Until you can't ship any chips because all the fab owners are making their own chips and you have no leverage to get them to make yours.
I disagree with that. Due to the economics of chip manufacturing, massive consolidation in the industry was inevitable. Fabless has enabled countless companies to operate despite only a few leading edge fabs worldwide being economically justifiable. It's not (only) about profitability, but without fabless worldwide chip innovation would come out from the geriatric bureaucracies of a few megacorporations.
Even if you don't look at the leading edge, where the economics of a fab aren't as forbidding, fabless has enabled entrepreneurs with a clever idea to get started with much less capital than would have been required in the old vertically integrated manufacturer world.
And it's not like the current chip shortage is somehow manufactured by the fabs in order to shaft their customers. If the fabs were able to, of course they'd produce all the chips their customers would pay for. Particularly so for the pure-play foundries like TSMC, which explicitly don't make their own chips.
which part of what they said do you disagree with exactly?
Both of you are correct, in my opinion. I worked at a fabless as a logic designer. We used TSMC, as we didn't have capital enough for a fab. We wouldn't have been making chips if fabs for hire weren't available.
On the other hand, consolidation on foundry as a service makes the system more brittle. I don't see how there's much argument to be had on that point.
> which part of what they said do you disagree with exactly?
I'm disagreeing with:
> > "fabless semiconductor companies" are a significant part of the problem, too.
and
> > Until you can't ship any chips because all the fab owners are making their own chips and you have no leverage to get them to make yours.
because I don't believe the problem underlying the current chip shortage is due to the fabs voluntarily reducing their output in order to screw their customers, or that the fabs would give preferential treatment to in-house customers (which, as I mentioned, in the case of pure-play foundries like TSMC, certainly isn't the case).
> On the other hand, consolidation on foundry as a service makes the system more brittle.
That's true, but OTOH, the alternative to the current fabless + market foundry model isn't a world with tens or even hundreds of vertically integrated manufactures with their own leading edge fabs (that is, some kind of rollback to the 1980'ies), but rather a world where all leading edge chip development would be concentrated in a few megacorporations, with IMHO drastic effects on the rate of innovation across the entire industry, and susceptible to similar shocks like we see today if one of them would hit serious problems.
While I don't see a way out on the dependence on very few suppliers of leading edge fab capacity and all the problems that entails, I guess for slightly larger process nodes (say, in the 20-40nm range) where the capital costs aren't as big, there could be plenty of space for a healthy competitive landscape. Perhaps partially funded by governments (or things like the EU) that want their own chip manufacturing capability for "digital sovereignty" and national security/arms manufacturing reasons.
> because I don't believe the problem underlying the current chip shortage is due to the fabs voluntarily reducing their output in order to screw their customers
Same here.
The issue, I think, is that fabs are very frequently re-tooled in order to remain in geometries that have high demand and profit margins.
When I think about it, the issue is probably similar to the pharmaceuticals industry. Inexpensive / generic drugs have lower profit margins because they are largely figured out. Companies consequently opt to produce something else, despite there still being a market for the generic.
Fabless reduces the barrier to entry. If you want there to be only three or four IC companies in the world ever, sure, you can insist that they each have their own fab.
This article is sadly incorrect (not poor journalism necessarily, but based on statements from vendors who are defending their own interests).
Big name manufacturers are refusing to invest in fab expansion because they believe (correctly) that total demand for semiconductors has barely moved. What has changed is the confidence in the market (and this was destroyed by a major fuckup by car manufacturers deciding to screw over their suppliers at the expense of literally the entire industry). Nobody is actually producing more electronics (many manufacturers are producing less because they need to ration supply and can't allocate as much to specific products and risk not being able to produce others). Everyone is buying more, because they can't be confident they'll be able to get stock when they need it.
Chip manufacturers know that anything they put on the market now will be gone immediately, at any price. They also know that one day everyone will have enough stock stockpiled and will stop buying for a while. If they increase production now, they have added expenses and a limited time to recoup them before there's oversupply on the market. If they keep production at current levels, they get more revenue as the prices are higher, and lower costs so they can weather the coming overproduction phase better. It makes zero economic sense to expand production.
Some chip manufacturers are asking customers up front for demand visibility several years out to be able to plan better. Others are being absolute dicks and doing the same thing in an openly-hostile way by holding customers hostage (yes we know you ordered two reels of this part and we promised delivery by date X. We won't deliver on date X unless you also order and pay for another ten reels which we won't commit to a delivery date on, and also your order for the two reels is non-cancellable and non-refundable). I can't name this company because it would put the customer at risk, but they're a household name in the industry.
The core problem is everyone is operating in the dark and there's no visibility into future demand, supply, pricing, or availability. In this situation, large capital expenses make sense on the buyer side (to ensure future supply and widen their visibility horizon) but not on the supplier side (who then shoulder the risk of future demand cratering and being left sitting on their capex).
>Chip manufacturers know that anything they put on the market now will be gone immediately, at any price.
Isn't this part of the problem of having cheap money to go around?
I've got anecdotal feedback last year from some friends in different industries (mainly construction), complaining that "The americans are hoarding everything...", he said this after complaining they were buying concrete in the secondary market.
Like, when Apple buys full production of 3nm at TSMC[0] - isn't this in a sense anti-competitive practice?
They have access to unlimited money, it's like you have a cheat in the real world. The end game is that money starts to lose it's value, like it's happening now.
I hate to use this term, but maybe the WTC or some entity should start to think that the idea of "quotas" maybe ain't that bad in a globalized world that has countries printing money like crazy. They completely fuck up entire supply chains out of greed and fear.
Then those "quotas" could be sold around, but at first no one should be harmed due to some crazy practices.
I don't get where you got this from, you have global organizations without world governments, to supervise global rules - like the WTO, World Trade Organization (I made a typo called it WTC, should be WTO).
>The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to ensure that trade flows as smoothly, predictably and freely as possible.[0]
> In this situation, large capital expenses make sense on the buyer side (to ensure future supply and widen their visibility horizon)
Does it?
Are these actually large capital expenses ("cash" [or credits on a bank balance sheet] is actually being locked up and transferred to the suppliers) or are these purchase orders where fractions of the cash are actually transferred at the point these long term deals are being made and some ones else is actually on the hook (i.e a creditor) securing that?
Because if its something like the latter (which I'm pretty sure it is), suppliers still run the risk of future demand cratering as well as the buyers (esp the ones that are fronting the cash and still will have that innovatory on hand until they can actually unload it on to consumers in finished products), and if Jeffery Snider who as been warning about something like this for months now and more recently in "When GDP’s Almost All Inventory" [0], I'm pretty sure those buyers are gonna get hosed with the suppliers…
Unless you're a giant customer with something big to beat up the vendors with, like high-level political connections, you're going to be paying up-front for delivery sometime in the distant future if you order anything today. Many vendors won't take any orders without payment up-front.
Ok, so many vendors might get through unscathed for the duration of those orders (but not after, and not if one excludes all the auxiliary services to the buyers who will become stressed with all the inventory on their hands that vendors expect their buyers to also purchase from them along the way for the duration of those orders), but their buyers wont.
The GPU market is ruined by fuckers who are buying up all inventory and reselling it to either desperate system integrators and users, or to crypto fuckers at an enormous markup. This is an entirely different problem compared to what we're talking about here.
> Big name manufacturers are refusing to invest in fab expansion because they believe (correctly) that total demand for semiconductors has barely moved.
This is false.
First, big name manufacturers are indeed building more fabs.
Second, there appears to have been demand creation in the semiconductor market rather than just a transitory demand spike.
Perhaps only cutting edge makes sense to build new, and once there is increase of cutting edge capacity, older fabs will gain spare capacity to be used for automotive and other industrial users.
I bought some INTC calls last week. They are reinvesting their substantial revenues into construction of new facilities, reflecting the view that semis demand will be elevated for some time to come. I think the semiconductor sector could see a dispersion of valuations as businesses make different predictions about how best to skate to where the puck will be. So far Intel seems to have interpreted the shortages correctly, whereas some other firms saw the shortages through rose-colored glasses.
Perhaps it is time to add some of this to the data provided when buying the parts. Number of fab companies that can make the part and if the fab equipment is active/obsolete.
Sadly it takes a problem to bring out the hindsight. Sure lack of investment may well have been a factor, but a larger factor would be the shift towards just-in-time manufacturing. This has in many walks of the supply chain over the pandemic, highlighted this and many other downsides of such an approach.
We must also not forget the ever driven push to faster, smaller bleeding-edge process nodes and the demand. In effect, the whole pandemic proved a perfect storm for whole markets.
As always, lessons will be learned, though, in the end, higher consumer prices will and is inevitable as companies apply mitigations to address the issues that played out. Sure not all issues are as easy a fix as adding more capacity, stock warehousing and those additional costs, costs that we as consumers have seen play out as reduced prices as some of the savings with just-in-time have been passed on, though mostly to share-holders I do somewhat feel. This raises another question - will company share-holders who have enjoyed and profited from the shift in increased dividends over the decades thru this business model approach, accept a small cut, or will we (as I suspect) see that carry on and the increased costs/impact passed onto the consumers.
There is an opportunity in the market for sometime to come in and make relatively low cost machinery to fab at older process nodes. If someone designed and sold photolithography equipment meant for no greater than say 90nm and it did for pennies on the dollar compared to current EUV equipment then it could be a huge deal for the semi conductor industry.
There are plenty of designs that don't really need to be produced with more modern processes. That are just fine at 180nm, 130nm or 90nm. The natural attrition of old process nodes due to the hardware reaching end of life is unnecessary and I think in part why we are in this situation.
Presumably if a machine can be made with X level of precision for Y cost then one with a lower level of precision could be made for a lower cost. Although it probably doesn't scale linearly. One relevant large advance I know of is in laser. What used to take very expensive chemical lasers in the 90's can now be done with inexpensive solid state lasers with much lower power draw, much higher output and greater reliability.
I've hated Intel for a nearly a decade leading up to the Pandemic (My last intel system was an i7-3960x). Since the beginning of this chip shortage supply chain nightmare however, I've become very bullish on Intel. They are one of the rare US companies that have retained the knowledge to build and operate their own competitive fabs.
That is something that AMD, Nvidia and several others have left in favor of consolidation (TMSC, Samsung) and specialization - much to their benefit commercially (and at the expense of Intel).
As there are renewed reality checks on the pitfalls of having a critical fundamental supply chain epicenter outside of your realm of influence (Talking from the perspective of the US/EU here), I expect companies that can build and operate fabs on US and European soil will have renewed support from federal, state and capital markets. My hope is that it is not a passing fad and that it will carry on in perpetuity. I hope that it is competitive from a cost and performance perspective.
Also, in spite of that, Intel has also decided they will use TSMC's next gen process (3nm) as a backfill while they catch up and build out their own fab roadmap. That decision is exactly the watershed moment where AMD started taking off, in terms of performance and efficiency on their own CPU and GPUs (the spinning out of Global Foundry and shift to TSMC's manufacturing), where they started taking leads in markets that they hadn't seen for 15 years. It was the right decision at the time, and it remains so - from a purely financial/technological perspective.
The fact Intel's CPUs (raptor lake) and upcoming GPUs (Arc), made on a 3-year old lithography process, can compete with AMD's latest on TSMC's cutting edge is pretty respectable. When/If Intel finally gets access to a process that leapfrogs them ahead nearly 4 years... that kind of generational jump will hopefully be quite remarkable.
So, as much as I hated Intel, they seem to be the best bet for truly competitive fabs outside of the 750km radius circle they all currently reside in beside the East China Sea.
Edit: Yes I'm aware that TSMC has been talking about building fabs in the US/EU for a while now but really, it's been all talk for the last 3 years and feels like a pony show vs a genuine desire to build out the region and be competitive. The matter of where a company's chain of command and head office sits is nontrivial from a de-risking perspective.
I most certainly shared your dislike of intel over the stagnation of CPU's in the past 6 years. But I've come to appreciate more that Intel indeed is the last western player in leading node fabs. Pat Gelsinger has inspired much hope for me in Intel making a come back and focusing on the right things.
Agreed - he also put some serious money ($1BN) on the table for talent (both existing and new) and that is really where things get better. Their latest CPUs are excellent, and, perhaps critically, available. I'm not hearing any more news about fab delays or cultural plagues and Gelsinger feels like the rightful successor to Grove.
They have a lot of cash on hand as well - about $35BN - which they've been building up over the last few years (probably saving on fab investments, ironically). If there is a market crash, they will be scooping up companies and talent left and right. AMD has about $3bn, for comparison sake (Nvidia has $20bn but it's likely unspent ARMbucks).
If the congress approves this $52BN fund for US chip making (CHIPS for America Act), a big chunk of that is going straight to Intel for domestic fabs.
We're far enough past the initial shockwaves from car manufacturers under-ordering at the beginning of the pandemic. Is it safe to say now that this shortage would have occurred regardless of covid?
There was an article on HN a few months back about a new printing process for ICs in the, what, 100nm range. The idea was to have a plant suitable for making short runs of undemanding parts. If that's possible, it's probably a useful niche someone will occupy.
Automotive is headed in the wrong direction. Tesla's dashboard now consumes several hundred watts and cuts vehicle range around 3%.[1] Come on. You do not need Unreal Engine in the dashboard.
Probably a good idea to wait til the end of the year to buy a new car then. The market is simply and truly insane right now. The best price you can get for a used car is now the MSRP of the new version. And the best price you can get for a new car is $5-6k over MSRP. It's just insane. If you're spending $40k on a RAV4 or CRV, you might as well just spend that same $40k and get a Tesla.
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