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Shared pain shared gain: the start of a monopoly in leading-edge logic chip manufacturing ?

user nl

user nl

Active member
The recent discussions around Intel Foundry Services in relation to the performance of TSMC reminds me to the situation some 10-20 years ago around leading-edge lithography and the battle between Nikon, ASML and Canon (see e.g. https://siliconsemiconductor.net/ar...non_Ever_Catch_ASML_in_the_Lithography_Market).

For a while, around 2010-2015, it seemed that Intel was not comfortable with only a single supplier of immersion ArF lithography, and it was still buying Nikon iArF for awhile. Then around 2012 ASML forced the hands of Intel, Samsung and TSMC to have them co-invest in ASML to provide the funding for bringing EUV to HVM (https://www.asml.com/en/news/press-...program-for-innovation-completing-the-program.)

EUV-HVM began successfully around 2019 at TSMC. Presently, there seems only one litho-supplier left (ASML) to provide (leading-edge) lithography with EUV and immersion DUV. Nobody in the (western) world seems to be concerned anymore about this lithography monopoly of ASML, as long as ASML provides ALL their customers their litho-machines for a reasonable price (gross margins not exceeding the values of their customers?) in a reasonable time-frame. The market barrier for a potential competitor in leading-edge lithography in the western world is just unsurmountable. The ecosystem that ASML has created over the last 20 years with their suppliers and customers is enormous.

It seems that in leading-edge logic chip manufacturing the foundry model of TSMC appears to be the long term winner. The investments and large scale of production needed to make leading-edge logic chip manufacturing possible seems to be only (economically) feasible the way that TSMC operates. No competition with their customers, only serving their customers. And they have built an impressive ecosystem and a close interaction with the global providers of high-end logic. They have earned the trust of these leading fabless customers during the last 10-15 years.

Now TSMC is using the same "shared pain shared gain" vision to have their customers and (western) countries co-invest with them to build and operate many (new) fabs all around the world, USA, Japan, EU (Germany). And TSMC will provide its vast knowledge and operating efficiency to run these fabs and advanced packaging facilities. A small country that is betting its future survival on the global spread of its leading knowledge and competence in leading-edge logic manufacturing.

The question currently is: (besides the national pride/ego of USA) is there a real need for IFS to operate as an independent leading-edge logic foundry? Will IFS be able to invest the coming decades what is needed to serve their customers, and will it be able to operate for their customers with the same efficiency and innovation as TSMC has been showing during the last decades?

What will leading-edge logic chip-manufacturing look like in 2035, a (near) monopoly of TSMC serving all fabless customers, or a duopoly or a triopoly? Any thoughts/replies of people in this community are appreciated!
 
Last edited:
user nl said:
The recent discussions around Intel Foundry Services in relation to the performance of TSMC reminds me to the situation some 10-20 years ago around leading-edge lithography and the battle between Nikon, ASML and Canon (see e.g. https://siliconsemiconductor.net/ar...non_Ever_Catch_ASML_in_the_Lithography_Market).

For a while, around 2010-2015, it seemed that Intel was not comfortable with only a single supplier of immersion ArF lithography, and it was still buying Nikon iArF for awhile. Then around 2012 ASML forced the hands of Intel, Samsung and TSMC to have them co-invest in ASML to provide the funding for bringing EUV to HVM (https://www.asml.com/en/news/press-...program-for-innovation-completing-the-program.)

EUV-HVM began successfully around 2019 at TSMC. Presently, there seems only one litho-supplier left (ASML) to provide (leading-edge) lithography with EUV and immersion DUV. Nobody in the (western) world seems to be concerned anymore about this lithography monopoly of ASML, as long as ASML provides ALL their customers their litho-machines for a reasonable price (gross margins not exceeding the values of their customers?) in a reasonable time-frame. The market barrier for a potential competitor in leading-edge lithography in the western world is just unsurmountable. The ecosystem that ASML has created over the last 20 years with their suppliers and customers is enormous.

It seems that in leading-edge logic chip manufacturing the foundry model of TSMC appears to be the long term winner. The investments and large scale of production needed to make leading-edge logic chip manufacturing possible seems to be only (economically) feasible the way that TSMC operates. No competition with their customers, only serving their customers. And they have built an impressive ecosystem and a close interaction with the global providers of high-end logic. They have earned the trust of these leading fabless customers during the last 10-15 years.

Now TSMC is using the same "shared pain shared gain" vision to have their customers and (western) countries co-invest with them to built and operate many (new) fabs all around the world, USA, Japan, EU (Germany). And TSMC will provide its vast knowledge and operating efficiency to run these fabs and advanced packaging facilities. A small country that is betting its future survival on the global spread of its leading knowledge and competence in leading-edge logic manufacturing.

The question currently is: (besides the national pride/ego of USA) is there a real need for IFS to operate as an independent leading-edge logic foundry? Will IFS be able to invest the coming decades what is needed to serve their customers, and will it be able to operate for their customers with the same efficiency and innovation as TSMC has been showing during the last decades?

What will leading-edge logic chip-manufacturing look like in 2035, a (near) monopoly of TSMC serving all fabless customers, or a duopoly or a triopoly? Any thoughts/replies of people in this community are appreciated!
Click to expand...
Like you said, there is a monopoly on lithography and the world is still doing ok. No reason why it would be any different for foundries. The only viable way to break up a TSMC monopoly would be to lift sanctions on China and allow SMIC to compete on a level playing ground. China is the only country with the will power, financial resources and intellectual resources to sustain a competitive foundry outside of TSMC in the long term.
 
TSMC has an event here in Silicon Valley this month. It will be interesting to see what they say. I can assure it will be based on "Trusted foundry, we do not compete with you". A twisting of the knife in the back of both Intel and Samsung (IDM foundries). For TSMC a victory lap is well deserved, absolutely.
 
user nl said:
The question currently is: (besides the national pride/ego of USA) is there a real need for IFS to operate as an independent leading-edge logic foundry?
Click to expand...
No, the point of CHIPS is to provide the military with chips during a war with China, which is a fait accompli in the minds of the psychos that run America.
 
Daniel Nenni said:
TSMC has an event here in Silicon Valley this month. It will be interesting to see what they say. I can assure it will be based on "Trusted foundry, we do not compete with you". A twisting of the knife in the back of both Intel and Samsung (IDM foundries). For TSMC a victory lap is well deserved, absolutely.
Click to expand...
Looking forward to hear about that event. In a way it is ironic that when Morris Chang was going around the world in the mid-eighties to find large/leading chip companies willing to invest in his startup TSMC, he could only find "second-tier" (in his words) Philips Electronics in NL (the father of ASML) to invest with money and knowledge in his TSMC.
So, present day leading-edge litho-monopolist ASML has a long relation with (future monopolist ?) leading-edge logic foundry TSMC. And the (western) world may be just OK with that, as long as these two (trusted) companies serve their customers in time for a reasonable price and keep pushing innovation to the benefit of their customers.
 
I think the ASML and TSMC comparison is valid. I do believe however that the US should make sure we have competitive leading edge semiconductor manufacturing and everything else necessary to be competitive for the upcoming AI based military arms race (marathon). If you look at what the US Government spends our money on, "wasting" money on semiconductors is the least of my worries, absolutely.

 
Daniel Nenni said:
I think the ASML and TSMC comparison is valid. I do believe however that the US should make sure we have competitive leading edge semiconductor manufacturing and everything else necessary to be competitive for the upcoming AI based military arms race (marathon). If you look at what the US Government spends our money on, "wasting" money on semiconductors is the least of my worries, absolutely.

Click to expand...
But your sense is that it’s manufacturing that the US needs to ensure that we have. For example, as long as we have the TSMC AZ fabs, do you think we are OK?
 
osnium said:
But your sense is that it’s manufacturing that the US needs to ensure that we have. For example, as long as we have the TSMC AZ fabs, do you think we are OK?
Click to expand...

No, I think we need Intel AND TSMC and Samsung in the US. Intel is still a semiconductor innovator and they are driving TSMC and Samsung. Competition is key and without Intel's leading edge logic manufacturing and packaging there is no competition for TSMC. Also it is national pride especially here in Silicon Valley.

On a side note, I am assisting with a movie about the origin of the IC and it all starts with two of the founders of Intel. In fact, you will be hard pressed to find a semiconductor company that does not have Intel inside (former Intel employees) including TSMC.

Not to be a fanboy, but I do believe Intel serves a greater purpose and even though they have seem to lost their way I do believe that Intel is still an important asset for the semiconductor industry and the United States, absolutely.
 
I understand what you mean, but I'm not sure that leading edge logic manufacturing will be pushed by Intel (IFS) trying to compete with TSMC in a foundry model.

My impression is that all of TSMC's customers (and that whole ecosystem around it) are much more important and valuable in pushing TSMC to keep innovating in technology and manufacturing operation. Like all of ASML's customers are pushing ASML.

It seems there will be enough global investments in R&D by institutions like IMEC (Leuven), that work in collaboration with stakeholders, and many global academic institutions, because it seems at some point real innovation in chip-manufacturing needs collaboration between all the stakeholders.

Much innovation in the coming decades appears to come by advanced manufacturing and packaging into the 3e dimension, now that litho-scaling has slowed down so much.

Perhaps the iconic Intel company needs to go to an important phase now that another iconic US company, IBM, has gone through (many times) over its life-time:

"IBM is one of the oldest technology companies in the world, with a raft of innovations to its credit, including mainframe computing, computer-programming languages, and AI-powered tools. But ask an ordinary person under the age of 40 what exactly IBM does (or did), and the responses will be vague at best. “Something to do with computers, right?” was the best the Gen Zers I queried could come up with. If a Millennial knows anything about IBM, it’s Watson, the company’s prototype AI system that prevailed on Jeopardy in 2011."

https://www.theatlantic.com/magazine/archive/2024/01/ibm-greatest-capitalist-tom-watson/676147/
 
Daniel Nenni said:
No, I think we need Intel AND TSMC and Samsung in the US. Intel is still a semiconductor innovator and they are driving TSMC and Samsung. Competition is key and without Intel's leading edge logic manufacturing and packaging there is no competition for TSMC. Also it is national pride especially here in Silicon Valley.

On a side note, I am assisting with a movie about the origin of the IC and it all starts with two of the founders of Intel. In fact, you will be hard pressed to find a semiconductor company that does not have Intel inside (former Intel employees) including TSMC.

Not to be a fanboy, but I do believe Intel serves a greater purpose and even though they have seem to lost their way I do believe that Intel is still an important asset for the semiconductor industry and the United States, absolutely.
Click to expand...
You’ve said before that Samsung and Intel are like little chihuahuas trying to eat from the same bowl as a Great Dane. If that’s true, how is it sustainable for Intel spend money on technology development if they can’t profit from it? I think that was the original post’s point. It’s not sustainable and we will converge to a pure monopoly for advanced logic manufacturing (at least until the US relaxed sanctions on China or China catches up from a tooling perspective).
 
osnium said:
You’ve said before that Samsung and Intel are like little chihuahuas trying to eat from the same bowl as a Great Dane. If that’s true, how is it sustainable for Intel spend money on technology development if they can’t profit from it? I think that was the original post’s point. It’s not sustainable and we will converge to a pure monopoly for advanced logic manufacturing (at least until the US relaxed sanctions on China or China catches up from a tooling perspective).
Click to expand...

Would we have BSPD if not for Intel? How about FinFETs? HKMG?

The US Government needs to provide a separate bowl for Intel while Intel pivots into something scalable and profitable. Intel does not need to beat TSMC at TSMC's own game. Globalfoundries and Samsung both tried that and failed wasting tens of billions of dollars. China is no different but they will not stop, they will keep spending, they have no choice.

Bottom line: Intel needs to keep the US ahead of China.
 
osnium said:
You’ve said before that Samsung and Intel are like little chihuahuas trying to eat from the same bowl as a Great Dane. If that’s true, how is it sustainable for Intel spend money on technology development if they can’t profit from it? I think that was the original post’s point. It’s not sustainable and we will converge to a pure monopoly for advanced logic manufacturing (at least until the US relaxed sanctions on China or China catches up from a tooling perspective).
Click to expand...
A good alternative is to relax some EUV component shipments to China. For example, Japan's source. This will allow China to develop a cheaper second EUV supplier and competitor to TSMC simultaneously.
 
Daniel Nenni said:
Would we have BSPD if not for Intel? How about FinFETs? HKMG?

The US Government needs to provide a separate bowl for Intel while Intel pivots into something scalable and profitable. Intel does not need to beat TSMC at TSMC's own game. Globalfoundries and Samsung both tried that and failed wasting tens of billions of dollars. China is no different but they will not stop, they will keep spending, they have no choice.

Bottom line: Intel needs to keep the US ahead of China.
Click to expand...
TSMC would have invented those process flows. It was an entire semiconductor ecosystem that pushed for those innovations.
 
osnium said:
You’ve said before that Samsung and Intel are like little chihuahuas trying to eat from the same bowl as a Great Dane. If that’s true, how is it sustainable for Intel spend money on technology development if they can’t profit from it? I think that was the original post’s point. It’s not sustainable and we will converge to a pure monopoly for advanced logic manufacturing (at least until the US relaxed sanctions on China or China catches up from a tooling perspective).
Click to expand...
TSMC and ASML are almost like a type of duopoly. If the USA didn't have the issues it has with the PRC, SMIC or whoever would be a good counterbalance to TSMC's domination of the leading edge.
 
jorgequinonez said:
TSMC and ASML are almost like a type of duopoly. If the USA didn't have the issues it has with the PRC, SMIC or whoever would be a good counterbalance to TSMC's domination of the leading edge.
Click to expand...

Both TSMC (Taiwan, ROC) and ASML (the Netherlands) are located in long-time U.S. allied countries. The U.S. doesn't need to find a counterbalance to TSMC from the PRC/CCP.
 
hist78 said:
Both TSMC (Taiwan, ROC) and ASML (the Netherlands) are located in long-time U.S. allied countries. The U.S. doesn't need to find a counterbalance to TSMC from the PRC/CCP.
Click to expand...
they are talking monopoly. you know what does that mean. that means a customer has no bargain power.
Imagine there is only one phone brand one car brand in market.
you might need to pay 2k$ for a piece of iphone 13.
 
jim_22222 said:
they are talking monopoly. you know what does that mean. that means a customer has no bargain power.
Imagine there is only one phone brand one car brand in market.
you might need to pay 2k$ for a piece of iphone 13.
Click to expand...

A monopoly is better than fake competetion for the customer.

A good single supplier beats 3 or 4 less good suppliers every day of the week.

And like any "competition" one supplier is usually always best and the followers get crumbs
 
Daniel Nenni said:
Bottom line: Intel needs to keep the US ahead of China.
Click to expand...
or US needs Intel to stay ahead of China this is their only horse in this race
US should focus on their own development than focusing on cutting chinaout
Only two way to win the race either you are good or you cut the competition but as far as i can see it will bite them in the back
 
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