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HomeStartupSteve Clean The Semiconductor Ecosystem – Defined

Steve Clean The Semiconductor Ecosystem – Defined

The final yr has seen a ton written concerning 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 sophisticated 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 the whole lot. Semiconductors – chips that course of digital data — are in virtually the whole lot: computer systems, automobiles, dwelling home equipment, medical gear, and so on. Semiconductor firms will promote $600 billion price of chips this yr.

Trying on the determine under, the business appears fairly easy. Corporations within the semiconductor ecosystem make chips (the triangle on the left) and promote them to firms and authorities companies (on the best). These firms 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 customers, companies, and governments. The income of merchandise that include chips is price tens of trillions of {dollars}.

But, given how massive it’s, the business stays a thriller to most.  For those who 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 unit) holding a 12” wafer. But it’s a enterprise that manipulates supplies an atom at a time and its factories value 10s of billions of {dollars} to construct.  (By the best way, that wafer has two trillion transistors on it.)

For those who had been in a position to look inside the easy triangle representing the semiconductor business, as a substitute of a single firm making chips, you’d discover an business with a whole lot of firms, 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 –  this can be a simplified view of a really complicated business.)

Semiconductor Business Segments

The semiconductor business has seven various kinds of firms. Every of those distinct business segments feeds its sources up the worth chain to the subsequent till lastly a chip manufacturing unit (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 Tools (WFE)
  5. “Fabless” Chip Corporations
  6. Built-in Machine Producers (IDMs)
  7. Chip Foundries
  8. Outsourced Semiconductor Meeting and Check (OSAT)

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

Chip Mental Property (IP) Cores

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

Digital Design Automation (EDA) Instruments

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

  • In the present day, as logic chips proceed to turn out to be extra complicated, all Digital Design Automation firms are starting to insert Synthetic Intelligence aids to automate and velocity up the method

Specialised Supplies and Chemical compounds

Thus far our chip remains 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 unit known 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 record goes on…)
  • Fluids (photoresists, prime coats, CMP slurries)
  • Photomasks
  • Wafer dealing with gear, dicing
  • RF Turbines

Wafer Fab Tools (WFE) Make the Chips

  • These machines bodily manufacture the chips
  • 5 firms dominate the business – Utilized Supplies, KLA, LAM, Tokyo Electron and ASML
  • These are a few of the most intricate (and costly) machines on Earth. They take a slice of an ingot of silicon and manipulate its atoms on and under its floor
  • We’ll clarify how these machines are used a bit in a while

 “Fabless” Chip Corporations

  • Techniques firms (Apple, Qualcomm, Nvidia, Amazon, Fb, and so on.) that beforehand used off-the-shelf chips now design their very own chips.
  • They create chip designs (utilizing IP Cores and their very own designs) and ship the designs to “foundries” which have “fabs” that manufacture them
  • They might use the chips solely in their very own 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 Tools or use specialised supplies or chemical compounds
  • They do use Chip IP and Digital Design Software program to design the chips

Built-in Machine Producers (IDMs)

  • Built-in Machine Producers (IDMs) design, manufacture (in their very own fabs), and promote their very own chips
  • They’ve their very own “fabs” however can also use foundries
    • They use Chip IP and Digital Design Software program to design their chips
    • They purchase Wafer Fab Tools and use specialised supplies and chemical compounds
  • The typical value of taping out a brand new modern chip (3nm) is now $500 million

 Chip Foundries

  • Foundries make chips for others of their “fabs”
  • They purchase and combine gear from quite a lot of producers
    • Wafer Fab Tools 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 specialise in making chips for analog, energy, rf, shows, safe army, and so on.
  • It prices $20 billon to construct a brand new era chip (3nm) fabrication plant


  • Fabs are brief for fabrication vegetation – the manufacturing unit that makes chips
  • Built-in Machine 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 under)
  1. Simply as an creator writes a e book utilizing a phrase processor, an engineer designs a chip utilizing digital design automation instruments
  2. An creator 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 a sophisticated course of manipulating atoms utilizing etchers, deposition, lithography. Consider it as an atomic stage offset printing. The wafers are then minimize up and the chips are packaged
  6. The plant seems hundreds of thousands of copies of the identical e book. The plant seems hundreds of thousands of copies of the identical chip

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

Outsourced Semiconductor Meeting and Check (OSAT)

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


Fab Points

  • As chips have turn out 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 unit
  • One purpose 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 complicated. The clear room the place the chips are made is simply the tip of the iceberg of a posh 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 forefront has meant most firms have dropped out. In 2001 there have been 17 firms making probably the most superior chips.  In the present day there are solely two – Samsung in Korea and TSMC in Taiwan.
    • On condition that China believes Taiwan is a province of China this could possibly be problematic for the West.

What’s Subsequent – Expertise

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

  • As an alternative of creating 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 complicated to design, which implies bigger design groups, and longer time to market, Digital Design Automation firms 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 quicker time to market

What’s Subsequent – Enterprise

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

  • Foundries have economies of scale and standardization. Somewhat than having to invent all of it themselves, they’ll make the most of your complete stack of innovation within the ecosystem. And simply concentrate on manufacturing
  • AMD has confirmed that it’s potential to shift from an IDM to a fabless foundry mannequin. Intel is attempting. They’re going to 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 effectively show to be like controlling the oil provide within the twentieth. The nation that controls this manufacturing can throttle the army and financial energy of others.

  • Making certain a gentle provide of chips has turn out to be a nationwide precedence. (China’s largest import by $’s are semiconductors – bigger than oil)
  • In the present day, 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 few many years the U.S. moved most of its fabs to Asia. In the present day 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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