Do We Need Fab?

There has been debate for decades about whether it matters or not having a fab capability in a region.

The issue arises again with the Asian fabs taking the lead in process technology.

Back in the ‘80s Pasquale Pistorio persuaded the EU authorities that every region of the world needed controlled access to silicon.

That was achieved, but was allowed to, let slip and an attempt to revive it by Nellie Kroes was sunk by the industry.

On the whole, Europe no longer cares about lack of controlled access to silicon.

But the Americans do. A US Congressional Report finds that the world’s silicon wafer fab capacity is outside the US.

With Intel slipping behind, there is no source of commodity leading edge fab in the US.

We’ve gone without this for years in Europe, so does it matter to the Americans?

One figure suggests not – US fabless companies have a 53% market share of the world’s fabless revenues, according to IC Insights.

If you add to that Intel’s c.15% share of the total world chip market, it could be argued that the US is doing all right without leading edge commodity fabs.

There are consequences.

Without leading edge US fabs, young Americans will not have so strong an incentive to study silicon engineering.

Which means that the great silicon engineering schools of the US may lose their domestic student recruitment pool and their excellence may decline.

For the time being, however, with two staunch American allies, Taiwan and South Korea, holding most of the world’s advanced fab capability, there’s no immediate need for the Americans to do anything.

But what if Pistorio was right?


Comments

9 comments

  1. The concentration of all this stuff around the Pacific Ring of Fire has always puzzled me – that’s not risky geo-politics, it is risky geo-ology!

  2. I agree, David James, at the moment the downside risk is mostly China’s.

  3. Geo-political risks to the supply chain always cut both ways. If China cannot/will not sell hardware to America, America CAN find alternate sources. There may be damage but it can be done. In this case Europe looks a nice safe place to build your (Second source) infrastructure. If, for example, fighting in Taiwan destroys the key fabs or simply blocks exports, how many Chinese mainland factories are going to stop? If China’s Fabs and factories are idled for some time there will be millions of engineers unemployed, very quickly. In a country with no unemployment protections. What will they do? Industries can disappear very quickly. Look what happened to the Soviet industrial base sector after Glasnost.

  4. Yep it looks a bugger to me, zeitghost

  5. Things are getting Really Interesting in the South China Sea.

    I wonder if they’ll get to the sphincter puckering stage before long.

  6. The short answer is Uncle Sam, Martijn. Is Xi ready to risk the wrath of the US military? I don’t think so. . . . . not yet.

  7. I am not convinced that it’s unlikely to change. If Russia can annex Crimea with no more repercussions than an angry tweet, what is stopping China from invading Taiwan (as they have threatened many times)?
    South Korea seems more stable but Korea and stable in one sentence is still an oxymoron…. I am not talking about the next 3 years, but re-gaining leading edge process technology can easily take a decade (see China) so once you lose it you are doomed.

    Luckily Europe is the cute retarded kid in the corner, nobody seems to mind us since we are not a threat, so as long as we pay the rest of the world seems happy to peddle their wares to us.

  8. Well this is it exactly Martijn. At the moment – no need to worry – all the leading edge logic fab is in US-friendly countries. Is there any point planning for if that changes? Not really because it most likely won’t change. Meanwhile there’s always a chance of the West developing a post-CMOS process that scales like hell.

  9. Nowadays the biggest risk of not having leading edge fabs to me seems not the impact on the workforce, but the risk of being held hostage in geopolitical games.
    Like the article states, currently the leading fabs are in pro-US territory, but who knows for how long. What if next time Trumps grandson (or a less nepotistic democratic leader) slaps tariffs or economic sanctions on a country, and in response is deprived of leading edge chips?

    Come to think of it, it might actually be a great thing for a self-absorbed population to not have access to the latest and greatest phones… 🙂

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