Do we want the Dark age of technology?
Of course not. Who would want to go in those times? We have crossed a notable period of time from the beginning of our race yet it is a very small fraction relative to the birth of the solar system or universe. We suffered, we battled, we cried, then again we built, constructed, progressed, be happy, and rested. Throughout history, human progress has always depended on the innovations of science and technology. The progress rate was huge in the last couple of decades when computers came to the front page of our life. Computers and Electro-mechanical devices are everywhere and are all set in our life that we cannot even think of a single moment without them. Our everyday life is blended with gadgets and machines and hundreds of pages will not be enough to fill up with those names. Imagine, suddenly they are all gone, our phones are dead, cars won’t start, the automation systems all around us are gone, air conditioning and refrigeration systems are not working properly despite extensive heat or cold weather outside, all planes are at the ground, boats & ships are at the harbor, worst-case scenario, no MRI machine or simple ventilator will not work at the hospital it is like a horrible experience -imagine, living in 99th floor of the building and the elevator is gone, what will happen in the next - A dark age for technology and human progression halt and if we do not take positive actions immediately. The single tiny thing that computes electronics and computers and runs the whole system silently in the background is the modern technological creation called “Semiconductor” and a continuous supply of this, is the key to preventing us from falling into the abyss. Semiconductors play a significant function in the manufacturing and operating of all electronic and computer products & gadgets, phones, radios, televisions, laptops, video games, toys, air-conditioners, airplanes, ships, cars, almost all household appliances, high-tech machinery, modern medical equipment would all be unavailable.
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| Microprocessor, The brain of modern-day computer |
Semiconductor History
Hundreds and thousands of scientists and researchers working on the development of semiconductors, the term “semiconducting” was used for the first time by Alessandro Volta in 1782. Michael Faraday was the first person to observe a semiconductor effect in 1833. Karl Ferdinand Braun developed a crystal detector, the first semiconducting device in 1874. In 1901, the very first semiconductor device, called "cat whiskers," was patented. The device was invented by Jagadis Chandra Bose. Cat whiskers was a point-contact semiconductor rectifier used for detecting radio waves. Later on John Bardeen, William Shockley and Walter Brattain developed the bipolar point-contact transistor in 1947 at Bell Labs in New Jersey and eventually won the Nobel Prize in Physics in 1956 for their great work. The transistor is at the heart of almost all electronics and so it is one of the most important inventions of the 20th century. The second big step, the invention of the integrated circuit, took place simultaneously at Fairchild Semiconductor and Texas Instruments from 1957 to 1959. Jean Hoerni at Fairchild Semiconductor developed the planar transistor then Jack Kilby at Texas Instruments and Robert Noyce at Fairchild Semiconductor developed the integrated circuit. So those all, two inventions, the transistor, and the integrated circuit, really are the key to electronics today. Electronic devices have become smaller, quicker, and more dependable as semiconductor technology has advanced over the last 50 years rapidly.
Semiconductor Devices
Semiconductor devices are divided into two categories based on the device's physical structure: two-terminal devices and three-terminal devices.
Diode, Zener diode, Phototransistor, Schottky diode, Light-emitting diode (LED), Laser diode, Photocell, Solar cell are two-terminal devices examples.
Bipolar transistors, IGBTs, TRIACs, Field-effect transistors, Silicon-controlled rectifiers, Thyristors are three-terminal semiconductor devices.
Another thing, Optocoupler (Photocoupler) and Hall-effect Sensor are two examples of four-terminal semiconductors.
Transistors and ICs are the most valuable of all of them. In the modern-day world, we are much dependent on them. An integrated circuit (IC) is an electronic device that consists of various functional elements such as transistors, resistors, condensers, and other components on a silicon semiconductor substrate and is packaged with multiple terminals. Critical dimensions of IC elements are now in the range of 10 nanometers which is incredibly tiny. Hitachi’s “mu-chip” is the world’s smallest IC (Integrated Circuit) chip measuring only 0.4 mm square and is 0.06 mm thick. The contemporary IC is extremely integrated and miniaturized, measuring approximately 1/55000 of the size of a transistor radio and covering 3 billionths of its area. ICs with diverse functionalities included have substantially improved the performance of electronics due to their high integration. Each year the size of semiconductors is decreasing and it’s getting more compact and more efficient.
Semiconductor Industries
“It’s not rocket science, It’s more complicated than that” this is something we can tell about semiconductor manufacturing. Microprocessors are the most sophisticated things ever constructed by man. Intel, the leading American pioneer company, launched the 4004, the first microprocessor with just 2,300 transistors and a node size of 10 microns, or ten millionths of a meter in 1971. However, Intel's unchallenged dominance in the subsequent decades came to an end between 2015 and 2020, when competitors Taiwan Semiconductor Manufacturing Co. known as TSMC, and Samsung Electronics Co. of South Korea began producing chips with smaller transistors, down to 5 nanometers or 5 billionths of a meter. An average human hair is 100,000 nanometers wide (for comparison the size). Chipmakers are attempting to cram more transistors onto processors to improve performance and reduce power consumption. Over the last half-century, the relevance of semiconductor chips has expanded at an exponential rate. In 1969, the Apollo lunar module carried tens of thousands of transistors weighing a total of 70 pounds to the moon; now, an Apple MacBook packs 16 billion transistors into a 3-pound package. Chip adoption will continue to rise in tandem with the proliferation of mobile devices, the Internet of Things (IoT), 5G and 6G networks, and an increased need for computational capacity. Chip sales were $440 billion in 2020, and they are expected to expand at a rate of above 5% each year.
A chip takes more than three months to make and requires massive factories, dust-free environments, multimillion-dollar machinery, molten tin, and lasers. The ultimate goal is to turn silicon wafers—an element extracted from ordinary sand—into a network of billions of transistors, which will form the foundation of the circuitry that will eventually provide critical capabilities to a phone, computer, car, washing machine, or satellite. A single transistor is many times smaller than the size of a virus. One grain of dust may wreak havoc and squander millions of dollars in the effort. To reduce this danger, chipmakers keep their devices in chambers that are almost dust-free. Class-1 type Chip Manufacturing room is a thousand times cleaner than a typical Operation Theatre of a hospital. Semiconductor industries are like atomic-level manufacturers. Chip factories operate seven days a week, 24 hours a day. They do it for one reason: to save money. It costs roughly $15 billion to build a facility that produces 50,000 wafers per month at the starting level. The cost will eventually go up for a mature-level company. The majority of this money goes for buying specialized equipment. For example, each of TSMC's extreme UV lithography equipment costs roughly $175 million. There will be 20 of them in larger fabs. A chip is made up of around 1,500 stages, each with 100 to 500 variables. Even if each phase succeeds 99.9% of the time, only about a fourth of the overall output is useable.
There are three types of industries that are related to the semiconductor production business. These are
The Foundry model is a production and engineering business model consisting of two different firms or subsidiaries: a semiconductor fabrication factory, foundry, and an integrated circuit design operation. TSMC, Globalfoundries, UMC, Samsung Semiconductor, SMIC, TowerJazz, Powerchip, Vanguard, Hua Hong Semi, SeCamore Semi are some companies that do this sort of business.
IDM - A semiconductor firm that designs, manufactures, and sells integrated circuit (IC) devices is known as an integrated device manufacturer (IDM). Analog Devices, Fujitsu, Hitachi, IBM, Infineon, Intersil, Intel, LSI Corporation, Matsushita, Maxim Integrated Products, Micron Technology, Mitsubishi, Samsung, SK Hynix, STMicroelectronics, Sony, Texas Instruments, Tsinghua Unigroup, Toshiba are the integrated device manufacturers (IDM) in alphabetic order.
Fabless - Fabrication (or fab) of hardware devices and semiconductor chips is outsourced to a specialist manufacturer in fabless manufacturing. Qualcomm, Broadcom, Nvidia, AMD, Mediatek are some fabless companies.
These businesses are quite diverse, have very distinct cost structures, and investors value them very differently. It's not ideal to lump them all under one label.
The Difficulties and The Synchronization of Business
The cost of semiconductor manufacturing is astonishing, which is where the difference between the Fabless and Foundry versions comes into play. A new semiconductor fabrication facility may cost up to $20 billion, which is three times the cost of a nuclear power station, yet only have a few years of a usable lifetime before becoming technologically obsolete. From a strategic sense, the ramifications are enormous and primarily unfavorable. One company now dominates it, Taiwan Semiconductor Manufacturing Company (TSMC) with a market share of 55% all over the world. TSMC effectively controls the most complex element of the semiconductor ecosystem, and they have a near-monopoly on the bleeding edge. Morris Chang, a brilliant Chinese-born engineer who started TSMC in 1987 after studying at Harvard, Stanford, and MIT and working for 25 years at Texas Instruments, predicted the "fabless" trend. As technology progressed, the cost of new fabs increased, forcing more chipmakers to outsource and increasing TSMC's market dominance. It was doing work that no one else wanted to undertake.
Apple, for the first six generations of iPhones, the Cupertino titan outsourced chip manufacture to Samsung. However, once Samsung released its Galaxy smartphones in 2011, Apple filed a case alleging IP theft, which was eventually settled with a $539 million settlement to the American company. As Apple wanted to separate its supply chains from Samsung and avoid any agreements that may burnish a prospective rival, the conflict was a windfall to TSMC. It was comforting to know that TSMC was a determined foundry that would not veer from its path. Apple is still TSMC's most important customer. Apple was also instrumental in TSMC's ascension to the position of unquestioned technical leader. Moore's Law, named after Intel co-founder Gordon Moore, has long regulated computing. Moore's Law is more accurately stated as an "observation" that processing power doubles every two or so years. To meet that deadline, the industry's trend was to emphasize a new semiconductor node. Apple, on the other hand, insisted on a new node for each iPhone version. Apple prides itself on never skipping a launch of its crown jewel, so TSMC was under a lot of pressure to keep improving. Instead of merging a slew of new technologies every two years to increase power, it made incremental steps forward every year. Leadership comes with its own set of difficulties. Chips may be commonplace now, but the most modern varieties have restricted use. Toasters and traffic lights, for example, can make do with significantly less sophisticated nodes. The risk of one of TSMC's customers being caught up in political turbulence has increased as the company's customer base has shrunk; for example, TSMC stopped supplying Chinese telecom giant Huawei last year after the US intelligence agency accused it of being a proxy for the Chinese state without providing hard evidence, an island of only 23 million people, finding the resources needed to keep pushing limits is becoming more difficult.
Intel invented and produced semiconductors in-house at the dawn of the modern computing industry. However, in the 1980s, American companies began to struggle against Japanese competitors, and to stay competitive, they outsourced their manufacturing operations, focusing instead on the more profitable design side of their enterprises. Because fabs were costly and had poor margins, balancing capital expenditure and risk made sense.
Fabless models focus less on purchasing heavy machinery & equipment each year rather than they may instead put their money into design skills and functional innovation. Intel and other IDMs still do both. However, the requirement for capital expenditures is significant. Over time, some IDMs have given in to the economic rationale and separated into two halves - a Fabless design business and a foundry – to go their separate ways. AMD was an IDM until 2009 when its foundry operation was split off into a separate company, Global Foundries. Even Intel has dabbled with a split.
China has been pouring billions into the semiconductor industry, with mixed results and some notable failures. Although it is on track to become the world's largest chipmaker in terms of volume, its chips are not of the most recent design. Shanghai-based SMIC is its leading company, but despite $300 million in government funds in 2019, its greatest chip is approximately five years behind TSMC's, with little chance of catching up. Meanwhile, at least six multibillion-dollar Chinese chip companies have gone bankrupt in the last two years, including Wuhan Hongxin Semiconductor Manufacturing Co., which was shown to be a $20 billion fraud perpetrated by unscrupulous businessmen with no prior expertise in the field.
The semiconductor business is not the same in price and earning ratio. In 2020, Intel, Samsung, and TSMC produced nearly as much income as the next 12 top chipmakers put together. Out of a total of $ 440 bIllion, almost half of them were dealt with these three companies. Because of the industry's harsh economics, fewer businesses can afford to stay up. TSMC manufactures the majority of the 1.4 billion smartphone chips supplied each year. Intel controls 80% of the computer processor market. Samsung is the market leader in memory chips. It's difficult to break in for everyone else. The following graph sheets will let us understand clearly.
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It’s clearly understood that fabless companies generate more revenue than IDMs and foundries. But without IDMs and Foundries, fabless companies are without raw materials. It’s not very difficult to start a fabless company but it takes time to establish a foundry. While TSMC dominates foundry services, only ASML, a Dutch company, manufactures the sophisticated lithography machines that all of its fabs rely on. The synchronization of these companies is very important for the further progress of the semiconductor sector.
The Real Scenario of the Shortage!
Achieving semiconductor self-sufficiency is extremely tough for countries. Business is very sensitive in this case. President Joe Biden refers to them as "essential items" whose "supply-chain breakdowns can jeopardize Americans' lives and livelihoods," while Japan and South Korea compared chips to "rice." The achievement of TSMC in controlling this crucial market has turned into a geostrategic headache. The Pentagon is pressuring the Biden Administration to spend more in sophisticated chipmaking so that its missiles and fighter planes are not reliant on a self-governing island that China's strongman President Xi Jinping considers a renegade province and has vowed to attack many occasions. According to a Goldman Sachs report, a global chip shortage has touched 169 sectors, ranging from steel and ready-mix concrete to air-conditioning systems and breweries. Most notably, automakers in the United States, Japan, and Europe have been compelled to curtail or even stop production, resulting in 3.9 million fewer automobiles entering global showrooms this year than last. The shortage of chips has propelled TSMC from obscurity to the heart of a worldwide debate about the future of technology; the company will play a significant role in defining how the world will appear at the end of this decade. A growing climate problem and escalating geopolitical tensions between China and the United States have prompted some to predict the emergence of a dystopia.
According to Mark Liu, the present Chairman of TSMC, AI deployment by 2030 could help alleviate the effects of climate change through detailed weather prediction, make more accurate cancer diagnoses feasible sooner, and even combat false news through automated social media fact-checking and all these will happen if the supply chain is not hampered. The semiconductor-chip shortage was first made when average order-to-delivery times for chips stretched to an unprecedented 15 weeks due to a confluence of factors: the COVID-19 pandemic-induced economic slump prompted carmakers to prematurely cut chip orders, which quickly rebounded as chips were hoarded by firms fearful of being caught up in the US-China trade and technology war. More chips were shipped to factories than were left in goods during what was billed as a global chip crisis, implying that "there are individuals accumulating chips who-knows-where in the supply chain," according to Liu. The issue focused attention on access to technology that the United States pioneered and continues to design better than anyone else but no longer manufactures at scale.
How we will overcome the shortage for a long time
Major key players are all in action to minimize the shortage, though it is projected that this chip shortage may last long for the end of the year 2022.
Because chip manufacturing is so complicated and specialized, spreading fab locations will make it more difficult to maintain quality. Although silicon—or refined sand—is the most important component, the magic is in how it is treated and handled.
Biden's $2 trillion infrastructure proposal included $50 billion for improving semiconductor competitiveness. TSMC, on the other hand, is planning to invest $100 billion in additional capacity over the next three years. It's a huge number, but "the more I think about it, it's not going to be enough," Liu says. Even as chips have become increasingly widespread and important, the semiconductor industry has shrunk. Apart from TSMC, Samsung Electronics of South Korea is the only company capable of commercially producing today's most sophisticated 5-nanometer (nm) processors. TSMC, on the other hand, is constructing a new manufacturing plant—or "fab"—across 22 football fields in southern Taiwan to make revolutionary 3-nm chips that will be up to 15% quicker and use significantly less electricity. Intel and GlobalFoundries, for example, will be at least two generations behind in this current iteration of chip manufacturing, or "node." Despite America's supremacy in chip design, politicians are concerned about the country's lack of manufacturing competence as they aim to bring additional fabs onshore. Intel is restructuring its foundry business, spending $20 billion on two new fabs in Arizona.
Instead of wasting money on pursuing and localizing portions of the semiconductor supply chain, Liu proposes investing it in building the next big thing. "The United States should concentrate on its strengths: system design, artificial intelligence, quantum computing, and other forward-thinking technologies," Liu argues. Although TSMC has already won 2030, the decade after that is still up for grabs. But what will happen if any unpredicted incident occurs! Stagnation of progress in technology, another chip shortage, and Global disturbance surely.
This chip shortage is not the first time in history but it can be the last if we come along together to overcome the difficulties and find a long-lasting solution for it. In its new five-year plan, China declared chip independence a top national priority, while US President Joe Biden pledged to rebuild a secure American supply chain by revitalizing domestic manufacturing. The European Union is considering taking steps to manufacture its chips. Success, however, is not certain yet. The high risk of inevitable monopoly gameplay may cause disturbance to the rest of the world. We need initiatives from Governments all around the globe to secure semiconductor supply and thus keep the supply chain smooth for technological enhancement, in the best possible way because its crisis may lead us to great chaos which we cannot bear at all. The auto-industry scarcity served as a wake-up call for lawmakers who were already dealing with the COVID-19 epidemic and a trade war. The European Commission has announced a public-private semiconductor alliance to expand European semiconductor output to 20% by 2030. South Korea's government is extending incentives to chipmakers to encourage them to spend $450 billion by 2030.
While American companies account for 65 percent of all TSMC sales, China, as the world's factory, is the largest end destination, importing about $350 billion worth of chips in 2020 alone. According to the Boston Consulting Group, "decoupling" the US and Chinese tech industries would lose US chip companies $80 billion in sales. The present antagonism between the US and China helps no one. Many Chinese companies are storing chips in case they are targeted like Huawei. The United States and China must recognize that while they are not friends, they are not adversaries. Common rules are needed to provide people with certain expectations about how to do business and growth. If TSMC is caught in the center of a tug-of-war between Washington and Beijing, the island on which it sits is, too, with considerably more severe repercussions. An interruption to chip supply chains in the event of an invasion would entail for China's economy, strategists think Taiwan is safeguarded by an effective "silicon shield." It’s about the US-China relationship and the rest of the world are much depending on how these two countries agree to solve and minimize the chip shortage at the earliest time. Converting all huge investments into new chip facilities, new chip designs, and a fresh pipeline of technical talent would take years. Only through understanding this business properly and securing its supply chain can meet the goals of companies engaged in this business gradually and thus improvement of science and life will be achieved in the future—or maybe go beyond.
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