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HomeStartupSteve Clean The Semiconductor Ecosystem – Defined

Steve Clean The Semiconductor Ecosystem – Defined

The final yr has seen a ton written in regards to the semiconductor trade: chip shortages, the CHIPS Act, our dependence on Taiwan and TSMC, China, and so forth.

However regardless of all this speak about chips and semiconductors, few perceive how the trade is structured. I’ve discovered one of the best ways to grasp one thing sophisticated is to diagram it out, step-by-step. So right here’s a fast pictorial tutorial on how the trade works.

The Semiconductor Ecosystem

We’re seeing the digital transformation of every thing. Semiconductors – chips that course of digital info — are in nearly every thing: computer systems, vehicles, dwelling home equipment, medical gear, and so forth. Semiconductor corporations will promote $600 billion price of chips this yr.

Wanting on the determine under, the trade appears fairly easy. Corporations within the semiconductor ecosystem make chips (the triangle on the left) and promote them to corporations and authorities businesses (on the proper). These corporations and authorities businesses then design the chips into programs and gadgets (e.g. iPhones, PCs, airplanes, cloud computing, and so forth.), and promote them to customers, companies, and governments. The income of merchandise that comprise chips is price tens of trillions of {dollars}.

But, given how giant it’s, the trade stays a thriller to most.  If you happen to do consider the semiconductor trade in any respect, chances are you’ll image staff in bunny fits in a fab clear room (the chip manufacturing facility) 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.)

If you happen to had been capable of look inside the easy triangle representing the semiconductor trade, as an alternative of a single firm making chips, you’ll discover an trade with lots of of corporations, all depending on one another. Taken as an entire 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 advanced trade.)

Semiconductor Business Segments

The semiconductor trade has seven several types of corporations. Every of those distinct trade segments feeds its sources up the worth chain to the subsequent till lastly a chip manufacturing facility (a “Fab”) has all of the designs, gear, and supplies essential to manufacture a chip. Taken from the underside up these semiconductor trade 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 System Producers (IDMs)
  7. Chip Foundries
  8. Outsourced Semiconductor Meeting and Take a look at (OSAT)

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

Chip Mental Property (IP) Cores

  • The design of a chip could also be owned by a single firm, or…
  • Some corporations license their chip designs – as software program constructing blocks, referred to as IP Cores – for large use
  • There are over 150 corporations 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 trade is dominated by three U.S. distributors – Cadence, Mentor (now a part of Siemens) and Synopsys
  • It takes a big engineering staff utilizing these EDA instruments 2-3 years to design a fancy logic chip like a microprocessor used inside a cellphone, laptop or server. (See the determine of the design course of under.)

  • Right now, as logic chips proceed to develop into extra advanced, all Digital Design Automation corporations are starting to insert Synthetic Intelligence aids to automate and pace up the method

Specialised Supplies and Chemical compounds

To date our chip continues to be in software program. However to show it into one thing tangible we’re going to must bodily produce it in a chip manufacturing facility referred to as a “fab.” The factories that make chips want to purchase specialised supplies and chemical substances:

  • 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 corporations dominate the trade – Utilized Supplies, KLA, LAM, Tokyo Electron and ASML
  • These are a number 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 afterward

 “Fabless” Chip Corporations

  • Techniques corporations (Apple, Qualcomm, Nvidia, Amazon, Fb, and so forth.) 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 could use the chips solely in their very own gadgets e.g. Apple, Google, Amazon ….
  • Or they might promote the chips to everybody e.g. AMD, Nvidia, Qualcomm, Broadcom…
  • They don’t personal Wafer Fab Tools or use specialised supplies or chemical substances
  • They do use Chip IP and Digital Design Software program to design the chips

Built-in System Producers (IDMs)

  • Built-in System Producers (IDMs) design, manufacture (in their very own fabs), and promote their very own chips
    • They don’t make chips for different corporations (that is altering quickly – see right here.)
    • There are three classes of IDMs– Reminiscence (e.g. Micron, SK Hynix), Logic (e.g. Intel), Analog (TI, Analog Units)
  • They’ve their very own “fabs” however may 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 substances
  • The common 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 a wide range of producers
    • Wafer Fab Tools and specialised supplies and chemical substances
  • 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 focus on making chips for analog, energy, rf, shows, safe navy, and so forth.
  • It prices $20 billon to construct a brand new technology chip (3nm) fabrication plant


  • Fabs are quick for fabrication vegetation – the manufacturing facility that makes chips
  • Built-in System 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 acceptable for his or her sort of chip (reminiscence, logic, RF, analog)
  3. The printing plant buys paper and ink. A fab buys uncooked supplies; silicon, chemical substances, 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 an advanced course of manipulating atoms utilizing etchers, deposition, lithography. Consider it as an atomic degree offset printing. The wafers are then reduce up and the chips are packaged
  6. The plant seems tens of millions of copies of the identical e book. The plant seems tens of millions of copies of the identical chip

Whereas this sounds easy, it’s not. Chips are in all probability essentially 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 Take a look at (OSAT)

  • Corporations that bundle and take a look at chips made by foundries and IDMs
  • OSAT corporations take the wafer made by foundries, cube (reduce) them up into particular person chips, take a look at them after which bundle them and ship them to the shopper


Fab Points

  • As chips have develop into denser (with trillions of transistors on a single wafer) the price of constructing fabs have skyrocketed – now >$10 billion for one chip manufacturing facility
  • 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 advanced. The clear room the place the chips are made is simply the tip of the iceberg of a fancy 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 corporations have dropped out. In 2001 there have been 17 corporations making essentially the most superior chips.  Right now there are solely two – Samsung in Korea and TSMC in Taiwan.
    • Provided 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 can be denser, sooner, 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 advanced to design, which suggests bigger design groups, and longer time to market, Digital Design Automation corporations 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 sooner time to market

What’s Subsequent – Enterprise

The enterprise mannequin of Built-in System Producers (IDMs) like Intel is quickly altering. Previously there was an enormous aggressive benefit in being vertically built-in i.e. having your individual design instruments and fabs. Right now, it’s an obstacle.

  • Foundries have economies of scale and standardization. Slightly 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 making an attempt. They’ll 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 properly show to be like controlling the oil provide within the twentieth. The nation that controls this manufacturing can throttle the navy and financial energy of others.

  • Making certain a gentle provide of chips has develop into a nationwide precedence. (China’s largest import by $’s are semiconductors – bigger than oil)
  • Right now, each the U.S. and China are quickly making an attempt to decouple their semiconductor ecosystems from one another; China is pouring $100+ billion of presidency incentives in constructing Chinese language fabs, whereas concurrently making an attempt to create indigenous provides of wafer fab gear and digital design automation software program
  • Over the previous couple of a long time the U.S. moved most of its fabs to Asia. Right now we’re incentivizing bringing fabs and chip manufacturing again to the U.S.

An trade that beforehand was solely of curiosity to technologists is now one of many largest items in nice energy competitors.



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