Korva is a scroll of the internet’s best ideas.
Fabs follow their customers
Mature chip successes
The CHIPS office had ambitions to onshore not only leading-edge manufacturing but current and mature technologies, and it had real success on the mature side with GlobalFoundries and Texas Instruments.
TSMC follows customers
TSMC's own choices show the pattern. It decided to do leading-edge manufacturing in the United States and to build its current mature facilities in Germany and Japan. The United States is home to Apple, Nvidia, and AMD, the major leading-edge customers, so a facility close to them makes sense. Japan and Europe are important industrial ecosystems, and building lagging-edge technologies in partnership with the customers there makes sense too.
The market's logic
Single-nation efforts to onshore parts of an industry played out against that logic. The market kept making pretty sensible decisions about where each type of manufacturing happens.
Why do mature chips get built near customers?
Car makers and industrial firms buy mature chips in huge quantities and need them to be reliable. Being close lets engineers qualify parts together and shortens delivery times. Europe's automotive industry is concentrated in Germany. TSMC's Dresden fab is a joint venture with Bosch, Infineon, and NXP.
Why don't Apple and Nvidia make chips?
They are fabless companies, meaning they design chips and hire foundries to make them. Building a fab costs billions, and design needs a different set of skills. Morris Chang founded TSMC in 1987 on the bet that many designers would want a manufacturer that did no designing of its own. The model let companies such as Nvidia, founded in 1993, start without owning factories.
Why make older chips at all?
Older manufacturing nodes cost less per wafer and work well for chips that do not need cutting-edge density, such as power management, sensors, and microcontrollers. Cars, appliances, and industrial equipment use these in huge numbers. The factories that make them have also paid off much of their equipment. GlobalFoundries was formed in 2009 from the manufacturing arm of AMD.
More from The Lawfare Podcast
