TPT September 2024

INDUSTRY 360

Many who were still employed found themselves working at home, likewise resulting in a glut of purchasing activity, mainly for new or upgraded home computer systems to work and meet remotely. Some other transient factors came into play, such as the week-long blockage of the Suez Canal in March 2021, which threw some transoceanic logistics into disarray. A longshoreman strike in the middle of 2023 shut down some of the terminals at the Ports of Los Angeles and Long Beach for a time. This series of crises highlighted the need for greater resilience and flexibility in the semiconductor supply chain, which means more subsidies to build more plants in more locations. The politics of semiconductors Manufacturing in the global arena to make a profit is all about outfoxing the competition. Of course it doesn’t end there. Manufacturing in the global arena, when the goods include electronic products for military applications, has greater and graver implications than mere profit. And as the current conflict in Eastern Europe shows, such electronic goods are far more critical now than ever before. Long supply chains, especially those that cross ideological borders, can be problematic where military-related goods are concerned. A key consideration here is Taiwan, whose role in the global semiconductor supply chain cannot be overstated. Taiwan Semiconductor Manufacturing Co (TSMC) is the world’s largest and most advanced contract chipmaker. Rather than have too many eggs in one distant basket, various nations and trade blocs are moving eggs to local baskets, creating programs to boost homegrown IC design and manufacturing. The US, for example, has introduced the CHIPS for America Act, which aims to bolster domestic production through subsidies and incentives. Similarly, the European Union is seeking to double its share of global semiconductor production by 2030 through the European Chips Act. Meanwhile, China has accelerated its efforts to develop a self sufficient semiconductor industry, investing billions in domestic companies and research initiatives. The “Made in China 2025” plan aims to reduce the country’s dependence on foreign technology, with semiconductors being a critical focus area. Not a pipe dream According to Intel, a typical semiconductor fabrication plant requires 1,200 multi-million-dollar machine tools and 1,500 pieces of utility equipment. A primary consideration is the proximity to a reliable water supply. A single fab can use millions of gallons in a single day, according to the Georgetown Center for Security and Emerging Technology (CSET). This is about the same amount of water as a small city uses in a year. According to the Institute for Progress, the process tools constitute the largest portion of the cost of a modern fab, at about 55 per cent. The lithography tools, which etch the chips, account for 20 per cent of the cost. The third cost category is the processing systems, which move the various gasses and liquids through the plant. Granted, much of this expenditure is for pumps, compressors and filtration systems, but a substantial amount of it is for the pipe itself. The tally is around 6.15 per cent of the project’s cost. If the entire plant were to cost slightly higher than the middle of the range at

$16.5bn, the cost of the processing systems would amount to $1bn. The bulk of that is for equipment, but still, much of it is for pipe. Mile after mile of pipe. Semiconductor manufacturers Approximately 175 companies run 485 semiconductor fabrication plants throughout the world. A similar number of fabless companies carry out the design and development work, then outsource the production. Some of the more well known companies of both types are listed here by value of market capitalisation. NVIDIA Corp Revenue (TTM): $79.8bn Market cap: $3.35tn Industry segments: graphics processors for video gaming systems and CAD Source: Investopedia Taiwan Semiconductor Manufacturing Co Ltd (TSM) Revenue (TTM): $71.5bn Market cap: $932bn Description: Broadcom Inc (AVGO) Revenue (TTM): $42.6bn Market Cap: $839.1bn Industry segments: digital and analogue semiconductors; the world’s largest semiconductor foundry Samsung Electronics Revenue (TTM): $202.2bn Market cap: $275.8bn Industry segments: consumer electronics; appliances; medical equipment Qualcomm Inc (QCOM) Revenue (TTM): $36.4bn Market cap: $253.4bn Industry segments: wireless communications products and services Advanced Micro Devices (AMD) Revenue (TTM): $22.8bn Market cap: $249.9bn Industry segments: CPUs and GPUs computers, consumer electronics, automobiles and servers Intel Corp (INTC) Revenue (TTM): $55.24bn Market cap: $130.4bn Industry segments: processors for PCs and servers; also software for networking, telecom, and data centres; interfaces for Bluetooth, routers, switches, processors and fibreoptic systems

IoT products; memory and storage; autonomous driving technology; and programmable semiconductors

SK Hynix Inc Revenue (TTM): $28.7bn Market cap: $28.7bn Industry segments: memory chips, notably dynamic random access memory and NAND flash

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SEPTEMBER 2024