This is largely because Europe became infatuated with austerity and its industrial policy has suffered as a consequence. You want big, cutting-edge fabs? You’re going to need to spend public money getting them off the ground. TSMC’s success is in part due to Taiwan itself designating semiconductors as a key strategic economic interest years ago and making investments/tax breaks accordingly
Interestingly, in the 1970s, before any fabs on the island, Taiwan arranged for semiconductor engineers from the iconic but slowly dying American company RCA to transfer their technology to a visiting Taiwanese team, establishing what would later become TSMC. RCA pioneered so much: radio, TV, color TV, NBC... And just as it was starting to decline and die, its semiconductor knowledge was transferred to Taiwan!
> This is largely because Europe became infatuated with austerity and its industrial policy has suffered as a consequence.
Was austerity broad-based or specifically targeted toward industrial areas? I'd always assumed austerity meant cutting back on public benefits/pensions/etc. but not strategic areas like this which is why I'm curious.
That's an interesting thesis - but, for example, Greece with its "let's piss money away without control for anything and everything" somehow hasn't become an industrial powerhouse either... so it might be that austerity (or lack thereof), in general, isn't really such an important factor?
Greece has other, deeper problems to fix before it makes any attempts in creating any form of industry. The "pissing money away" happened because of internal problems, which can be attributed to corruption and cultural aversion to any form of entrepreneurship that goes beyond the scale of mom 'n' pop stores.
I am not trying to absolve Greece from its liabilities, just pointing out that Greece is a bad example for austerity not playing a significant role in slowing industrial development.
_leading-edge chip manufacturing_ must be seen like "defence": making money out of it is optional, but it has to stay _really_ leading-edge and should be ready to produce at scale for other failing "friendly" part of the world. Since South-Korea and Taiwan did just that, and the others not, they are now alone on the global market.
To believe the "supply/demand" rule of the economy can magically make the money flow decently and properly is _REALLY_ dangerous, it cannot apply to everything.
Why do we even want cutting edge fabs in Europe? We have no companies that design cutting edge logic chips here. Literally none. Why invest 20 billion dollars (or what is the price of a cutting edge fab these days?) to create supply without demand?
Or do we seriously expect that US companies will generate significant demand even though TSMC and Samsung are already building heavily subsidized fabs in the US?
> or what is the price of a cutting edge fab these days?
Intel says they're going for two factories of 20 bln indeed [1], Samsung for 17 bln in Taylor, Texas [2], and Micron claims to go for 100 bln (over time) in Clay, New York [3].
> Why invest 20 billion dollars [...] to create supply without demand?
Why do we have to pay about 5 dollars per month for a VPS with only 1 vCPU, 1 GB RAM, and 10 GB storage? I'm certainly hoping these specs to all increase 10-fold over the next 10 years for the same price.
Re your last point: cloud specs are already far beyond that. Cloud companies just pocket the difference. Cloud lets hosting companies benefit from Moore’s law, not you.
Look at the machine you can build for one months’ typical AWS cost for a medium size SaaS company.
Cloud also charges insanely high rates for bandwidth.
I doubt that. I was not talking about AWS. The price I mentioned is from Hetzner (by heart though, so I might be a bit off) which is pretty cheap. I have also tested multiple budget VPS providers and they all don’t dare to go below aforementioned price even though there is a lot of competition in the VPS market. Sometimes the more budget providers provide more vCPUs but in my tests those usually turn out to be extremely slow.
It's quite low, but the real costs are on datacenter space and connectivity anyway, I have no idea what their cost structure looks like.
I would expect any real user to switch into renting servers as soon as small VPSs aren't enough. (But yes, the fact that there is a market of large VPSs tells people don't to that. I don't think I will ever understand this, as I don't understand most people usage of AWS.)
Most buyers are simply not savvy enough to pick the most effective hosting. I worked for a small e-commerce operation years ago, they had essentially no technical expertise in-house, but they knew their products and their market. Odds are very low that their VPS arrangement was optimal but how would they know? As long as the site stayed up and the orders came in.
> Or do we seriously expect that US companies will generate significant demand
Yes I think so, presuming that there is not an over-supply of capacity.
US companies would much rather rely on an EU country than one that is being threatened with invasion over a small gap of sea. US local supply will never be enough.
> US companies would much rather rely on an EU country
Agreed
> US local supply will never be enough.
But you won't just have US supply. You'll have US and Taiwanese supply, and I don't believe that Taiwan will happily let TSMC (the only cutting edge foundry left in the world, when you take Samsungs abysmal yields into account) build foundry redundancy in the western world.
But we'll see, you could definitely end up being right. I just hope we'll invest at least an equal amount of money into chip design.
ARM came out of europe. With the right industrial policy, chip manufacturing could be onsourced. The dutch already make most of the equipment that makes the fabs/chips.
It's not necessarily about supply and demand. These past few years have shown what shortages of chips can do to the supply chain. It's a strategic vulnerability if Europe does not at least think about this.
I guess it depends what fabs you build but we have seen very large numbers of manufacturers desperate for components. A fab anywhere in Europe could easily supply any factories in Europe so there should be demand.
On the other hand, if people are trying to build the cutting-edge, there might not be as much local demand since it is probably only needed for the latest IT equipment, most of which is built in the Far East.
Do you have any sources for your claims or are you making stuff up?
Many, many Europeans do work in factories. Just ask the Germans.
What's wrong with working in chip factories anyway? They produce some of the highest margin products in the world and since they are highly automated, working in a chip factory requires certain knowledge and education on physics, quality assurance, automation, material science, and certainly give you experience that makes you a valuable worker with future perspects rather than a replaceable cog in a dead end job as is the case for the Europeans working in most other factories that are a few steps away from being off-shored to lower cost areas.
I have personal experience having been in a low end research fab.
The bunny suits and the protocols are elaborate.
It was only for few hours and it was quite uncomfortable, hard to see or get a sense of things around you.
Regular users would generally stay for several hours to make it worth it. No break, water, toilet or food, probably come in with an empty bladder and empty stomach and stay the whole day.
From what I have read, it requires specialised training and intermediate if not advanced level skills and relatively high level of education. You work on the same machines for years and they pay is not necessarily that high compared to the trouble that you put in.
In fact, even in Taiwan the challenge is that people often switch to chip design or software instead. This definitely gets harder as people age.
Yes it’s extremely toxic there’s a reason why manufacturing moved from the US (and probably EU/UK but I’m not certain). It’s horribly toxic and you can read this about Samsung[1].
Asia has what some would call almost slave labor and a complete lack of care for workers. Many countries don’t care about pollution either.
US and European countries will gladly clean up manufacturing at home while shifting to countries who could care less about employees or environmental impacts.
So I’ve seen conditions in some poorer nations in Asia be described as similar to slave labour, but we’re talking about Taiwan and South Korea aren’t we? These are high-income countries, so I’d be really surprised if they had such conditions.
I could believe EU has some stricter environmental regulations than both, though
Tons of people go work in factories making cars, chemicals, and food. If they could provide better shifts and working conditions they can potentially attract talent. Oil fields attract people who wouldn’t have gone into the industry if they hadn’t been offered better pay and family benefits.
Do you have hard numbers how much it would impact the bottom line to offer fab employees good wages and work-live balance? It's not like fabs are employing fast armies of low skilled labourers in sweatshop (even if you do sweat under PPA).
