Why China is Losing the Micro-Chip War - New Cold War?

Why China is Losing the Micro-Chip War - New Cold War?

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as countless inventions change the face  of Technology two Titans are locked in a   fierce battle for technological Supremacy the  US and China but behind the scenes there is   a handful of companies that hold the keys  to it all around one-third of all the new   computing power every year around the world  comes from just one company taiwan's pride   and joy tsmc in fact about 55 percent of  all the contract manufacturing Fork trips   meaning like apple silicon for example Apple  designs it and builds your architecture but   the actual fabrication happens at companies  like tsmc for the first time some have started   to wonder is the fight for the control of  the digital world a second more dangerous   Cold War let's find out this is the trip  Wars I'm Ricky and this is Two Bit da Vinci thank you [Music] this video is sponsored by delete me in the  age of AI you would think that data was the   new currency that moved progress forward but  in reality our ability to process all that data   is what really matters and that comes down to  computer chips most of the Technologies we've   covered on this channel are either partially  or entirely reliant on Silicon semiconductors   for example solar panels or the inverters  they plug into electric cars and of course   the latest AI algorithms all require a steady  supply of chips to function this was all put   in the spotlight for people like you and me  when in 2020 the global chip shortage began   automakers were forced to Halt production  and the world's Tech Giants were threatened   with supply chain disruptions it was a wake-up  call that highlighted just how important the   chip manufacturing supply chain is for the world  economy when everything from a new Toyota to a   PS5 suddenly became harder to get for governments  around the world particularly here in the U.S this   also highlighted the risk of not controlling  the supply chain the world's most valuable   technological resources especially for military  applications silicon chips with China threatening   Taiwan the world's leading chip manufacturer and  the risk of the people's Liberation Army getting   ahead of the US and the arms technology race  a new Cold War started to stir between the US   and China the so-called Chip War coined by the  author Chris Miller long story short the trip   war is an ongoing geopolitical conflict between  the United States and China over control of the   advanced semiconductor chip manufacturing industry  the US is doing all it can to prevent China from   getting access to Advanced chip technology trying  to hinder China's ability to further develop its   Ai and Advance smart weapons and industries by  keeping it one or more Generations behind in   terms of computer hardware compared to the Western  World China on the other hand is pressing hard on   Taiwan in part to provoke the U.S and in part  to try to seize control of the world's biggest   and most advanced semiconductor manufacturing  complex this has major far-reaching implications   for all of us spanning from consumer electronics  availability to National Security at the center of   this shipwar are two major companies the Taiwanese  semiconductor manufacturing company tsmc and   advanced semiconductor materials lithography asml  from the Netherlands these are two names you've   probably never heard of until now yet they are the  two most critical companies in the world that make   our way of life possible to understand why this  is let's do a quick rundown on the computer chip   we started Computing long before computers even  existed by counting with our fingers this was a   time when computing even became a profession  for people with special math skills but the   first actual computers emerged during World War II  and they were huge bulky room-sized computers that   worked with vacuum tubes fun fact these vacuum  tubes worked like light bulbs so they attracted   a lot of moths which is where the origin of  debugging in modern computer science comes   from in 1947 Shockley and his team invented  the transistor they want to know about prize   and computers changed forever in the 1950s the  Department of Defense funded the development of   computer chips as a way to miniaturize computing  power to two main applications getting people up   into space and building smaller computer guidance  systems that would fit into nuclear missiles you   gotta love their priorities in fact the first  commercially viable computer chip was put into   a guidance computer of the Apollo spacecraft  and the second was ordered for the Minuteman 2   intercontinental ballistic missile before we get  back to that let me tell about our sponsor this   week delete me now you guys know I love privacy  online and that's why I love this new service   I just found out about called delete me delete  me is an amazing service and what's really cool   about them is even if you don't want to use their  service their online resources and 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delete me and you for supporting   the show this is Morris Chang sorry sorry this  is the Morris Chang building here at the tsmc   headquarters now he's a really important part  of this story it's back in the day he fled the   Communist moved to Hong Kong and in 1949 moved  to the United States he would go on to study   at Harvard than MIT and then eventually join a  little startup called Texas Instruments but his   role in this story is huge and we'll get back to  that in a minute Texas Instruments is one of the   keys to the growth and commercialization of the  computer chip industry it was the epicenter of   Chip Manufacturing in the world until late 1960s  and early 70s when it shifted to California and   Silicon Valley then came Intel founded by Bob  noyce and Gordon Moore in 1968 and with a candy   commercial and personal computer of today since  then transistors have gotten increasingly smaller   and faster roughly doubling the total number of  transistors per trip every two years a phenomenon   dubbed Moore's Law leading to an exponential  increase in computing power over time the US's   progress in computer chip development was one of  the keys to success during the Cold War against   Russia having invented them for decades the US  was the biggest producer of chips worldwide but   that completely changed in today's landscape  so semiconductors are the building blocks of   modern electronics and today they contain tens  of billions of transistors each this means that   transistors are getting even smaller and harder  to make reaching almost Atomic Precision with   modern manufacturing technology as a general rule  the smaller the transistors and the more of them   there are the faster and more efficient a computer  chip is but also the harder to manufacture so most   Cutting Edge processors today are classified  depending on the size of the transistors with   smaller being better for example things like your  refrigerator or washing machine will use large   chips with bulky cheap transistors often the range  of hundreds of nanometers or a couple of thousand   times smaller than the thickness of a human hair  slightly more advanced chips in the range of 28   to 40 nanometers are normally used for internal  combustion engine car manufacturing and in more   consumer electronics like wireless Bluetooth  peripherals and low-end computers and phone   chips these are usually made using a technique  called Deep ultraviolet lithography or duv but   the most advanced semiconductors today have  transistors the size of three nanometers or   less that's about a hundred times smaller than a  Corona virus viron these are the semiconductors   that make up the high end of the AI chip segment  tsmc was the first to Pioneer the seven nanometer   process that means each transistor on a silicon  wafer is seven nanometers across and that means   you can fit more of them on there but they're  not done this company spends so much money on R   D they're one of the highest percentages of any  company around and now they're working on the   next generation of three nanometer process and in  fact Apple's M3 silicon which will be in MacBooks   probably next year is going to feature this three  nanometer process it is Cutting Edge and Industry   leading tsmc always feels like they lead the way  we're here at the Fab 12 Factory this is one of   their fabrication facilities where they produce  these Wafers and they have these facilities All   Around the World in China even in the US as you  can imagine it is so difficult to think about how   they make these transistors so small it's so hard  in fact that there's only one company in the world   that can make the machines that make these chips  asml's extreme ultraviolet lithography units and   these machines are so expensive around 200 million  dollars that only a couple companies in the world   can even afford to buy and operate them to give  you an idea of how complex these machines are   to make let me break them down for you each euv  machine is made of seven modules all produced in   different locations around the world these modules  include a 30 kilowatt CO2 laser which is the most   powerful laser sold for commercial applications  in the world and is made of almost half a million   Parts the euv rays are generated when the laser  impacts tiny droplets of molten tin that are shot   out of a rate of 50 000 droplets per second which  explode when hit by the laser and release bursts   of ultraviolet radiation the radiation is guided  and focused using the world's smoothest mirrors   they're so smooth that if the mirrors were the  size of the US the highest bump would only be   one millimeter high take the mirror and expand  it to the size of the US the largest imperfection   would be one millimeter high that is insane  if you know anything about manufacturing and   tolerances incredible I can't imagine what that  cost but making such small transistors would be   meaningless if you couldn't make them at scale and  asml's machines deliver euv units can print out 3   000 silicon Wafers a day each with hundreds of  chips with as many as 15 billion transistors   each that works out to nearly 10 quadrillion  transistors per day to give you an idea of how   big this number is if there is about 100 trillion  cells in the human body so each one of asml's euv   lithography machines can pattern 100 times more  transistors in one day than there are cells in   your body that's insane this wouldn't be a common  theme just the insanity of of this topic so as   you can see chip manufacturing is the most complex  manufacturing process ever designed by humans and   it used to be that companies like Fairchild and  Texas Instruments could design and make their own   custom chips the same way the Intel makes their  chips today changed the technology game for good   he found the taiwani semiconductor manufacturing  company tsmc and he invented the chip Foundry   business model for companies dedicated solely to  manufacturing semiconductors for other companies   this allowed tsmc to cut Capital costs down to  a minimum and optimize the use of its high-tech   equipment making it the most competitive in the  field it all paid out and tsmc is today the single   biggest chip Foundry in the world single-handedly  producing almost a third of the world's computer   chips and more than 90 percent of the most  advanced semiconductors on the market there are   only five of these companies in the world three in  the US including Canon one in Japan Nikon and one   in the Netherlands asml asml is the only company  in the world that can produce the euv lithography   machines that make the most advanced stage chips  making it one of the most solid monopolies in   the world they're currently working on a new  design called the high numeric aperture machine   to produce two nanometer chips and Below then you  have a handful of companies capable of affording   and using these tools to produce chips with the  most advanced designs while there are five major   companies in this field which are SK hynix Micron  Samsung Intel and tsmc most of them are in Taiwan   they're utterly dominated by Chang's tsmc then  you have three companies all based in the US that   produce electronic design automation software or  Eda the software used to design the most Cutting   Edge chips this software includes Cadence and  synopsis finally we have the fabulous companies   that you saw software to design the most Cutting  Edge chips and then pick companies like tsmc to   make them I'm talking about household names we all  know and love like apple Nvidia and Qualcomm there   is one other key player in the complex supply  chain that few people mention I'm talking about   the company that makes asml's machines possible  to begin with the german-based Carl Zeiss smt   Carl Zeiss May well hold the global silicon Throne  since they're the only ones that make the optical   systems that asml's EV lithography machines are  based on this is the most critical part of the   entire system as it determines the accuracy with  which the euv Rays were focused on the Silicon   Wafers and no one else can make these awesome  Optical systems so by now you've probably noticed   that China is really nowhere to be seen here on  the international chip manufacturing scene other   than as a supplier of raw materials such as rare  earth metals and is one of the biggest markets for   finished chips this is in part a consequence of  the trip Wars in China by the US government which   brings us to the next part of this video what are  the battles being fought with China and what are   the potential consequences of either side winning  the trip War isn't as recent as you may think some   state that it goes back decades but it at least  goes as far back as the Trump Administration one   of the first onsets of the second Cold War was  the Tariff with China that started in 2018 when   the Trump Administration imposed a 25 tariff  on 50 billion dollars worth of Chinese Imports   in early 2019 the Trump Administration pressured  asml to not sell its most advanced trip machines   to China the extreme ultraviolet lithography  EV machines and asml has so far complied this   alone has been the single most crushing blow to  China's progress in the chip industry setting it   back years compared to the rest of the world then  the US went after Huawei when the U.S Commerce   Department announced that it would restrict  exports of certain semiconductor components   to Chinese companies including Huawei for fear  of companies like Huawei using its technology   G to spy on Americans shortly after the US  government banned Huawei from purchasing any   American-made technology without prior approval  from the U.S government in 2020 things got even  

hotter when the US government blacklisted several  of more Chinese technology companies including one   of China's largest chip makers smic but the  most likely reason you've heard of the trip   Wars in recent news is because of developments  during the Biden Administration this includes an   official export ban on Advanced semiconductor  and Chip making tools to China which will set   them back years but Biden's Administration took  things one step further and also banned exports   on deep ultraviolet duv lithography units to  China these don't make the most cutting-edge   chips but they're used to make the bulk of chips  for everything like EVs and personal computers so   the effect of these in the Chinese economy could  be long reaching and long lasting the second part   of Biden's strategy was U.S chip act this involves  52 billion dollars in subsidies and almost 200   billion dollars in total incentives to boost chip  manufacturing here in the US the program was a   great success with several major firms setting up  shop only a few months after this is probably the   most promising positive effect of the chipboard  for everyday people like you and me since it   brings back high paying jobs in The Cutting  Edge technology industry to the Homeland and   dramatically reduces their risk of running into  other important chip shortage for local industries   that rely on them this could avoid impacts on your  pocket when buying electronics for example because   the chip shortage tsmc increased chip prices  by 20 percent and this resulted in end users   like you and I pay more for the same stuff thanks  in part to the chip act the US is seeing a surge   in chip manufacturing infrastructure projects in  the country here are some of the most important   projects currently being built Intel is building  two massive 20 billion dollar chip Fabs one in   Ohio and another in Arizona these include the new  high numeric aperture units commissioned by asml   that sell for 300 million dollars once built  Intel will be the only company in the world   capable of manufacturing two nanometer chips all  of them on U.S soil this alone could bring Intel   back into the game on the international market and  increase its chances in its fight against AMD and   other rival ship makers Samsung plans to build two  Fabs in Texas including a 17 billion dollar Fab in   Taylor where they plan to produce three nanometer  chips tsmc is building a 12 billion Fab in Arizona   to produce five nanometer chips in Phoenix which  will come online next year 2024 and will have a   footprint of 2.3 million square feet equivalent  to 40 football fields once it comes online it'll  

produce the most advanced technology ever produced  in the US at least until Intel's come online later   that year the downside here is that tsmc's new Fab  in Arizona is a duplicate of tsmc's Fab in Taiwan   which means that by the time the Fab is built and  operational it'll already be two or three years   behind the most Cutting Edge Tech either way it'll  be good for American companies that don't require   the most advanced semiconductors to have a secure  source of trips right here in the U.S however this   will come at a cost Morris Chang founder and  former CEO of tsmc publicly stated that chips   made in the U.S will cost 55 more than the ones  they make in Taiwan which is why subsidies and   other incentives will be essential additionally  sources indicate that besides subsidies tsmc   moving part of its production to the US may also  help the company gain more experience in design   and Fabrication of analog computer chip something  Taiwan isn't particularly good at so things are   looking promising right I mean now we'll be  able to dominate the chip industry again as   we did back in the 1990s when the U.S produced 34  of the world's silicon chips right not likely even   if we added all the current investment that's  coming in it'll barely reach 100 billion and   around 300 billion if you count in subsidies and  other incentives so we would need well into the   trillions of dollars to catch up with Taiwan  furthermore even if we did put in the money no   single country is likely to develop its Advanced  chip making industry fast enough to catch up to   tsmc as it still depends on asml's machines either  way but then this all begs the question of why is   China putting up with all this what if China  suddenly decided to react and finally invade   Taiwan to take tsmc's Fabs I've thought about that  for a while and after a bit of research realized   that that actually wouldn't work an all-out  military Invasion would most likely damage the   delicate equipment Beyond repair or it could just  as well be sabotaged by the workers if push came   to shove either way even if they did manage to  take the Fabs in pristine condition they wouldn't   have the Personnel to make them work so production  would not continue completely disrupting the   entire world's chip Supply and affecting the  Chinese economy significantly so as you see   China's dependency on the Taiwanese semiconductor  industry is what protects Taiwan from a Chinese   Invasion something dubbed the Silicon shield and  it's the most likely reason why it'll probably not   happen so in the end it seems that if this is a  second Cold War we're well poised to win this time   around as well and this comes with good timing  too since breakthroughs from Nvidia regarding an   algorithm that speeds up one or more of the most  time-consuming parts of Chip manufacturing will   increase all current and future ASMR machines  throughput by as much as 40 times so the chip   Wars the war you maybe didn't even see coming  a lot like the last Cold War but this is one of   the most incredible stories because I've never  heard of such dominance in any other industry   car makers Toyota is the biggest car maker in the  planet but if Twitter disappear tomorrow all the   other makers would kind of fill in the void but  this is an insane story of such dependence on   so many little companies and if any one of them  were disrupted no new iPhones next year no new   iPads no new laptops no more gaming computers and  gaming cards it's insanely fragile so that silicon   Shield let's hope it remains and holds up and it  prevents countries from doing the wrong thing and   invading or any other missteps because any such  move would hurt their countries just as much as   everybody else and honestly we'd enter a bit of a  stone age in a way so that is a look at tsmc one   of the world's most influential and important  companies so the next time you reach for your   smartphone your laptop odds are there's a trip  made by tsmc inside now I'm going to reach out   to tsmc and try to get a tour or more access and  do another follow-on episodes and subscribe and   stay tuned for that but in the meantime forever in  Taiwan you have a chance to book a reservation to   check out the Innovation Museum here at tsmc you  got to do it and find out more about the history   of this amazing amazing company all right I'm  rickertime Da Vinci thank you so much for watching

2023-05-14 06:00

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