YouSaid · the spoken record

Morris Chang

lines on the record: 63
first: 2023-01-31
most recent: 2023-01-31
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“At Ukraine, on the one hand, you think the Russians screwed things up militarily. On the other hand, it's not obvious that a lot of the other lessons you are drawing might not make you a bit more optimistic. You could keep the US out in a meaningful way. So I'm not confident that China is looking at Russia and Ukraine and saying this makes us less confident about Taiwan. And I worry that actually some of the key lessons that China is drawing are making it more capable of structuring an intervention in Taiwan that would keep the US out. And if everyone else knew that the US wasn't going to intervene in Taiwan's behalf, it would be very hard for Taiwan to put up a serious defense. And that's why I think you see China rapidly expanding its nuclear forces to make those nuclear threats more credible and to try to keep the US out if there were a crisis in the Taiwan Strait. So I remain quite worried despite the fact that Russia's military has profoundly underperformed in Ukraine.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“But I think on the one hand you'd say the Russians overestimated military capabilities. Surely the Chinese are now wondering if they're overestimating their capabilities too. That's one lesson you could draw. But there are other lessons that China might be drawing that are less reassuring. One example is that nuclear weapons work. You can threaten nuclear use and keep out outside powers from intervening. The Russians showed that very clearly. Biden has made very explicit that he's not going to do anything close to what would trigger Russia from escalating the war. So nuclear threats work. That's a lesson that is directly relevant to a China-Taiwan scenario. A second is that in Ukraine, it's been absolutely critical that Ukraine borders Poland because you can very straightforwardly ship arms, equipment, supplies over a land border to a neutral country. Taiwan has no such land borders, so you need to find ships that would go into Taiwan to resupply them. That's a very, very different proposition, not impossible, but very difficult. And so I think if China looks...”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Just to wrap this up, make the comparison to Russia and Ukraine for me. I know this is also an area of your expertise. We've seen this now, right? No one would ever invade Ukraine. Here's this, it's always on the precipice. And then they just did it. And it's a disaster for them on many levels. We kind of feel the same way about Taiwan. This would be a disaster on many levels. Is there a chance that China is looking at Russia and Ukraine and saying, oh, we could probably do that too?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“If you want to attract chipmaking firms to your country, you've got to make it cost competitive. And for the US, cost has been higher for a variety of reasons. Land is more expensive, environmental regulations are more strict. The tax regime is less generous. And so if the U.S. wants more chipmaking, it's got to spend the money to make it more attractive for chip firms to invest. But I think capital expenditure is necessary, but it's not sufficient because in addition to the CapEx, you need the expertise. And that's something that the Taiwanese realized very early. It wasn't just that they put forward a lot of money. They also made sure that hundreds of Taiwanese engineers were doing PhDs in electrical engineering at Berkeley and Stanford from the 1950s. And so although Taiwan seems a long way from Silicon Valley, in fact, there were very few places in the world that had so many deep personal connections to Silicon Valley as Taiwan. And when Morris Chang moved to Taiwan in the 1980s, he found former classmates, former”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Clearly, it's worth, I mean, we should talk about Russia and Ukraine. I think there's a parallel there to potential conflicts with China and Taiwan, but I just want to finish the thought here. When you say the Taiwanese government was like, we need this. We're going to spend the money on having a chip industry. Earlier you said you need to build the next generation of chip manufacturing companies. You need enormous amount of capital, long-term vision, and you have to subsidize a bunch of stuff. That's what the Chinese government does, right? They will just happily build oversupply. Here's 95 bridges in economy will arrive here one day. The United States does not do that. We're horrible at that, almost at every level. We're successful maybe despite it. I think there are some people who will tell you we're successful because of it. But we don't do that. Is that what is absolutely necessary, though, for the United States to say we are going to build the chipmaking industry? It has strategic purposes that we realize.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“That's right, there was a direct linkage in the Taiwanese government's mind between more US investment, more criticality in U.S. supply chains, and more credible U.S. security guarantees. And that's why the Taiwanese government put up over half the capital in TSMC when it was founded. It was a direct project of the Taiwanese government to make Taiwan more indispensable in electronic supply chains. And it's worked.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Well, in hindsight, it would have been great if they'd established it in New Zealand or in Switzerland, but Morris Chang had spent some time in Taiwan as a taxis instruments executive. He'd help TI set up a facility there in the late 1960s. And so he'd gotten to know some of the Taiwanese government officials. And they wanted more U.S. investment. They wanted to be more plugged into U.S. supply chains as a way of guaranteeing their security. They bet that integration was the best way to ensure that the U.S. would help defend Taiwan. And today we're seeing the fruits of that strategy borne up because Taiwan is important not only because of its geopolitical significance, but also because if there were a war, it would be catastrophic for the world's tech sector and all the world's manufacturing too.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Why put it in such a perilous geopolitical region? When I think about TSMC now, I'm like, they have to employ as many foreign policy experts, as many lobbyists as they do people who are relentlessly focused on manufacturing inefficiency just because of their location more than anything else, their location. Why choose Taiwan?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“know Morris Chang is officially retired, but in fact he regularly shows up in TSMC's offices and in TSMC's events. So I'm not sure if we should really say that he's no longer there. But I think the culture he put in place does endure in terms of the willingness to take big bats in terms of R&D decisions and in terms of capital expenditure decisions, in terms of the relentlessness with which TSMC hones its manufacturing processes, which Morris Cheng's co-workers from the 1950s would talk about the ferocity with which he would find inefficiencies in the manufacturing process and then push them out of the assembly lines as fast as he could. I think that commitment to manufacturing excellence is what made TSMC to where it is today and that stems in no small part to Morris Chang and the culture that he instilled.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“I think TSMC is profoundly underrated. It is a very opaque company. They're very proud of themselves. They're very opaque. It's hard to know how they work. What's your sense of TSMC? I mean, Morshang isn't there anymore. How does the culture persist? What are its new leaders like?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“He's, I think, the most underrated business person in the last 100 years. Most people have never heard of him, even though we all rely on products that his company produces every single day. And his life, I think, is a fascinating microcosm of the chip industry as a whole, born in mainland China, moved to the US right after the revolution, enrolled in Harvard when he was the only Chinese-American student in his class. And then personally built the chip industry working on production lines at Texas Instruments before founding TSMC. So all of the big shifts in the chip industry and computing technology over the last 75 years are shifts that not only, he doesn't only illustrate, he actually made them happen. And so we all owe a lot to Morris Shang. And I wish more people had heard of him because I think his importance is really profoundly underrated.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“TSMC emerged thanks to Morris Chang, who is the founder of the company in 1987. He actually spent his career at Texas Instruments, lived in Texas for most of his life before that point, and was the person who had the visionary idea to create a foundry business that didn't design any chips, only manufactured them, which at the time seemed like a crazy concept since there were no fabulous chip design firms. He had no customers when he started. But he began convincing companies that he'd do all the manufacturing for them, he'd take all the production risk, all they had to do was give him chip designs, and he'd return functional chips. And that model proved extraordinarily successful because it let TSMC scale by serving lots of different customers. And that scale in turn let TSMC hone its production processes because the more chips they produce, the more they learn from the process of actually manufacturing each ship. And so there's a direct relationship between the fact that TSMC is both the world's largest shipmaker.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Yes, in terms of a war or a blockade between China and Taiwan, the impact on not just the tech sector but all manufacturing would be close to catastrophic. So TSMC produces 90% of the world's most advanced processors, but more than that, it produces over one-third of the new computing power the world adds each year. If you add up all the transistors, produce them processor chips, over a third of them are produced in Taiwan. And so it certainly would be catastrophic to Apple or to AMD if we were to lose access to TSMC's facilities, but it's also dishwashers and microwaves and autos that would face tremendous disruptions. I mean, we'd be back to manufacturing crisis that would feel equivalent to 1929. in terms of its shock. You wouldn't be able to buy a car for a year or two and the same level of disruption for all sorts of manufactured goods. It's a huge problem. It's such a big problem that companies really struggle to get their heads around how do you insure against it? Because the costs of”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“There's real political risks because the T and TSMC is Taiwan. The fabs are in Taiwan, especially the leading edge fabs. If there's strangeness between the United States, China, and Taiwan, the iPhone economy grinds to a halt, right? Like the chips just go away. The NVIDIA GPU economy grinds to a halt. Is that something that we should be more worried about”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“I think most of TSMC's customers have gotten used to the fact that TSMC's has an extraordinary track record in managing their own supply chain and making sure that problems are solved before they actually happen. And so one of the reasons customers love working with the SMC is that they don't have to wake up in the morning worried about what's going to happen upstream of TSMC's production. Are people thinking more about the upstream supply chain than they ever have before because of these restrictions? Absolutely. But if you're Apple or your NVIDIA, they don't really apply to you because all of the inputs that TSCC relies on for its production are produced in the US, Europe, or Japan. And there's no chance that those countries are going to control their transfer to Taiwan anytime soon. So you're actually pretty secure in terms of your upstream. It's your downstream. It's your assembly of chips, which is often taking place in China. And then you're assembling to final goods. That's where you've got the most political risk, both in terms of what Beijing does.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Right, they're wholly dependent on TSMC, which is in turn wholly dependent on ASML. What is that relationship like? Does Tim Cook wake up in the morning worried about Dutch restrictions on ASML exports, or is he a TSMC customer? Or is that just an API where he places an order and the chips comes out?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“When I think about the three companies that are doing the best at pushing computing power forward for a given ship, it's Apple, it's Nvidia, to some extent AMD, maybe it's three and a half companies, and then it's TSMC, which is the manufacturer for those two and a half companies there. Apple's really good at packaging. They're really good at optimizing their software for their own hardware. They're really good at pushing the limits of ARM. Nvidia, obviously the leader in GPUs. AMD. less of a jump, I think, over the average Intel chip, but doing better just because they're using TSMC's manufacturing capabilities to improve their battery life to performance ratio. I look at those three companies, three and a half companies, and I think, okay, what they're dependent on is TSMC. If TSMC was not able to push forward manufacturing, their techniques for building, designing better chips would actually be for naught.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Long runway that goes well beyond 2040 in terms of the things we can do to produce more computing power. And so for that reason, I would be pretty skeptical of the thesis that we're ever going to hit a brick wall.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Becomes fixed. Well, it depends on what we mean when we say Moore's law expires. So at some point, it will be impossible to shrink transistors further. But that doesn't necessarily mean that the computing power you can get out of an individual chip will necessarily come to a halt because you can package them in different ways. You can put memory closer to the processing power. You can improve your interconnects. You can put photonics on a chip. There's lots of different techniques that are, in many cases, just in their infancy that are creating new ways to get more computing power out of chips. And all those will require both creative design and really precise machine tools to make. So even if you were to tell me, transistors won't shrink by a single nanometer after 2030, I would still say that we're going to get more computing power out of a square inch of silicon well throughout the 2030s and beyond using all of these other techniques. And so if you take this kind of most expansive view of Moore's law and say all the different things you can do to tweak a chip to get more out of it, I think there's a really”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“I think it's inevitable that China catches up to the current status quo at some point when that happens, whether that's in 2027 or 2035, I don't know. But I think it's not going to be in 2024. It's multiple years out. Will China ever catch up to the cutting edge? I'm not sure that the answer to that question is yes. Even if more. But I'm saying that.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“The reason I ask in this context is we're talking about limiting advanced shipmaking equipment to China. We're talking about the next generation of GPUs or other AI acceleration chips. 2030 is tomorrow on the scale of industrial policy, on the scale of foreign policy. If the roadmaps of advancements in shipmaking and even in 2040, that's still kind of tomorrow on the scale of industrial policy. Isn't it inevitable that China will catch up, even if they're restricted in all these ways? Are we just buying time or are we actually creating a durable, sustaining advantage?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“History says the appropriate prediction is they'll figure it out, right? I mean, that is why it's called Moore's Law. It's just at some point you're running out of things to even measure, you're running out of units, like Intel had to move to Angstroms instead of nanometers. Maybe that was some branding, but they definitely did it”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“So, at some point, the answer is yes, but we're not talking about individual atoms yet. We're talking about layers of materials measured in individual atoms, but transistors themselves have lots of atoms in them, even at their current microscopic scale. And I think we've got a pretty clear line of sight, at least through 2030 or so, in the existing plans of firms like TSMC and Intel as to how they're going to keep shrinking transistors, stacking them on top of each other, using more tricks to get more of them on ships. Beyond 20, 30 or so, it's harder to say, but it's always been hard to look too far into the future. So I don't know how meaningful.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“So that smaller and smaller transistor is you have a chapter in this in the book. I'm sure actually decoder listeners are very familiar with this concept of Moore's law, which is just a prediction that the chip industry will double the density of transistors on a chip every year. We are already talking about having to fire lasers at a ball of tin through the world's flattest mirrors and then building hyperspecific optics to make them even smaller. There are a limit like it feels I feel dumb being like, is there a limit to Moore's law because anyone could have said that at any time in the past 40 years and been proven a fool, but we are talking now on the level of atoms, is there a limit that the chip industry sees? Okay, we're not going to get past the level of individual atoms.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“That's basic. More is to come. So the next generation is going to be called high numerical aperture EV, which is going to have more sophisticated optics that will let you carve more precise chips. So those machines are supposed to be available in three or so years. They're going to cost twice as much as the basic, if you will, EV tools. And then beyond that, R&D underway for what ASML calls hypernumerical aperture. So even more specific optics, which it's unclear if it'll work. It's a decade away from production, but that's where R&D already is happening. And that's what we need if we're going to make smaller and smaller transistors on more and more sophisticated chips.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“More manufacturing, but an additional 25% is going to go to funding RD. And part of that will go to the next generation tools, including potentially next generation lithography systems, which will be needed in five or ten years' time.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think when it comes to should we have a competitor to ASML and advanced lithography, I think the answer is that the cost benefit there just doesn't play out. I think we're likely to get the Dutch implementing controls that are pretty similar to US controls over the next couple of months. I think we'll see that be the result of these conversations. I think there's not much supply risk with the Netherlands. Nobody's worried about the Netherlands not shipping to US firms. And I think the cost of setting up an alternative lithography firm would be very expensive because, again, ASML has unique capabilities that they've built up over 30 years. It would be very hard to replicate that or to build a competitor. So I think our production and our R&D dollars are much better spent elsewhere. But I think when you talk about next generation lithography and next generation tools, that's a great place to invest. And I think if you look at the way the Commerce Department is planning to spend the Chips Act money, you'll find is that three-quarters of the funds are going to go to incentives.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“The challenges that diversification is very expensive. If you want to pay for additional capacity that you're not going to use in the chip industry, you're going to spend a ton of money. Just a single new cutting-edge shipmaking facility costs $20 or $25 billion. And it's cutting edge just for a couple years. I don't think there's really a lot of appetite in the US for undertaking the tremendous capital expenditure that you need to build surplus capacity. At the margin, we're going to get some through the Chips Act, but we're not going to get a ton of surplus capacity. And so we need companies that are going to have functional business models after we help them get off the ground with their foundry businesses in the U.S. And that's why I think it does make sense to bet on multiple companies and see which ones are able to produce that. I don't think it's necessarily the case though that we're going to end up with one company winning and the other's losing. It could well be that we end up with multiple commercially viable foundries with capacity in the US and that would be a great outcome.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“And that's like a very American way of doing it, right? It's like we're going to subsidize the creation of a market and then whoever wins wins. But don't you kind of just end up at someone's going to win the race and then we have another weird monopoly in the United States. Is there any thought to actually what you need is diversification at every level of the supply chain”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“I think that's right. I think Intel is of the three leading firms in producing processor chips. Intel is the one that would naturally invest in the US because it's home based in the US. I think it's also worth noting, though, that Intel doesn't have an existing foundry business in the U.S. And so in terms of building up foundry capacity in the U.S., we're starting from a pretty low base across the board. Samsung has a facility, global foundries has facilities that are not the most leading edge but have some impressive capabilities and some meaningful scale as well. But in terms of building up scale and foundry, everyone is starting from a pretty basic starting point. And so in some ways, that's why the US is probably going to end up betting not solely on one firm, but actually on all three, on Intel, on TSMC, and on Samsung, trying to get all of them to invest more in the US and see which one is able to develop the biggest facilities, the most functional business model in the US, see who wins the race.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Reason I ask about Intel specifically is because it is the only choice. There's not another scaled American producer of chips. There's a little bit of TSMC activity here. There's a little bit of Samsung activity here, but it's not their leading edge process nodes. TSMC actually hasn't even really started its scale yet. I think they're going to start Arizona. Intel's what we got. And it feels like if they were much more successful, the national security conversation, the supply chain conversation, the export control conversation might be very different. But because Intel is where it's at in this moment of pretty dramatic transformation, it has downstream impacts on how we're dealing with China.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Well, no, I think there's no doubt that he's turned the culture around at Intel, but I think you're right to outline the challenges that Intel faces on the process technology manufacturing side, on the design side, and on the business model side with creating this new foundry business. It's going to be hard. I think tackling each of these three challenges simultaneously is the only choice he's got because Intel has to deal with all of them. But you're right to say that it's a tall order ahead of him. And I think a lot depends for the United States on whether or not Intel succeeds.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“And so now Intel is saying, okay, we'll do EUV. Just walk me through that process. They've got a big competitor at TSMC that is obviously embedded with ASML. It's very good because its business model is just manufacturing chips, all its energy. It's focused at manufacturing chips. Intel is at a place now where I even asked Pat about this. I said, do you think of yourself as the national champion in the United States? You're it. You're what the Biden administration has in this moment in terms of a large chipmaking concern that can insulate the United States from the global supply chain. And he was like, yeah, I don't know about that, but he's got to step it up and become a foundry. That's what he wants to do. He said he would put AMD and AMD logo on the side of an Intel fab if AMD wants to manufacture chips there. But he's got to go and buy an EUV machine from ASML. He's got to learn how to make arm chips all while developing the next generation of Intels own x86 chips. Is that possible? Does that seem like we're...”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“And so that was the low risk option in some ways was to try that. In hindsight, it didn't work. It was a terrible bet. But you can understand why they took that bet. I think there was, though, to point some blame back at the accountants. I think there was a bit too much risk aversion and an unwillingness to, as Gelsinger said, to prepare multiple pathways for the R&D and see which one worked. And that was probably a bit of cost-cutting that seemed wise at the time in terms of spending resources efficiently, but hindsight had a tremendous cost for Intel because it left them unprepared. When quad patterning turned out to be inefficient and in some cases completely incapable of producing the precision that Intel needed.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“So UV was a technology that was supposed to be production ready a decade before it actually emerged. The development process had repeated delays, billion dollar cost overruns. And for a long time in the late 2000s and early 2010s, it seemed like something that might completely fail. And so up until 2015, it was really very uncertain whether or not this would ever work. And if it did work, whether it would be remotely cost competitive. And so in that context of uncertainty, you can understand why there are people at Intel who wanted to bet against UV and bet instead on what they called quad patterning, which means using existing lithography machines that everyone knows works and just do more lithography runs to carve ever more precise circuits. I was obviously going to be more expensive than doing fewer runs of lithography because you have more steps. But everyone with the machines”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Now, in hindsight, the answer is you were extremely stupid. And he's the new guy and he's fixing it. And I think that's why he's allowed to say that they were being stupid. Were they actually stupid in that moment? Is it correct to say, oh, you can bet against EUV and maybe something else will pan out? Or is that just Intel being run by a series of accountants instead of engineers? And now they have an engineer.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“We were betting against it, and because of some of the other, we had taken a lot of risk in Intel 10. We don't need EUV, we'll go to advanced quad patterning the lithography. We were doing other things to avoid needing EUV. Those things weren't panning out. At a minimum, we should have had a parallel program on a UV that says, huh, if we got this wrong, if we get some of this quad patterning and some of the other techniques that we were doing in self-aligning wrong, hey, we should have had a program, but we didn't. We were betting against it. How stupid could we be?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“So I'm going to quote to you from Pat Gelsinger when he was on Decoder a few months ago. I asked him about EUV because Intel famously bet against EUV and now they're going to buy machines from ASML, put them in the United States, in Ohio, and try to build next generation chips. So I said, what happened with the UV? And here's his answer. He said.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“In companies have really unique knowledge that it's hard for anyone else to acquire. And that provides a really strong moat around those companies because there's no straightforward way for anyone who's not working at these companies to develop the requisite knowledge. So the combination of capital intensivity plus really unique knowledge makes it very difficult to set up any sort of competing firms.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Across the chip industry, what you find over the last couple of years is that there's been a real trend to concentration with in many cases that just a handful and in some cases just one company capable of producing the types of software, the types of machinery involved. And there's two reasons for that. One is that many parts of the shipmaking process are just brutally capital intensive. It's extraordinarily expensive to make this machinery. And that really disincentivizes competition because a new entrant has to spend billions of dollars before they can see if their product even works. That's one reason. The second reason is that the types of knowledge and expertise you need to produce these types of tools is something you can't study in the abstract. You've got to hone it over the course of your manufacturing. There's no amount of training in a PhD program that's going to let you understand how these systems work when they're actually manufactured. You've got to have your hands on the machine tweaking it over time. And that means that people who are working on these tools”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“How do we even end up in a situation where there's one Dutch company that we have to get a hold of in order to make sure China doesn't gain these capabilities? Again, in a functional market, there would be, especially for something like chips, which are so important to everything, there would be multiple companies with multiple different approaches to making chips at the scale that modern ships are required to make at the process nodes that we operate it now. But instead, there's just one and it's in the Netherlands. How did that happen?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Well, this is the big question US strategy will succeed if China can't catch up on its own, and the U.S. is betting that the answer is China can't catch up or at least can't catch up anytime soon. But there's some uncertainty around this. It's just hard to predict whether China will find ways to produce some of the necessary technology domestically or find ways to split apart the Western coalition and acquire some pieces of tech from countries that are unwilling to follow U.S. lead on export controls. My best guess would be that the controls that US and also Japan are pretty going to impose will be really problematic for China over the next couple of years and potentially over the next 10 years or so in terms of making advanced semiconductors. But the more countries that are on board with these controls, and that's what the Dutch are so important, the more likely of these controls are to work.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“By the US, but Japan, South Korea, Taiwan, a number of different countries have taken steps to impose new investment screening mechanisms or to restrict technology or knowledge transfer to China when it comes to advanced semiconductors.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“I think there really is a coherent strategy, and I would differentiate what's happening now from Trump's trade war on the tariffs. It's really a separate track of discussions. I would also differentiate it from the semiconductor shortages. The shortages were not about which country is capable of producing the most advanced chips. What you find is that inside the national security bureaucracy on the NSC and the intelligence agencies over the past seven or so years, there's been an increasing concern that China is making real advances in shipmaking capabilities just as it's becoming clearer and clearer the ways in which advanced chip capabilities and especially the types of chips that go into data centers will be critical in training next generation AI systems. And because of that, from the late Obama administration all the way up to the present, including the Trump administration, there's been a fair amount of coherence in terms of the policy with regard to restricting China's access to advanced ship technologies. And it's something that's been done not only”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Describing kind of an escalating regime of sanctions against China in terms of making chips, in terms of technology transfer from UNITA. Is that all of a piece? Is that a strategy, or is that the Trump administration was mad at China so they could, you know, they imposed sanctions against Huawei and now the Biden administration has woken up to the chip shortage because of the pandemic. And they're like, we need a national chip foundry. Okay, it's Intel do something in Ohio. Here's some other stuff. Is there coherence to all of these moves or is it just reactive?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“The argument for is that even the second generation most advanced tools can be used to produce some pretty sophisticated chips, which is certainly true. The argument against is that it will be expensive for ASML and other companies to lose market share because Chinese customers have been investing very, very heavily in chipmaking capacity subsidized very heavily by the Chinese government over the past decade. And for many toolmakers, China's become a really important market for non-cutting-edge tools. And so this will be a costly stop if the Netherlands implements these types of export controls that restrict not only the most cutting edge, but also the second generation most cutting edge tools. The cost will be in the billions of dollars in euros for leading toolmakers.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“Transferring this equipment to China. There are a number of Chinese firms that have tried to become advanced enough to buy ASMLs, EUV tools, SMIC, China's leading foundry, is the best example of this. But the Dutch have been imposing controls on EUV exports for a couple of years, not letting ASML ship these tools to China. Now the US wants the Dutch to impose controls on a broader set of lithography tools, not only the most advanced, but also the second most advanced set of tools. And that's something that is a new ask of the US government and is requiring pretty extensive negotiations and discussions between the US and the Netherlands about whether this will be allowed or not.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“You have access to advanced shipmaking tools like those produced by ASML and this small number of other advanced toolmakers in the world, you've got a reasonably good shot at making advanced chips. Now it's still not guaranteed you can do it, but the tools are one of the key choke points that only a couple of companies can produce and that none of them are produced in China. And so the US is thinking about next generation military and intelligence systems, which will rely increasingly on artificial intelligence and AI systems are trained in vast data centers, which are full of sophisticated chips like GPUs, which are the type of chips that are used to train AI systems. And if you can't mass manufacture cutting-edge chips, you can't get the data center capacity that you need to train AI systems. And so that's what the US is ultimately trying to accomplish, trying to stop China from developing advanced data centers, but it's using the machine tools as the choke point, preventing U.S. firms, but also trying to prevent Japanese and Dutch firms.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“I want to come to that because that history with Intel is really interesting. We actually had Pat Gelsinger, the CEO of Intel, on the show recently. I asked him at EUV. We can get to his answer and why he thinks it was dumb that Intel didn't win this race. But I want to just come back to where we started, which is President Biden is in the Netherlands and he's pressuring the prime minister to restrict exports of ASNL devices to China. You said there's only a handful of companies in the world that can use these machines. None of the companies you named are Chinese companies. Why is this a concern that the Dutch government will allow exports to China?”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT
“That's absolutely right, and knowing how to use it as a process that not only requires starting with a PhD in electrical engineering or material science, but really requires years of working with the tools. The process of developing an UV tool took 30 years. And that just gives you a sense of the scale of precision that was needed to actually harness it.”
2023-01-31 · Decoder with Nilay Patel · Inside the global battle over chip manufacturing · IDENTIFIED FROM THE TRANSCRIPT