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 blogs can help you take care of deleting your private information online yourself but if you're like me don't have time to keep track of it all and keep up to date on it to delete team can do it all for you delete me is a hands-free subscription service that will remove your personal information that's being sold online delete means privacy experts remove you from Google and 100 plus data Brokers all year long get a privacy report in seven days remove all your personal information like phone address Etc dilling me will also monitor sites and repeat removal as needed and users can even make custom removal requests they believe in your right to own manage and remove your personal information since the ways companies collect share and sell your data is constantly changing the Leeming Solutions are also evolving as well so stay a step ahead of your privacy online and save 20 on all plans with code Ricky when you check out links in description huge thanks to 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