1. Extremely expensive equipment, both directly related to IC fabrication (e.g., lithography) and indirectly related (e.g., air filtration, water processing, stabilization).
2. A large amount of skilled labor onsite to operate and maintain the complex equipment.
3. Constant supply of resources, including power, water, and sand.
The next two statements are more helpful.
You are talking about something that is forever edging towards atomic size manufacturing. $7B is hardly expensive in today's terms. Not to mention the scale. Annual Smartphone sales is 1.2B unit. You have multiple silicons within a single smartphone.
>If so, is there maybe a market for smaller fabs that only produce small scale batches of specialized chips?
Smaller Fabs will just be as expensive. You built larger fabs ( as you have noted ) to try and amortised over larger volume. ( Lower Unit Cost ) Which is the problem why NAND and DRAM capacity planning are hard, their Fab size have grown to a scale that it is hard to build additional one without some careful consideration. ( High Cost, High Risk )
the processing steps that is involved is like 300+. that's why you hear the term "yield" in the semis foundry business. each step that went wrong is going to affect your yield.
here is a short video that show the semis fab process.
1% loss: 4.9% yield
0.5% loss: 22.2% yield
0.1% loss: 74% yield
0.01% loss: 97% yield
You have to have an error rate in the range of X failures per thousand per step to get above 50% yield, and X/10000 for a really good yield. And all of these things are so small that a spec of dust causes failures.