Italy, Intel close to $5B deal for chip factory | Hacker News Reader

Italy, Intel close to $5B deal for chip factory

reuters.com

102 pointsKoftaBob59 comments

Please educate me! I often hear 'billions' quoted in chip factory related deals. What is it about chip manufacturing that's costing so much, which requires such a scale of investment? Is it the R&D, or are the factories too sophisticated, or are there too many people involved, or something else?

Some of the machines are already 100s of millions of $.

All of the above.

You need thousands of highly skilled engineers to operate an advanced fab. You need extremely advanced and expensive specialized equipment - look up ASML for a general idea of what this equipment does. You need a huge, purpose-built cleanroom that is many orders of magnitude “cleaner” than an operating room. You need a structure (and location) that has virtually zero vibration or noise. You need an constant, high-volume supply of a bunch of resources including water, power, and sand. And the list goes on.

Edit: Good video on ASML and semiconductor fabrication equipment in general: https://www.youtube.com/watch?v=iSVHp6CAyQ8

Is it true that it's common TSMC practice to use PhD:s to continously babysit and tweak manufacturing processes? Does Intel handle that aspect differently?

Someone more knowledgeable can probably chime in, but my understanding is that, yes, fabs in general do employ a good number of PhDs.

Why is this a bad thing?

Is it really "all of the above?" The R&D is obviously very expensive as well, but I'm under the impression that the number in this sort of headline is usually the actual cost of the factory. (Although I guess money is fungible)

I’m not an expert on the financials, but R&D costs need to be recouped somehow. My uneducated guess is that R&D expenditures are amortized across fabs in the form of indirect costs.

> water

Even simple things like "water" is not just water but instead you need ultrapure water. The machines that purify water to the purity semiconductor industry needs it are not cheap.

Very expensive equipment.

Ultra high precision set up of the equipment.

Storing, using and disposing of some very toxic chemicals.

Convincing ultra specialist, high demand/skill/income engineers to relocate to place X.

These processes are so complex that it takes months for a single wafer to be processed from one end to the other, and wafers aren't like a fine wine that's left alone for long.

If you are not from the US or Canada remember Billions are Milliards for the rest of us.

Oddly enough, the same difference exists between Portugal's portuguese (original) and Brazil's (colony) :-)

See "How big is a billion?" by Numberphile:

* https://www.youtube.com/watch?v=C-52AI_ojyQ

* https://en.wikipedia.org/wiki/Long_and_short_scales

(Given a choice, I would go with the long system, but sadly that doesn't seem to be the timeline we live in.)

Fabricating chips is the most sophisticated manufacturing that humans have ever built. Key dimensions in a single transistor are about the length of 100 hydrogen atoms. It takes a lot of technology to control things at that scale, and build billions of them in one chip.

What's always blown me away is that chips are built up in layers. These layers are built up by lithography, which involves depositing an extremely thin sheet of material and then etching out the pattern for wires, etc. The etching requires accurately exposing a mask pattern on the layer. Each subsequent layer must perfectly align with the layer below, or the chip is dead. We're talking 1 to 2nm alignment (millionths of a mm) . So a 'printing head' must move accross the wafer stepping accross for each chip and land exactly over the previous layer. The stepping is extremely quick. So move 20cm and stop within 1nm, that's orders of mangintude in speed and accuracy. consistently. Jesus, how do they build these things!

The newer chip fabs, eg. TSMC N5, and upcoming N3 cost around $20 billion. This Italian plant is not for fab, but for dicing the wafers, packaging, etc. The advanced fab processes used by Apple, Qualcomm, NVidea, Samsung, Intel (soon), and others rely on ASML's EUV (Extreme Ultra Violet) lithography (for fine lines in printing. Each succeeding process has more layers done with the EUV thus requires more of these machines and the cost is around $160 million each. A newer version, for processes such as Intel plans in having in production in 2025, costs about $330 million each. Again, many of these machines are needed for each wafer fab.

Interesting choice but Italy doesn’t seem to be a great choice to me. In fact most of Southern Europe has endemic economic problems that can degenerate them completely to bankruptcy and other larger societal problems. If you have not followed the latest Italian politics I recommend you do so because they are (and have been for a while) in a mess. If a brexit like event happens, which I think if ever happens, Italy and Spain (along with Greece) would be the first to break up from EU.

I think countries such as France and Germany would be more stable choices but corporations are going to leverage workers lower wages to do anything and this is another case even if that means risking long term stability.

Well countries like people need opportunities even when things are not going well. If we take your logic once a country is on the down slope we would just abandon them? Personally I'm glad to hear of positive news coming out of Italy.

Have mercy, my dude!

If you really follow Italian politics you'd know it's been like that for 200+ years -- that's how the place operates. And with all that going on they managed to create a world-class automotive industry, ship-building industry, industrial equipment industry, etc.

I have the feeling you are talking about Italy through the lens of western media, and not through first-hand knowledge or experience.

Industrially, Italy is much more like South Korea than Greece or Spain.

Oh I know that. Italians are brilliant people and much of what we have today including art, literature (not just technology) we owe it to them. But you must acknowledge economic grievances have consequences on the health of a nation and its populace. Italy is a favourite spring travel destination for me and over the decade I have seen how the people in that place, especially in South, have become poorer, become increasingly pessimistic and in general have turned to nihilism (not all but significant).

Wage is and has been low and the cost of living has been rising rapidly and young people (not all but many) are subscribing to very dangerous ideologies (both left and right). This stifling will only get worse, even in the middle of a tightening cycle, ECB is insisting they have to keep buying Italian bonds to keep them afloat, what signal does that send? Even euro dollar market is taking a hit partly because of the political turmoil in Italy.

There is a huge migrant population that are “ghettoized” so to speak and there doesn’t seem to be a long term plan with them.

Well, if you call what is going on in italy "turmoil" I must remind you that no one has assaulted major political sites in their capitol in a decade, at least in a major way. Anyway who ever said that turmoil is mutually exclusive with engineering prowess?

To be entirely honest what italy has in terms of political situation is an excess of stability, but i digress.

Anyway the real issue in my view is that the EU chips act's investment size is anemic compared to the recent equivalent US initiative. But still it's a step in the right direction and the amount allocated to italy is so comparatively small as to be negligible.

In many ways Italy is two countries put together. Northern Italy is a lot more like France or Germany.

There is a political party that started out with the ideal to "split" Italy into a more "productive" north and a "lazy" south.

Ironically quite a lot of the "lazy" southerners have migrated into the "productive north" because they jobs are there. I wonder what kind of immigration policies would such an socio political arrangement come up with. "Luckily" in the last few years they found a new enemy: other people with browner skin. And so the party grew from being a north only party to being a national party that got quite a few votes from people that until a few years ago were loudly despised because they were lazy southern italians.

You’re making it sound as if Italy is a third-world country heading towards societal collapse. It’s the second largest manufacturer in the EU with a lot of companies producing high-tech products (Arduino is Italian, for example). It’s also a G7 member and the 3rd largest economy in the EU and Eurozone.

Northern Italy is like France.

Southern Italy is like Greece.

It's not actually politically unstable like Chile, or Ukraine, more like UK - their leadership just 'collapsed' they'll be a new suit soon to replace the last guy.

We're going to be drowning in a glut of chips in 5 years.

..and the feast and famine cycle of the semiconductor industry continues.

I suspect in 10 years time a lot of these factories will either be mothballed, closed, or the original plans scaled back.

Not unless local governments keep subsidizing them to try and maintain domestic production.

Will we really be though?

Chips are getting put into everything now and will only continue to expand as they get cheaper. Amazon and others putting Alexa or equivalent into everything. Necessary or not. Coffee is done, pings a phone. Dishwasher, etc. Not to mention vehicles.

I wonder how long until my drill needlessly records how many holes it has drilled over it's lifetime. Or so that I can rent it and pay per hole drilled.

Make more and they will be used. As much as I will personally miss dumb equipment that just worked.

Even Febreze has a plug-in product that apparent uses a chip: https://www.businesswire.com/news/home/20210203005168/en/Sce...

If you have a battery powered drill, it probably has at least one chip for the battery management and one for the speed control.

Silicon ICs have been commonplace in appliances for decades now, “smart” or not. My appliances are all dumb as bricks and there are probably a couple dozen ICs in my kitchen.

Plug-in drills are much better than battery. :)

Not if you're using it on a job site. A battery operated drill is a lot lighterweight than having to lug around a gas or diesel generator to plug your electric corded drill into.

If it were 2005, I'd agree with you.

It depends on what you drill and where.

What node size are these new fabs aiming for? And exactly for what are they geared for? CPUs? GPUs? Ram? Flash? Other chips?

I don't know. With all these threats of war between China and Taiwan, I would imagine the exact opposite scenario is also a real possibility, where a conflict arises and then for some reason TSMC is unable to operate for at least a while.

Not really. Intel, Nvidia and AMD have learned to ramp supply up and down depending on demand to ensure they keep their margins very healthy.

Even if their costs come down due to fab oversupply, don't expect them to pass their savings along to you and me.

They have near monopolies in their sectors so have no incentive to lower prices too much.

Why intel? Aren't EU supposed to become independent about top-notch chip manufacturing? Scam? Oh, and node size?

As an European, because outside of ASML and a few other small but important suppliers to the semi industry like Zeiss and Trumpf, we don't have any high margin giant dogs in this fight the size of Intel, GloFo, Samsung or TSMC that can extract huge profits. And that's before we go into top fabless companies (AMD, Apple, Nvidia, Qualcomm) where the US just mops the floor with all EU companies put together.

The EU in general is just weak, old fashioned and too risk adverse and when it comes to heavily investing in cutting edge tech. And defense. And paying competitive wages. And resistance to offshoring. And energy independence. And being proactive on Russian threats. And sticking up to China. And border security. etc.

At least we have Airbus.

cries in €60k/year senior engineer salary

You get 60k? I get way less.

In a high cost country, as a mid-senior, before the 45% taxes, where a decent small apartment is >400k€ and a house is nearly one million €.

Also, don't compare yourself with random people on the internet. No matter how much you make, someone will always make way more than you with less experience and less work. It's a never ending vicious cycle towards depression and self loathing.

yeah the EU (governing bodies) doesn't seem to like or understand tech too much

This is a packaging and assembly plant, so it probably isn't poaching the sort of talent that the EU would need to, say, implement a new process node if they were going to try to do something like that.

Honest question: Why are all these chip companies building fabs in first-world, expensive countries (e.g., Japan, the US, Italy)?

Wouldn't building a fab, say, somewhere in Africa, be a lot cheaper?

No. You also need stable government and good infrastructure (electricity, water supply, transportation etc). Most importantly, you need highly educated human resource in this field. (Importing workers from other countries doesn't make sense as you would have to pay high wages, negating the cost advantage you are seeking). Note also that you need supportive government policies - fabs consume huge amount of water and the treated water released back still is unfit and polluting. Water is a really a tricky issue in many countries because you need it for agriculture and everyday use, and this can often become a contentious political issue. Most governments are not willing to standup to farmers and ordinary citizens if there is a water shortage as they know that's a battle they can't often win politically.

Thanks for your answer.

So for the first-world countries, what makes the current counties being targeted the chosen targets? Why Italy instead of Israel? Why Japan instead of Germany?

Israel has an Intel fab already

Wikipedia's list of fab lines https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat... has 4 in Italy, 3 Intel ones in Israel and 2 by an Israeli firm named Tower Semiconductor, which on its page has 2 in the US plus there's a joint venture with more. To get an idea about how this can go in the less cutting edge market, all but one of their fab lines was purchased from another company or in one case acquired through a merger.

Geopolitics, lobbying and money. Businesses go where their government can get them the best deal, and to countries whose government most accommodate their needs. Israel and Japan are close allies of the US. Japan is willing to invest a lot of money too in fabs. The Anglosphere distrust the Germans and the French, and vice versa.

> You need stable government

So yes, Italy is the obvious choice :-).

Italy is footing the bill (40%), Intel can use its own money to do what it wants. But what it wants is stock buybacks and dividends, so they have no money left for R&D.

This apparently is not a fab. It is packaging/assembly. Can’t figure out why it’s this expensive, unless it’s absolutely huge. Can’t figure out why Italy for something done usually in Penang, Costa Rica, etc.

Please enlighten me.

That’s small. The Arizona and Ohio ones are 20B+

Salaries are lower in EU.

It's capital expenditure, not salaries. And even then companies pay less in the US to reach median income than they do in Italy for the same.

It includes the cost of construction, which includes salaries of labour.

Arizona and Ohio are silicon chip fabs, in Italy it would be a packaging fab taking silicon dies from other Intel fabs to produced packaged chips. Packaging can be pretty high tech and challenging nowadays, but it's not the same cost as silicon dies production.

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