Companies that make chips
Source: Counterpoint research
Nature of business: The more advanced the chips being made the more capital intensive the process. For example, TSMC’s capital expenditure for 2022 will be $36bn, and in December 2022 it announced plans to triple its investment in Arizona from $12b to $40b in the coming years, where it will also bring the more advanced 3nm chips by 2026.
TSMC: More than 90% of the most advanced chips below 10nmn are made by TSMC.
Others: STMicroelectronics supplies chips for automotive and industrial markets that largely use “mature” chip technologies (those with transistors bigger than 10-nanometres)
Companies that design chips
Source: FT, “Europe’s bid to compete on chips”, December 14th, 2022
Companies that make the machines needed to make chips
ASML is the only manufacturer of Extreme Ultraviolet (EUV) machines, which are currently used to make 5nm and 7nm chips. The machines are incredibly difficult to replicate; involving 100,000s of components, 10s of billions of dollars of investment and two decades of research. In 2012, Intel, Samsung and TSMC had all invested directly in ASML to make sure it had the funding necessary to build EUV tools their chips would require. Natural light has a wavelength of several hundred nano meters. So as chips needed to become smaller, smaller wavelengths of light would be required, like EUV light at 12nm.
Tool makers
Applied materials is the world’s largest semiconductor tool-making company. For example, it makes the machines that apply the thin films of chemicals on top of silicon wafers as they are processed
LAM Research is the world leader in etching circuits into silicon wafers.
KLA has best tools for finding nano-meter-sized errors on wafers and lithography masks.
Carl-Zeiss provides the optical lenses critical for ASML’s EUV machines. They are the only company able to produce these lenses and are 25% owned by ASML.
Software makers to design chips
The software capable of laying out these transistors is provided by 3 American firms:
-Cadence
-Synopsis
-Mentor
–> together have 75% Market share
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