A well written article, and as a retired electrical engineer I can really relate to almost every sentence. I wanted to work on semiconductors (it was the major of my MSEE degree BTW), but all my employed friends went into software because it was apparently sexier and certainly paid more. Worse, what little federal money that was available for hardware seemed to all go to military contracting companies (think "Star Wars" initiative) and that wasn't something I wanted to work on.
Finally, about the STEM engineering problem. When I turned 38 my project got cancelled. It took me a few years to find anything remotely in my field of expertise. The industry seems only interested in "a few years of experience" engineers. Meanwhile the executives of several failed companies I worked for got paid millions every year. America needs a serious attitude adjustment!
I'd certainly would like to write more about this. I have plenty to say. I also taught science and maths (not a typo) in Vietnam for a while. The differences in attitude towards engineers in SE Asia is so very different than in America!
"Part of the lack of interest in semiconductors is due to the culture of repairing and tinkering with computing devices. [...] Unfortunately, the culture of repairing computers, game consoles, and smartphones, is dying in the western world due to a variety of legislative and company specific roadblocks."
This is SO true. I became interested in the industry decades ago because I liked to take things apart and see how they worked. This culture is critical to keep people interested in hardware!
Excellent work. I've covered the semiconductor industry as a journalist for nearly 30 years. Your article here highlights many of the issues I've reported with increasing alarm.
"Most of the largest semiconductor equipment, design, and software companies are based out of the US", I *think* that this is trying to say "Most of the largest semiconductor equipment, design, and software companies are based in the US", but as written, to a UK English speaker at least, it's very hard not to read it as saying what is written, i.,e. they're based outside the US. Perhaps it'd be worth a minor revision?
Funny how the author asks the government to do this and that. Isn't this a "free market" or not? Of course, it's not. The US will only play the "free market" card to others, in order to favor American businesses.
An excellent article with real, actionable takeaways. It would be so monumental to see the U.S. regain chip superiority (in this lifetime) before it really becomes too late.
The key is to SHARE articles like this (esp. to Congress) until policymakers listen & act!
Nice article and agree with all of it. One aspect that many articles of this type fail to mention is non-degreed skilled labor- maintenance and process technicians. Maybe it's my corner of the semi market (not leading edge node), but finding reliable technicians is incredibly difficult. With the capital expenditure increasing, OEMs are struggling to staff field service adequately. And the most skilled folks are nearing retirement. This happens in conjunction with OEMs removing fabs' right to repair by limiting the information given on tool purchase. (AMAT/KLA are leading, LAM is following.) It will be hard to run US fabs if there aren't enough folks to keep the tools running or processing 24/7.
I need to add something important here. The work in a fab is extremely tedious and cumbersome. You have to work long shifts, be very alert all the time while wearing a a special suit with a mask.
Even if we educate people in the US to go to semi-conductors, most won't stay. And this spells disaster for the industry. Everyone wants to write code from home.
I see the future of semi-conductors in Asia where they have a culture of hard work and mainly in China, where individuality takes a second spot in society in favour of the collective.
everyone wants to write code from home, not everyone has the capability to do it. those that can't in america can find a myriad of other grifts, such as selling bonds door to door, cryptocurrency trading, or running the seminar circuit peddling real estate investment "guides" to rubes
meanwhile in east asia people have to work to survive, the overall society is not affluent enough to siphon residual wealth from scams.
"I got an Xbox 360 for Christmas. A few months, it broke due to a defect known as the “Red Ring of Death”."
might be 'a few months later'?
I do not believe in more grants, more tax breaks , more more more for those huge corporations that for the most part enjoy soaring profits and record low taxes (especially compared to small businesses). No matter how targeted those could be. We've been giving in on that front for 50 years and the result is the exact opposite of investment. I believe what you left out is how strong governments are in asia. TSMC SMIC UMC etc were created and steered by local govs.
As far as grants and breaks, it's necessary. Either you let the US lose share and our companies lose aswell, or you play on an equal playing field. If you think semiconductors are important, which they are, then the choice is obvious.
Basically, your argument is that government didn't hand out enough free money to these businesses that were mis-managed and got greedy. Stock buyback is the direct result of poor, short-sighted, greedy management, not due to tax policies. You must be aware that stock buybacks have been rampant in other industries as well, right? Back to free money: low interest rates is essentially that -- it's making funds cheaper and more accessible. But instead of investing long-term, these businesses preferred to pump their own stock prices.
So tax-breaks and subsidies to greedy, bloated and complacent behemoths will not fix the issue -- they will keep using funds for short-term gains, like stock buybacks. Instead, the effect will be a strengthening of monopolies and suppression of innovation. Policies should encourage small businesses and start-ups instead.
Thank you for answering, and since your post got mentioned in thediff I gave it another read. I think the point I'm trying to make is visible in that tweet :
TSMC pays a nice dividend to be fair. Also US companies attitudes are a byproduct of the tax policy. It's absolutely better to do buy acks rather than huge capacity expansions for shareholder value.
Two years on, what updates would you make to policy recommendations? I'd love to read a follow up post of you reviewing the CHIPS Act to date and what else needs to be done.
Fyi tinkering with upgrading memory and my Athlon 1800+'s motherboard was really fun as a teenager. Can relate with your experiences!
A well written article, and as a retired electrical engineer I can really relate to almost every sentence. I wanted to work on semiconductors (it was the major of my MSEE degree BTW), but all my employed friends went into software because it was apparently sexier and certainly paid more. Worse, what little federal money that was available for hardware seemed to all go to military contracting companies (think "Star Wars" initiative) and that wasn't something I wanted to work on.
Finally, about the STEM engineering problem. When I turned 38 my project got cancelled. It took me a few years to find anything remotely in my field of expertise. The industry seems only interested in "a few years of experience" engineers. Meanwhile the executives of several failed companies I worked for got paid millions every year. America needs a serious attitude adjustment!
I'd love to hear more about your experience. Have you written more about this anywhere? Or would you like to chat?
Hi Dylan,
I'd certainly would like to write more about this. I have plenty to say. I also taught science and maths (not a typo) in Vietnam for a while. The differences in attitude towards engineers in SE Asia is so very different than in America!
We could chat as well.
Email me at dsp@semianalysis
.com
Thanks!
"Part of the lack of interest in semiconductors is due to the culture of repairing and tinkering with computing devices. [...] Unfortunately, the culture of repairing computers, game consoles, and smartphones, is dying in the western world due to a variety of legislative and company specific roadblocks."
This is SO true. I became interested in the industry decades ago because I liked to take things apart and see how they worked. This culture is critical to keep people interested in hardware!
As a reader from Taiwan I think the post is accurate regarding Taiwan's culture of repairing and tinkering with computing devices 😂
Excellent work. I've covered the semiconductor industry as a journalist for nearly 30 years. Your article here highlights many of the issues I've reported with increasing alarm.
"Most of the largest semiconductor equipment, design, and software companies are based out of the US", I *think* that this is trying to say "Most of the largest semiconductor equipment, design, and software companies are based in the US", but as written, to a UK English speaker at least, it's very hard not to read it as saying what is written, i.,e. they're based outside the US. Perhaps it'd be worth a minor revision?
Thanks for the comment. I fixed it. BTW I like your work! ♥️
Excellent, very kind!
Funny how the author asks the government to do this and that. Isn't this a "free market" or not? Of course, it's not. The US will only play the "free market" card to others, in order to favor American businesses.
An excellent article with real, actionable takeaways. It would be so monumental to see the U.S. regain chip superiority (in this lifetime) before it really becomes too late.
The key is to SHARE articles like this (esp. to Congress) until policymakers listen & act!
Nice article and agree with all of it. One aspect that many articles of this type fail to mention is non-degreed skilled labor- maintenance and process technicians. Maybe it's my corner of the semi market (not leading edge node), but finding reliable technicians is incredibly difficult. With the capital expenditure increasing, OEMs are struggling to staff field service adequately. And the most skilled folks are nearing retirement. This happens in conjunction with OEMs removing fabs' right to repair by limiting the information given on tool purchase. (AMAT/KLA are leading, LAM is following.) It will be hard to run US fabs if there aren't enough folks to keep the tools running or processing 24/7.
Yea, Technicians and trades in general are the toughest spot, and where the cost differential between US and foreign is highest.
I need to add something important here. The work in a fab is extremely tedious and cumbersome. You have to work long shifts, be very alert all the time while wearing a a special suit with a mask.
Even if we educate people in the US to go to semi-conductors, most won't stay. And this spells disaster for the industry. Everyone wants to write code from home.
I see the future of semi-conductors in Asia where they have a culture of hard work and mainly in China, where individuality takes a second spot in society in favour of the collective.
Oddly it's a cultural thing.
everyone wants to write code from home, not everyone has the capability to do it. those that can't in america can find a myriad of other grifts, such as selling bonds door to door, cryptocurrency trading, or running the seminar circuit peddling real estate investment "guides" to rubes
meanwhile in east asia people have to work to survive, the overall society is not affluent enough to siphon residual wealth from scams.
"I got an Xbox 360 for Christmas. A few months, it broke due to a defect known as the “Red Ring of Death”."
might be 'a few months later'?
I do not believe in more grants, more tax breaks , more more more for those huge corporations that for the most part enjoy soaring profits and record low taxes (especially compared to small businesses). No matter how targeted those could be. We've been giving in on that front for 50 years and the result is the exact opposite of investment. I believe what you left out is how strong governments are in asia. TSMC SMIC UMC etc were created and steered by local govs.
Thanks fixed.
As far as grants and breaks, it's necessary. Either you let the US lose share and our companies lose aswell, or you play on an equal playing field. If you think semiconductors are important, which they are, then the choice is obvious.
Basically, your argument is that government didn't hand out enough free money to these businesses that were mis-managed and got greedy. Stock buyback is the direct result of poor, short-sighted, greedy management, not due to tax policies. You must be aware that stock buybacks have been rampant in other industries as well, right? Back to free money: low interest rates is essentially that -- it's making funds cheaper and more accessible. But instead of investing long-term, these businesses preferred to pump their own stock prices.
So tax-breaks and subsidies to greedy, bloated and complacent behemoths will not fix the issue -- they will keep using funds for short-term gains, like stock buybacks. Instead, the effect will be a strengthening of monopolies and suppression of innovation. Policies should encourage small businesses and start-ups instead.
Thank you for answering, and since your post got mentioned in thediff I gave it another read. I think the point I'm trying to make is visible in that tweet :
https://twitter.com/draecomino/status/1354922712368623620
US companies don't look like responsible/long-term focused actors to me.
TSMC pays a nice dividend to be fair. Also US companies attitudes are a byproduct of the tax policy. It's absolutely better to do buy acks rather than huge capacity expansions for shareholder value.
Also, what is thediff?
https://www.thediff.co/p/longreads-open-thread-05a
I thought you guys knew each other !
wow spicy title
Dylan, always remember Uncle Vonnegut’s story creation principles-
https://m.youtube.com/watch?v=S5BhQiny7O0&pp=ygUea3VydCB2b25uZWd1dCBzaGFwZSBvZiBhIHN0b3J5
America has ALREADY LOST semiconductors.
Two years on, what updates would you make to policy recommendations? I'd love to read a follow up post of you reviewing the CHIPS Act to date and what else needs to be done.
Fyi tinkering with upgrading memory and my Athlon 1800+'s motherboard was really fun as a teenager. Can relate with your experiences!
Great piece. Shame to see how little progress has been made since it was published.
Many of your points are being addressed by the CHIPS Act. So the US isn't losing the Semiconductors War!
This was written before the chips act passed, and no, it's still not enough.