EP60: Is Intel going to be a CHIPS Act success or failure?
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Summary: In this episode, we examine Intel's role in the success of the CHIPS Act, focusing on its acquisition of advanced High NA EUV lithography machines from ASML, which are critical for producing smaller, more powerful microchips.  We highlight the significance of this technology for advancing Moore's Law and its potential impact on various technological fields, including AI, IoT, and robotics. We also explore the financial implications of the CHIPS Act for Intel, noting the significant government funding it has received, and the potential for Intel to succeed in the chip fabrication market where companies like Samsung and TSMC have faced challenges. Ultimately, we suggest that Intel's success in utilizing these advanced machines will be key to determining the ultimate success of the CHIPS Act. Questions to consider as you read/listen: 1. What are the technological and economic implications of Intel's acquisition of ASML's High NA EUV lithography machines for the future of chip manufacturing? How does Intel's strategy of both designing and fabricating chips compare to its competitors, and what are the potential consequences of this approach for the industry? How will the US government's investment in Intel through the CHIPS Act affect the global semiconductor landscape and the future of semiconductor fabrication? Long format:  Is Intel going to be a CHIPS Act success or failure? Without a doubt the Intel story is setting up to be a success story of the CHIPS Act. We are far from unfurling the “Mission Accomplished” sign. To me, the single biggest bit of news in Intel’s favor was someone there developing an amazing relationship with ASML.  Intel was the first company to buy and assemble one of ASML's High Numerical Aperture (High NA) Extreme Ultraviolet (EUV) lithography machines. The machine is called the TWINSCAN EXE:5000.  This next-generation lithography system will be key to advancing Moore's Law towards logic well under 2nm technology generation. What is High NA EUV Lithography? High NA EUV lithography is the latest advancement in creating smaller and more powerful features on microchips. Like its predecessor, the NXE system, it uses EUV (extreme ultraviolet) light to print tiny patterns on silicon wafers. The new High NA EXE platform allows for an even finer pattern, achieving an 8 nm critical dimension (CD), enabling transistors 1.7 times smaller and increasing transistor density by 2.9 times compared to NXE systems. Key Innovations in High NA EUV: 1. Enhanced Optics for Better Resolution: The system’s “NA” (numerical aperture) has been increased from 0.33 to 0.55. This provides better resolution but required larger mirrors. To manage this, the EXE system uses anamorphic optics, shrinking patterns by 4x in one direction and 8x in the other. This innovative design preserves reflectivity, letting chipmakers use standard-sized reticles. 2. Faster Stages for Increased Productivity: The EXE system has a smaller exposure field, which would normally slow down production, but it compensates with much faster wafer and reticle stages, enabling it to print over 185 wafers per hour. Aiming for 220 wafers per hour by 2025, this speed ensures High NA integration is cost-effective for chipmakers. 3. Simplified Manufacturing for Cost Efficiency: High NA EUV allows chipmakers to produce tiny features more efficiently, reducing the need for complex, defect-prone production workarounds. This results in faster, more reliable production of advanced chips. 4 Improved Chip Efficiency and Performance: The EXE system’s 8 nm resolution lets chipmakers fit more transistors on a chip, enhancing functionality and energy efficiency. This advancement will drive next-generation microchips for technologies like AI, IoT, and robotics. Impact of High NA EUV Lithography: With the EXE:5000 system, chipmakers can meet consumer demand for smaller, faster, and more efficient electronics. The first EXE:5000 chips will be used in 2 nm Logic chips, setting the stage for cutting-edge technology in various fields. THE COST TO TAXPAYERS  And this set up hasn’t been cheap either… Back in March 2024, the Department of Commerce announced that Intel Corporation will receive $8.5 billion in direct funding from the CHIPS and Science Act, in addition to $11 billion in loans. I can’t think of a single company in the history of the United States that has received that much in taxpayer money in such a short amount of time.  It’s an eggs all in one basket approach it seems both for the US government and for the company.  Interestingly enough, as of October 25, 2024 has received $0 of the US government money.  <<<<TSMC received $6.6 billion in CHIPs funding, while Samsung rounded out the top three with $6.4 billion from the US government.>>>> WILL THE STRATEGY WORK? Recall TSMC is not a chip designer. They are chip fabricators for the chip designers. That distinction and division of purpose is entirely how TSMC came to capture its market share.  Samsung and Nikon and Rapidus are designers and fabricators. Therefore a lot of designers refused to move their fabrication to Samsung and Nikon and Rapidus because they didn’t want to fuel their chip design competition. This dual purpose company design led to lower market share for them.  Intel, at least so far, has retained its intent to design and fabricate. We will see what the market will do ultimately with that. Will Intel succeed where Samsung, Nikon and Rapidus did not? Time will tell.  Sources: https://www.intel.com/content/www/us/en/newsroom/resources/intel-high-na-euv.html) https://www.datacenterdynamics.com/en/news/intel-acquires-asmls-entire-2024-stock-of-high-na-euv-machines/) https://www.reuters.com/technology/asml-ships-first-high-na-lithography-system-intel-statement-2023-12-21/) https://www.intel.com/content/www/us/en/newsroom/news/us-chips-act-intel-direct-funding.html) https://finance.yahoo.com/news/intel-ceo-frustrated-chips-act-173132913.html) https://www.forbes.com/sites/willyshih/2024/03/20/195-billion-chips-act-package-for-intel-is-a-diversified-bet/) https://www.semiconductors.org/chips-incentives-awards/) Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe)