Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Halloway. So Tracy obviously, Yeah,
Speaker 1: we've done a lot of episodes about the semiconductor industry,
Speaker 1: about chips. There's one specific, I guess I would say,
Speaker 1: sub component of the story that people are like, Oh,
Speaker 1: you guys got to do that, you guys got to
Speaker 1: do that, which we have yet to hit so far.
Speaker 1: You say, there's one thing that we have yet to do,
Speaker 1: but I have a feeling like this is the Endless
Speaker 1: Semiconductor series, and as soon as we finished this episode,
Speaker 1: we're going to discover some other hidden component of the
Speaker 1: semi conductor supply chain and that's going to lead to
Speaker 1: another episode. But yes, you're right, um, there is one
Speaker 1: sort of big elephant, big semiconductor thing in the room,
Speaker 1: and that is a company called a s m L.
Speaker 1: Not to be confused with a s m R, which
Speaker 1: I always seem to do a s mL but hopefully
Speaker 1: for like a certain kind of person, listening to an
Speaker 1: hour of people talking about chips is a type of
Speaker 1: for them SMR. So maybe killed two birds with one stone,
Speaker 1: but yes, s m L, you know, one of the
Speaker 1: things that we established in thinking about how these sort
Speaker 1: of the chip ecosystem works. Maybe part of our characterization
Speaker 1: is we twan semiconductor the biggest contract fabrication company in
Speaker 1: the world. I think we sort of think of as
Speaker 1: like they're the final boss right in chims, Like in
Speaker 1: the end, they're like the central bank of chips. Their
Speaker 1: capacity kind of almost dictates chip capacity overall. There's some
Speaker 1: other companies that make chips, including Intel and Global Boundaries,
Speaker 1: but t SMC is the big one. But TSMC has
Speaker 1: to buy equipment from others to you know not no
Speaker 1: one is completely self sufficient in this industry, and t
Speaker 1: SMC is a huge client or a huge purchaser of
Speaker 1: equipment made by this company. It's a Dutch company a SML. Yeah,
Speaker 1: so you mentioned that it's Dutch, And this is the
Speaker 1: other thing I mean, in addition to not really understanding
Speaker 1: what this company does or the type of equipment it's
Speaker 1: actually making for semiconductor manufacturers like t SMC, the other
Speaker 1: thing I don't really get about it is why is
Speaker 1: it a Dutch company? Because the one thing I know
Speaker 1: about it is it has its origins in the US
Speaker 1: UM I think in the you know, like nineteen eighties,
Speaker 1: it sort of came out of the collapse of a
Speaker 1: bunch of US lithography firms or something like that. And
Speaker 1: yet now it's a Dutch company that has this enormous
Speaker 1: role in the global supply chain. It's squarely like kind
Speaker 1: of crowning, like it's sort of like a kingmaker for
Speaker 1: semiconductor technology or expertise. And I don't know, I just
Speaker 1: have so many questions already. I know we haven't even started. Yeah,
Speaker 1: I know, I have no questions too. We'll get started
Speaker 1: just a second. But you know, you mentioned the oddity
Speaker 1: of it big Dutch. There's another element here, and I
Speaker 1: I don't you know, I feel like reluctant to like
Speaker 1: talking like cliches or stereotypes, but I don't really think. No,
Speaker 1: it is true of like Northern Europe or Europe in
Speaker 1: general as being like this like cutting edge high tech
Speaker 1: hotbed for anything. When I think about tech, I think
Speaker 1: about Silicon Valley, maybe more of the consumer and but
Speaker 1: also like you know, obviously a long history. It means
Speaker 1: Silicon Valley for a reason. And I think about various
Speaker 1: parts of East Asia, and when I think about the
Speaker 1: engineering prowess in Europe. Hey, I don't think about tech
Speaker 1: in Europe that much, and when I do think about
Speaker 1: engineering prowess in Europe, it's typically I'm thinking more on
Speaker 1: these sort of like bigger industrial engineering, so a company
Speaker 1: like Siemens or companies that are really good at public
Speaker 1: public works or trains or whatever. And I don't think
Speaker 1: of Europe as being a hotbed of say, semiconductor innovation,
Speaker 1: and there's probably countless like counter examples. I'm just sort
Speaker 1: of thinking, like it doesn't fit into my mental models
Speaker 1: of this stuff. So it is interesting that it's Dutch.
Speaker 1: Well also, just when you think about the European market,
Speaker 1: like you start thinking about the biggest companies there, and yeah, sure,
Speaker 1: stuff like Semens, LVMH like luxury good makers. But mL
Speaker 1: is absolutely massive, and like just looking at the share
Speaker 1: price chart, it has had a huge, huge run up
Speaker 1: over the past year or so, I mean basically since
Speaker 1: the global pandemic, much like a lot of other semiconductor stocks,
Speaker 1: but I mean amazing run up, huge market cap, and
Speaker 1: yet it's sort of like this company that outside of
Speaker 1: the semiconductor sphere, it doesn't seem to get that much attention. Yeah,
Speaker 1: I mean it's A. It's like a it's like a
Speaker 1: third over three billion dollar market cap. It is. It's
Speaker 1: it's one of the biggest companies in the world. Um,
Speaker 1: but not many people know about it, far from my
Speaker 1: household name. Okay, so we have a million questions. So
Speaker 1: we got to get right into this discussion. And we
Speaker 1: have the perfect guest to tell us a out this company.
Speaker 1: We're gonna be speaking with Chris Miller. He's an assistant
Speaker 1: professor of international history at the Fletcher School at Toughs University,
Speaker 1: and he is the author of a forthcoming book that
Speaker 1: will be out next year entitled Chip War, The Struggle
Speaker 1: for the World's Most Critical Technology, And he can answer
Speaker 1: all of our questions about a SML. Chris, thank you
Speaker 1: so much for joining us. Thanks for having me. Chris,
Speaker 1: what is lithography? You know? I think that this is
Speaker 1: one of these questions that's like the word gets It's
Speaker 1: probably come up on like every episode. And I pride
Speaker 1: myself on never being too embarrassed to like ask a question,
Speaker 1: but I think I actually was too embarrassed to ask
Speaker 1: this on some of the other episodes. I'm like, hm, phothography,
Speaker 1: what phithography? So if you want to make a semi
Speaker 1: connected device, you take a slab of silicon, you cover
Speaker 1: it with chemicals called photo resists, which are chemicals that
Speaker 1: react with light, and then you shoot light raise or
Speaker 1: now extreme all tra violet light rays at the silicon
Speaker 1: wafer UH, and the shapes that you shoot at it
Speaker 1: will form the transistors. So that's that's the simplest version.
Speaker 1: Now today, if you buy a new iPhone, the most
Speaker 1: events process around it will have ten billion transistors. So
Speaker 1: you've got to shoot extraordinarily narrow wavelengths of light through
Speaker 1: masks that create these shapes on the silicon wafer, and
Speaker 1: the masks need to be able to project all of
Speaker 1: these shapes onto the wafer. So making this possible at
Speaker 1: the scale of ten billion transistors per chip is is
Speaker 1: what a SML does. Wait, how many per chip? What
Speaker 1: do you say? Ten billion per chip? That's right, a
Speaker 1: new Apple processor in your iPhone will have ten billion
Speaker 1: transistors per chip. Some chips that go into data centers
Speaker 1: will have more than that. But the scale of transistors
Speaker 1: that we produce at any given year is is more
Speaker 1: than the scale of all goods produced by all companies
Speaker 1: and all other industries and all of world history. It's
Speaker 1: a tremendous number. So could you maybe describe where a
Speaker 1: SML sits in the sort of ecosystem of the semiconductor industry.
Speaker 1: So I gather it doesn't seem to have much competition,
Speaker 1: but like who does it actually supply? And also who
Speaker 1: does it not supply? Like are there people out there
Speaker 1: who try to do this on their own. In the
Speaker 1: early days of the chip industry, companies built lithography machines
Speaker 1: in house, so Texas Instruments would have had its own
Speaker 1: Lithography Machine Division IBM. But today the machines are so
Speaker 1: complex and expensive that there's just a couple of companies
Speaker 1: that make lithography machines in general, and just one company,
Speaker 1: a SML, as able to make a u V lithography machines,
Speaker 1: which are the most advanced type. Anyone who operates a
Speaker 1: chip fab sility where chips are made has to buy
Speaker 1: lithography equipment, and so for the most cutting edge chips,
Speaker 1: you've got no choice but to buy from a s mL.
Speaker 1: This is fasting. So whether we're talking about UNTIL doing
Speaker 1: its own chips or TSMC or any one else. And
Speaker 1: we've talked with other people who talked to Stacy Raskin
Speaker 1: of Burnstein and about the nanometer wars and all of them.
Speaker 1: If you're doing cutting edge manufacturing, you are a customer
Speaker 1: of a a s mL. That's right, that's right. For
Speaker 1: the most cutting edge lithography machines, a SML is the
Speaker 1: only supplier for slightly less cutting edge machinery. Uh Night
Speaker 1: kind of Japan is also a competitor of s mls.
Speaker 1: They have a duopoly for anything that's not the most
Speaker 1: cutting edge. So what is it about the technology that
Speaker 1: makes it, I guess so proprietary to a s mL, Like,
Speaker 1: how did they get into a position where they basically
Speaker 1: control it? And what is it that they've been able
Speaker 1: to do that others haven't. So the the challenge with
Speaker 1: EUV lithography in particular and lithography in general is that
Speaker 1: you've got to uh manage a supply chain that is
Speaker 1: extraordinary complex. A SML has got around four thousand suppliers,
Speaker 1: and many of these suppliers are producing equipment that only
Speaker 1: they can produce. So, just to give you a couple
Speaker 1: of examples them, the mirrors within s MLS lithography machines,
Speaker 1: the eu V machines are the flattest structure that humans
Speaker 1: have ever made, the flattest man made structure in the universe.
Speaker 1: And when you go through the list of materials and
Speaker 1: components that you need to produce an e V lithography machine,
Speaker 1: there are multiple parts of the system that are the
Speaker 1: most this or the most that, and managing that is
Speaker 1: an extraordinary complex business. If you talk to people at
Speaker 1: a sm L, they'll say, our biggest engineering challenge is
Speaker 1: not actually engineering any particular part, engineering the supply chain,
Speaker 1: making sure that all of our suppliers are producing things
Speaker 1: so that they all fit together, they all work together,
Speaker 1: they arrive on time. And it's hard enough to do
Speaker 1: that with basic machinery, but when you're trying to manipulate uh,
Speaker 1: individual atoms, which is what SML is able to do,
Speaker 1: it's even more complex. Tracy, I already loved this episode
Speaker 1: so much. I don't know, like how many things like
Speaker 1: I've learned already in five minutes. And then the fact
Speaker 1: that like it's it's also a supply Like Okay, obviously
Speaker 1: there's a chip supply chain, but then the idea that
Speaker 1: the most advanced technology within the chip is actually itself
Speaker 1: a supply chain. I'm just like, I'm already obsessed with this,
Speaker 1: but where do they So Okay, you mentioned that for
Speaker 1: sort of like okay, for the very cutting edge, there's
Speaker 1: just a SML for slightly less cutting edge. Uh, Nikon,
Speaker 1: did you say, Nikon? That's right, Nikon. In Japan, they're
Speaker 1: also in the game. Do other players aspire to be
Speaker 1: cutting edge or is there some barrier that just basically
Speaker 1: makes it so that no one else is really trying
Speaker 1: to get be at that level in the which is
Speaker 1: when investment in EUV began. Nikon made a choice not
Speaker 1: to try to commercialize UV technology. The first physics papers
Speaker 1: on the V actually came out of a Japanese university,
Speaker 1: so there's plenty of optics expertise in Japan that a
Speaker 1: SML was the only company that was willing to bet
Speaker 1: on EUV from the forward and capable of raising the
Speaker 1: funds and assembling the expertise. So right now, if someone
Speaker 1: wanted to replicate what U vs what a SML has
Speaker 1: done with UV, it would take them a decade and
Speaker 1: billions and billions of dollars in investment. And because the
Speaker 1: suppliers that work with a SML have exclusivity agreements with
Speaker 1: a SML. SML has invested in some of his key suppliers.
Speaker 1: It's just basically impossible for anyone to break into this
Speaker 1: without replicating their entire separate supply chain. It would take
Speaker 1: a decade to do. So, maybe this is a good
Speaker 1: place to start talking about the history of the company
Speaker 1: and where it actually came from. And I think that
Speaker 1: will help us like understand some of these dynamics how
Speaker 1: it built up a competitive edge versus it's you know,
Speaker 1: non existent or very few competitors. But my understanding is
Speaker 1: the sort of like sprung up out of US military
Speaker 1: technology of some sort. Can you start like at the beginning?
Speaker 1: How like? I guess this goes back to Joe's question,
Speaker 1: what is lithography? Why is the U. S Army interested
Speaker 1: in it? And how did it play into a s
Speaker 1: ML's creation story. When the transistor was first invented in
Speaker 1: the late nineteen forties in Bell Labs in New Jersey,
Speaker 1: it was predominantly used in military devices for its its
Speaker 1: first commercialization, and there was a scientist in a US
Speaker 1: Army lab named J. Lathrop in the nineteen fifties who
Speaker 1: was trying to find out how to minim miniature eye
Speaker 1: transistors produced them smaller and smaller so they could be
Speaker 1: put in smaller devices. One day, he and his his
Speaker 1: assistant realized that they could use photo resist chemicals, these
Speaker 1: chemicals that react with lights to create shapes on on
Speaker 1: the silicon and germanium that they were working with, and
Speaker 1: they turned their microscope that they were using the lab
Speaker 1: upside down. So normally a microscope lets you see something
Speaker 1: small and it expands the image for your eye. They
Speaker 1: did the opposite. They had a shape that was large
Speaker 1: and were able to project that in a smaller version
Speaker 1: by using an upside down microscope, And with that they
Speaker 1: filed the first patent or photo lithography and coined the
Speaker 1: phrase in the nineteen fifties. Over the next couple of decades,
Speaker 1: photo lithography was used both by chipmakers who were making
Speaker 1: their own machines and house and then eventually a couple
Speaker 1: of specialized photo lithography companies emerged in Connecticut and Massachusetts.
Speaker 1: They were defense contractors primarily, but realized they could use
Speaker 1: their specialized optics things that they had honed in spy
Speaker 1: satellites and military equipment like that for the semiconductor industry,
Speaker 1: and so until the mid nineteen eighties, the center of
Speaker 1: the photo lithography industry was in New England, but those
Speaker 1: companies faced hard times in the nineteen eighties. They were
Speaker 1: poorly managed, and the nineteen eighties were a time when
Speaker 1: the Japanese ship industry in general was rising. A Nikon
Speaker 1: as well as can and then the two camera companies
Speaker 1: began investing in photo lithography. For a time in the
Speaker 1: eighties and nineties, they were the dominant companies in the industry,
Speaker 1: which the US was quite worried about. Worried about being
Speaker 1: too reliant on Japan at a time of commercial and
Speaker 1: also geopolitical tension, and so US chip makers began turning
Speaker 1: to a s mL, both to diversify their supplier base,
Speaker 1: but also because a SML was able to produce very
Speaker 1: high quality equipment as well. In the nineteen nineties in
Speaker 1: the mid as well, was the only company willing to
Speaker 1: take the gamble on EUV, and since that point it's
Speaker 1: become the dominant firm in the industry. We just have
Speaker 1: extreme ultra violet. I don't know if we just want
Speaker 1: to make sure we've established what UV stands for? Can
Speaker 1: I just ask so, can you explain again? What's the
Speaker 1: difference between extreme ultra violet and I guess non extreme
Speaker 1: ultra violet. So over the past couple of decades is
Speaker 1: we've tried to make ever smaller device is in ever
Speaker 1: smaller features on silicon wafers. We've begun to use different
Speaker 1: and smaller wavelengths of light, and so extreme multi violet
Speaker 1: has a wavelength of thirteen point five nanometers. Is the
Speaker 1: smallest wavelength of light that we've been able to use
Speaker 1: in in mass productions. So if you rewind several decades ago,
Speaker 1: we were using larger wavelengths of light that we're uncapable
Speaker 1: of producing the small feature sizes on silicon wafers that
Speaker 1: we demand today. One of the reasons why I think
Speaker 1: the chip episodes, well, why we've done so many chip episodes,
Speaker 1: and why they're why they keep resonating. I think there's
Speaker 1: a few things. I mean, one is there's the chip shortage,
Speaker 1: and it should be noted that the shortage is actually
Speaker 1: wore at the is not really at the advanced level.
Speaker 1: It's a lot of cheap chips, etcetera. But we're starting
Speaker 1: to the chip shortage that relates to automobiles, etcetera. Has
Speaker 1: sort of brought people a lot of awareness about lack
Speaker 1: of domestic US manufacturing capacity. I think another reason people
Speaker 1: care about chips is obviously just the general explosion of
Speaker 1: chip demand. Even where there isn't an acute shortage, there's
Speaker 1: chips h and everything. And then I think the other
Speaker 1: thing that makes it sort of an interesting story right
Speaker 1: now is that, at least in the US and probably
Speaker 1: elsewhere around the world, there is a rethinking about the
Speaker 1: role of state capacity in and um state investment into
Speaker 1: certain space. And of course, as we all know, the
Speaker 1: chip industry and as you just talked about, the chip
Speaker 1: industry overall really was sort of born out of defense,
Speaker 1: so like sort of the ultimate in UH state investing
Speaker 1: and government spending, and at various times throughout US history
Speaker 1: at least we seem to go in waves of how
Speaker 1: much the government wants to get in to protect the
Speaker 1: chip sector, to invest in the chip sector, to build
Speaker 1: and bolster a homegrown chip sector. You mentioned the sort
Speaker 1: of stress and tension with the Japanese or reliance on
Speaker 1: Japanese companies in the eighties and nineties that seemed to
Speaker 1: produce a wave of um sort of defensive and use.
Speaker 1: Perhaps it could be characterized. Talk to us about how
Speaker 1: a SML fits into that in terms of you know,
Speaker 1: when we talked about to say, the history of t SMC,
Speaker 1: that was clearly in part it was a very like
Speaker 1: public sort of private venture. There was the government backed
Speaker 1: it up under the condition that it could raise private
Speaker 1: foreign money as well. Talk to us about the role
Speaker 1: of like public money in the creation of a SML.
Speaker 1: So a sm L emerged first as a division of
Speaker 1: of Phillips, the Dutch electronic company UM and it was
Speaker 1: spun out in at a time when the Europeanship industry
Speaker 1: was relatively small as a player on the world stage.
Speaker 1: It was the U S and Japan at the time
Speaker 1: that were the biggest players, and there were a variety
Speaker 1: of Dutch and European Union programs to support R and
Speaker 1: D at s mL. But for a SML in particular,
Speaker 1: actually the most important government support was from the U
Speaker 1: S government because in in the nineteen nineties, when the
Speaker 1: investments and EUV were being made, Intel, which at the
Speaker 1: time was the the industry leader in hip making, decided
Speaker 1: to take a big bet on eu V being the
Speaker 1: next lithography technology and established a consortium of a number
Speaker 1: of private ship firms and a number of US national labs,
Speaker 1: uh the Lawrence Livermore for example, that would work together
Speaker 1: to produce prototype UV machines. And so the technology that
Speaker 1: we use today an SML Systems really comes from this
Speaker 1: work with US national labs. It was largely funded by
Speaker 1: industry but using the scientists there. And at the time
Speaker 1: there was some interest in trying to turn the technology
Speaker 1: over to a US company to producing commercialized on the
Speaker 1: grounds that it came largely out of US national labs,
Speaker 1: but there was no US lithography firm at the time
Speaker 1: that was seen as a credible candidate to commercialize. If
Speaker 1: the options were NICON or a SML. Given the tensions
Speaker 1: with Japan, a SML was seen as the least risky option,
Speaker 1: and also they had a long track record of producing
Speaker 1: quality machines. And so we've got this strange situation now
Speaker 1: where a lot of the core technology in this machinery
Speaker 1: that's assembled in the Netherlands actually comes out of California.
Speaker 1: And indeed SML has actually bought a number of companies
Speaker 1: over the course of the past couple of decades in
Speaker 1: California as well. So there's a lot of US technology
Speaker 1: in a SML Systems partially funded by the US government.
Speaker 1: Could you imagine something like that happening today? Like, I
Speaker 1: just think the environment is so different, and the idea
Speaker 1: of like the U S government funding a technology and
Speaker 1: then deciding like, well, okay, I guess the best company
Speaker 1: to actually make this stuff is over in the Netherlands,
Speaker 1: so we'll just let them do it and give up
Speaker 1: like a key component of a highly competitive supply chain.
Speaker 1: It just seems so so unlikely in the current environment. Yeah,
Speaker 1: it's it's an interesting question. On the one hand, you
Speaker 1: do hear a lot of conversation in Washington, d C.
Speaker 1: About joint R and D project with Allied countries, and
Speaker 1: in some ways this is a perfect example of this.
Speaker 1: I think. The other thing is that a SML is
Speaker 1: a Dutch company, But if you look at the components
Speaker 1: of their EUV machines, for example, they're sourcing from all
Speaker 1: around Europe, around the US and really worldwide. So to
Speaker 1: describe them as as a Dutch company misses the fact
Speaker 1: that you can't produce an EUV system was for example,
Speaker 1: the light source, which is produced by an S and
Speaker 1: L subsidiary in San Diego, so that there are a
Speaker 1: Dutch company S, but they're really a global supply chain
Speaker 1: that's focused on on the U S and Europe. So
Speaker 1: this is interesting because you mentioned that, Okay, at the
Speaker 1: time that the technology was sort of they decided a
Speaker 1: SML would be the most credible entity to commercialize this
Speaker 1: sort of US funded technology. There was this view that, Okay,
Speaker 1: it was better them than a Japanese player, in part
Speaker 1: because we already had anxiety about our reliance on Japanese
Speaker 1: chips at the time for other other chips, including DAM.
Speaker 1: How much are the same dynamics essentially in play when
Speaker 1: people think about the geopolitics of chips. Obviously one of
Speaker 1: the things that you know, we talked about anxiety about
Speaker 1: how my we rely on Taiwan. There's perhaps some anxiety
Speaker 1: about the domestic homegrown chip industry. Although China seems to
Speaker 1: be a several years behind in terms of mainland chip technology.
Speaker 1: How much does it still sort of benefit everyone this
Speaker 1: idea that this crucial component player is not part of
Speaker 1: either in US or Asia. That's an interesting question. I
Speaker 1: think certainly if you're a Chinese customer of SML, you're
Speaker 1: pleased that it's not a U S company, But the
Speaker 1: reality is that if if the US wanted to use
Speaker 1: actually poor controls to constrict SML sales to China, that
Speaker 1: wouldn't be very difficult to do. A SML already doesn't
Speaker 1: send it's eu V machines to China. In theory, that's
Speaker 1: because of Dutch restrictions. In reality, it's because of US
Speaker 1: pressure on the Netherlands to impose these restrictions. And there's
Speaker 1: discussion um in in Washington and Japan elsewhere about whether
Speaker 1: there ought to be stricter limits um the type of
Speaker 1: lithography machines you can sell to China, and legally there's
Speaker 1: there's nothing that would really stop the US from posting
Speaker 1: those restrictions unilaterally. Is the concerning that if those machines
Speaker 1: were shipped to China, that they would be able to
Speaker 1: UH that would accelerate China's semiconductor capabilities, or that literally
Speaker 1: having them in Chinese hands would then maybe allow them
Speaker 1: to be more easily sort of deconstructed and reverse engineered
Speaker 1: and that would be a big knowledge transfer. No, it's
Speaker 1: the former. I think if you just receive an SMaL machine,
Speaker 1: you have no idea how to produce it. Okay, Okay,
Speaker 1: it's that the more advanced cocoric machines you have, the
Speaker 1: more advanced shipmaker you have, the stronger the Chinese ecosystem is.
Speaker 1: So how big of an impediment is not having access
Speaker 1: to a sml S eu V technology to Beijing's like
Speaker 1: overall semiconductor development drive, Like, is it such an essential
Speaker 1: piece of technology that it basically means they're on a
Speaker 1: completely different footing to something like TSMC. That's right. For now,
Speaker 1: there's there's no viable of producing the most advanced chips
Speaker 1: with the smallest features without using UV. There are some
Speaker 1: some scientists who think there might theoretically be ways to
Speaker 1: get around it, but for the next decade there's there's
Speaker 1: just no choice but to use a SMLS machinery if
Speaker 1: you want to produce the smallest chips. So what are
Speaker 1: you know, let's talk a little bit more about a
Speaker 1: s MLS constraints. Everyone this year is becoming aware of, like,
Speaker 1: you know, constraints, and there's only so much boundary capacity
Speaker 1: in the world at any given time. The entities that
Speaker 1: wanted to buy cheap chips that go into cars sort
Speaker 1: of got shut out because they canceled their order for
Speaker 1: a while. And now they're scrambling and it might be
Speaker 1: years before they could catch up again. So we know
Speaker 1: that that's constraints. How strained is a s mls own
Speaker 1: capacity to grow and where do they face Is it
Speaker 1: just in the complexity of the supply chain? Is it
Speaker 1: in raw materials? Like what are their constraints? It's mostly
Speaker 1: in the supply chain complexity. So SML last year's shipped
Speaker 1: thirty one EUV machine sans, so we're talking getting one
Speaker 1: or two more machines out of the out of their
Speaker 1: production process is something that's hard to do because each
Speaker 1: of their suppliers is similarly constrained. And the ability to
Speaker 1: ramp up manufacturing, you know, this isn't high volume manufacturing
Speaker 1: when you're producing thirty one machines a year, and because
Speaker 1: their supply chain has so many specialized parts solely for
Speaker 1: their machines, their suppliers are producing thirty one or so
Speaker 1: of the components needed each year, and so there's just
Speaker 1: no way to ramp How many three hundred billion dollar
Speaker 1: companies in the world make produce thirty one make thirty
Speaker 1: one units a year, so we're talking like each one
Speaker 1: is like half a goon or something. There's thirty one
Speaker 1: of the of EUV machines. They will also sell some
Speaker 1: of the older equipment, but they sold units in total
Speaker 1: last year, so it's still a tiny number of units.
Speaker 1: It's still not very much. How much is it if
Speaker 1: you or I wanted to pull together and by a
Speaker 1: EUV machine? Like what are they? What are they retail for?
Speaker 1: Average average revenue per UV machine last year was around
Speaker 1: a hundred forty million euros. Got it? Okay, So this
Speaker 1: is something that comes up a lot in our supply
Speaker 1: chain discussions. But like how does ordering actually work and
Speaker 1: is there preference given to certain customers over others? Like,
Speaker 1: you know, if one company wants to buy an EUV machine,
Speaker 1: I imagine there there are plenty of other companies that
Speaker 1: want to do the same thing. For a limited supply
Speaker 1: How does a SML actually make the decisions about who
Speaker 1: gets allocated what? Also, how long does it take? Like
Speaker 1: what's the waiting time to actually get one of these things? Yeah,
Speaker 1: we don't really know the details as to how SML
Speaker 1: decides to allocate the number of potential customers for a
Speaker 1: hundred fifty million dollar machine. Is is limited? It's a
Speaker 1: half dozen potential customers in the world, you be realistically
Speaker 1: looking to buy one. But if you look at the
Speaker 1: main customers, it's t SMC, which has around half of
Speaker 1: operating the UV machines in its own fabs, Samsung, Intel,
Speaker 1: a handful of others, and there's almost certainly a premium
Speaker 1: that t SMC is paid for getting so many machines valuable.
Speaker 1: If if if a new company came online and wanted to
Speaker 1: buy machines, they'd face a weight of at least a
Speaker 1: couple of years because capacity has been purchased and advanced.
Speaker 1: Intel has said it's going to be the first customer
Speaker 1: of the next generation EUV machine, which would be online
Speaker 1: around Presumably it's paid something for the right to get
Speaker 1: the first generation, but we don't know any of the details. Yeah,
Speaker 1: speaking of Intel, and I want to back up to
Speaker 1: something we talked about earlier. Why was this never part
Speaker 1: of Intel's own ambitions? Because you know, over the years,
Speaker 1: I guess the degree to which Intel has wanted to
Speaker 1: be an i P first company or a manufacturing company
Speaker 1: at Waxes and wind, so at one point it was
Speaker 1: a manufacturing powerhouse, then has sort of scaled. Back then
Speaker 1: it was more of an I P company, and that's
Speaker 1: sally the anxiety these days now they seem to want
Speaker 1: to get back into being uh manufacturing, and the new
Speaker 1: CEO has made a point of like, we're not going
Speaker 1: to give up on being a manufacturing powerhouse. Why was
Speaker 1: lithography or advanced lithography never part of the Intel strategy? Well,
Speaker 1: when INTIL was founded, it was. It was founded at
Speaker 1: a time where you could already buy lithography equipment on
Speaker 1: the open market, so they always decided they were going
Speaker 1: to produce ships, but by lithography machines from suppliers. Over
Speaker 1: their fifty years, they've been one of the biggest buyers
Speaker 1: of lithography equipment in the industry, and the development of
Speaker 1: e V actually wouldn't have happened without Intel. When Andy
Speaker 1: Grove was still the Intel CEO in the early nine nineties,
Speaker 1: he made the first big bet on the development of
Speaker 1: EV lithography, putting up two or million dollars in nearly
Speaker 1: nines to begin to develop this on the grounds not
Speaker 1: that Intel was ever going to produce lithography equipment, but
Speaker 1: that it would eventually need EUV to produce the most
Speaker 1: advanced ships. And even as as recently as when a
Speaker 1: SML needed to raise more capital to to fund its
Speaker 1: development of UV. It went to Intel, t SMC, and Samsung,
Speaker 1: and Intel was the biggest investor in a SML at
Speaker 1: the time, putting in a several billion dollars to help
Speaker 1: fund SML's development. So until quite recently, it seemed like
Speaker 1: Intel would be the biggest user of e V lithography machines.
Speaker 1: It's only in the past couple of years that Intel decided,
Speaker 1: in what looks to be a mistake in hindsight, that
Speaker 1: EV wouldn't be ready by around now, where t SMC
Speaker 1: maybe opposite that that EUV would be ready for high
Speaker 1: value manufacturing. And t SMC was proved right, which is
Speaker 1: why it's done so well the past couple of years,
Speaker 1: and Intel has proven wrong, which I think most observers
Speaker 1: can explain some of the manufacturing problems it's had in
Speaker 1: recent years by not using EUV and trying to use
Speaker 1: older versions of lithography to produce its most advanced ships.
Speaker 1: Now Intel is changing it's it's it's plans, it's it
Speaker 1: says it's investing very heavily in UV, but it's gonna
Speaker 1: take a couple of years for them to learn how
Speaker 1: to actually use the UV and high volume manufacturing. Wait,
Speaker 1: so I have a slightly related question, although maybe it's
Speaker 1: sort of reversed, I guess, but like, given a SML
Speaker 1: competitive edge in producing a key technological component for semiconductors,
Speaker 1: could they ever have just gone into making semiconductors themselves?
Speaker 1: Like if they have a monopoly on this technology, no
Speaker 1: one can do it as well as them, Like why
Speaker 1: not just start making the finished product yourself. To make
Speaker 1: a chip, you not only need lithography, which is one
Speaker 1: of the key steps, but there are other steps as well.
Speaker 1: You need to be able to deposit films of materials
Speaker 1: um with with atomic level precision. There's there are different
Speaker 1: companies Applied Materials, for example, in California that make that
Speaker 1: type of equipment. You need measurement equipment that can measure
Speaker 1: individual atomic level errors in your final chips to make
Speaker 1: sure you understand what errors you have. That's a different
Speaker 1: set of companies that makes that equipment. UM. So there's
Speaker 1: a lot of different specialized equipment that you need to
Speaker 1: make chips. The cost of a new fab that for example,
Speaker 1: t SMC will build more than half of that cost
Speaker 1: is the equipment that goes in it and a SML
Speaker 1: and as ptography machines are a critical part of that,
Speaker 1: but that's far from enough to make chips, and SML
Speaker 1: specialty is really solely in lithography UH and not at
Speaker 1: all in deposition or matching or the other types of
Speaker 1: equipment that you need to actually make finished chips. This
Speaker 1: at this point is so fascinating to me, like to
Speaker 1: think about, like, okay, a s mL among the many
Speaker 1: extraordinary things. They also lay claim to having the flattest
Speaker 1: service in the world, and presumably in order to get
Speaker 1: the flattest service of the world, there's some technology, as
Speaker 1: you sort of just mentioned, that has to be able
Speaker 1: to measure flatness and actually measure if the services not
Speaker 1: flat and it sort of speaks to like you know,
Speaker 1: we think about like in the US these days, and
Speaker 1: there is UH. There's a bill in d C that's
Speaker 1: designed to invest in UH, designed to bolster US capacity.
Speaker 1: And again that's part of why you keep having these discussions,
Speaker 1: because there's this effort on the way. It's kind of bipartisan.
Speaker 1: The bill might pass, it might not pass, but there's
Speaker 1: this sort of bipartisan interest to bolster domestic capacity. But
Speaker 1: I don't even know what that means sometimes because obviously,
Speaker 1: as you describe, the internationalization and complexity of the chip
Speaker 1: supply chain is so extreme, and as we've talked about
Speaker 1: with other guests, chips across borders a million times before
Speaker 1: they arrive in your xbox or your iPhone or whatever.
Speaker 1: It is, Like, what does it even mean in your
Speaker 1: view just to think about like this question of like
Speaker 1: expanding domestic capacity in an industry that but that just
Speaker 1: is so extremely fragmented and international. Yeah, I think the
Speaker 1: first thing is you've got to be specific as to
Speaker 1: what type of capacity you wanted to spand expand domestically.
Speaker 1: Certainly the US could expand production of chips domestically if
Speaker 1: we wanted to, but that wouldn't have any effect on
Speaker 1: the reality that there's no way to buy lithography equipment,
Speaker 1: for example, except from foreign suppliers, either Nicon or a SML.
Speaker 1: I think domestic production is a is a great thing
Speaker 1: to support UM, but thesis that we're going to have
Speaker 1: a entirely domestically produced supply chain is a fantasy. The
Speaker 1: only reason that we're able to produce ships with such
Speaker 1: small features is because we're able to take advantage of
Speaker 1: expertise from companies in many different countries around the world,
Speaker 1: and there's no one in the industry who thinks there's
Speaker 1: any conceivable future even if you're to spend a trillion
Speaker 1: dollars over a decade where you'd get a domestically produced
Speaker 1: supply chain as anywhere near as efficient. Is what we've
Speaker 1: got now, you know. I think the supply chain risk
Speaker 1: discussion is often takes place at a thirty foot level,
Speaker 1: when what you really need to look at is what
Speaker 1: of the specific components you're worried about, Are there specific
Speaker 1: suppliers you're worried about, and how can you mitigate those
Speaker 1: specific risks? But just talking about domestic versus foreign production
Speaker 1: is not nearly specific enough to have any sort of
Speaker 1: real meaning. So we kind of mentioned this in the intro.
Speaker 1: But again, one of the themes that comes up repeatedly
Speaker 1: on these episodes is the idea of supply chains all
Speaker 1: the way down. So if there's a bottleneck in one thing,
Speaker 1: there's probably a bottleneck um and a component and even
Speaker 1: smaller component that leads into that one thing. So if
Speaker 1: there's a bottleneck in lithography equipment that's impacting semiconductors, I
Speaker 1: guess my question is is there a bottleneck in something
Speaker 1: that goes into the lithography machines or the eu V
Speaker 1: machines that is preventing a s m L from expanding production.
Speaker 1: It certainly could be there's not enough public information about
Speaker 1: SML supply chain to know, and it's very plausible that
Speaker 1: a SML, despite being real experts at management supply chain,
Speaker 1: doesn't always uh No. They report having around four thousands suppliers,
Speaker 1: and all of their suppliers who you speak to will
Speaker 1: say they ask lots of questions about their suppliers suppliers,
Speaker 1: But the reality is that there are you know, multiple
Speaker 1: orders of magnitude more suppliers of their suppliers and so
Speaker 1: tracing them all down the chain is is basically impossible.
Speaker 1: So what a SML tries to do is understand what
Speaker 1: other biggest risks. They've even gone so far as to
Speaker 1: purchase some of their suppliers to gain more detailed control
Speaker 1: over managing those risks. But they simply can't know every
Speaker 1: ultimate component that goes into all of all their suppliers systems,
Speaker 1: and so that's that's where the supply chain management just
Speaker 1: becomes extraordinarily difficult. Now what they've been really good at
Speaker 1: I think better than their competitors over the past couple
Speaker 1: of decades is managing that so it hasn't generally caused
Speaker 1: any sort of serious delays. And one of the things
Speaker 1: that they're known for with their customers is being able
Speaker 1: to deliver mostly on time when they promise a machine
Speaker 1: and managing this, which is something that no one else
Speaker 1: has been able to manage. I think. The other thing
Speaker 1: to note is that you know, when you've got this
Speaker 1: equipment that is is manipulating individual atoms or trying to
Speaker 1: trying to control the movement of light with extraordinary precision.
Speaker 1: It's it's one thing to have a machine that will
Speaker 1: do this once or twice or sporadically. It's another thing
Speaker 1: to have a machine that will do this day and
Speaker 1: day out, operating twenty four hours a day. And that's
Speaker 1: that's the other thing that a SML has done very
Speaker 1: successfully over the past couple of years. It was clear
Speaker 1: as early as the nine nineties that it was possible
Speaker 1: to make a chip with evy lithography. What's been difficult
Speaker 1: is making millions of ships with the euvy lithography and
Speaker 1: doing in a cost effective way. And that's what a
Speaker 1: smlls really stood out is that their machines are rarely broken,
Speaker 1: always functioning um They need less um, less tuning, less
Speaker 1: cleaning than their competitors. That's what a sml has done
Speaker 1: quite well. So it's not simply managing the physics, which
Speaker 1: is very hard, but it's also making sure that you've
Speaker 1: got this extraordinary precise physics that's always operating in these
Speaker 1: act way you expected to operate. Yeah, I'm thinking back
Speaker 1: to one of our discussions with HBS professor. Really, she
Speaker 1: and I don't remember the math exactly, but if like
Speaker 1: chip making is like a seven thousand step process, then
Speaker 1: even you know, ninety nine point nine nine percent execution
Speaker 1: in each step is insufficient in many cases because by
Speaker 1: the time you're down to the seventh seven thousand, you've
Speaker 1: like basically lost all your chips. I don't remember the
Speaker 1: exact math, but it is interesting to think about like
Speaker 1: building up that comp that competent now just in can
Speaker 1: the machine make the chip, but can make it over
Speaker 1: and over and over again without without many errors. If
Speaker 1: you look at a s mls revenue statements, what you'll
Speaker 1: find is they've got a growing share of their revenue
Speaker 1: coming from services which is servicing the machines that they operate.
Speaker 1: They've got staff in t SMCS, facilities in in Samsung, etcetera,
Speaker 1: making sure that not only the machines are operating, but
Speaker 1: they're operating exactly according to plan, they're not breaking down.
Speaker 1: The other thing that SML is is doing more of
Speaker 1: is managing the software for their machines. And the way
Speaker 1: that lithography works at at the scale that we're talking
Speaker 1: about is that if you want to print a certain pictures,
Speaker 1: so you want to print an AX, you don't reflect
Speaker 1: the shape of the ax on your silicon because the
Speaker 1: way that light reflects if you print and actually get
Speaker 1: something different, so you actually learn over time all of
Speaker 1: the unexpected errors and light refraction and errors in the
Speaker 1: way the chemicals react, and you print the error version
Speaker 1: and then it will give you an act. And so
Speaker 1: there's extradinally complex software that now tries to understand how
Speaker 1: all these different effects work. And you can actually look
Speaker 1: at the images that smls producing to produce a straight
Speaker 1: line and it looks nothing like a straight line. And
Speaker 1: so that that software as well as something that SML
Speaker 1: has been focusing on. So one of the things that
Speaker 1: we've talked about. You know, it's like the sort of
Speaker 1: the nanometer wars and the obvious. You know, people talking
Speaker 1: about Moore's law and whether it's t SMC or Intel
Speaker 1: or anyone else, so they're always or a MG. Maybe
Speaker 1: they're always bragging about like making smaller and smaller chips.
Speaker 1: And one of the things that we learned is that
Speaker 1: actually the chip companies all defined these measures a little
Speaker 1: bit differently, so to some extent it's made up. But
Speaker 1: how much are the chip manufacturers themselves as they advertised,
Speaker 1: like Okay, we're gonna be able to make a seven
Speaker 1: NIM chip or maybe a five NIM chip or whatever.
Speaker 1: How much are there timelines dependent on a s m
Speaker 1: l's I guess I would say a smls own learning curve.
Speaker 1: And what are as a sort of monopoly provider, I
Speaker 1: don't want to say monopoly, but is the sole provider
Speaker 1: of the most cutting edge technology. What are the forces
Speaker 1: that drive technological gains for a sm L itself. If
Speaker 1: you look at how a SML has begun to roll
Speaker 1: out at CV machines in into high volume manufacturing, which
Speaker 1: has mostly been at t SMC, the learning has happened
Speaker 1: collectively with a sm L and t SMC, so there's
Speaker 1: been lots of SMA personnel that spend tons of time
Speaker 1: in Taiwan and vice versa. So you really wouldn't have
Speaker 1: the rollout of e V over the past couple of
Speaker 1: years had you not have this collective effort between t
Speaker 1: s MC and a SML. And that's that puts other
Speaker 1: companies at a disadvantage because t SMC knows better than
Speaker 1: anyone how a s MLS machines actually work in practice,
Speaker 1: and and the highlight manufacturing is really crucial to understanding
Speaker 1: how how these machines work, because you don't really know
Speaker 1: until you've got them in production. And once you've got
Speaker 1: them in production, you've got thousands and thousands and thousands
Speaker 1: of iterations every single day where you can understand what
Speaker 1: the errors are, what the idiosyncrasies are of a given machine,
Speaker 1: and begin to correct for them. We talked about technological
Speaker 1: progress and that that's important, but in some ways the
Speaker 1: real challenge here is actually manufacturing progress. Understanding what the
Speaker 1: what what the ADO syncrasies are at the manufacturing stage
Speaker 1: and then learning to correct for them. And that's that's
Speaker 1: what t SMC has done extraordinarly well ad and it's
Speaker 1: been hand in hand with with a SML. So I
Speaker 1: have a sort of market oriented question. But you know,
Speaker 1: we think of semiconductors as this highly cyclical industry that
Speaker 1: usually moves in line with whatever is going on with
Speaker 1: GDP and economic growth, and that hasn't really been the
Speaker 1: case since the pandemic because we've had, you know, this
Speaker 1: big boom in demand for electronic goods and it's been
Speaker 1: a struggle to keep up. But I imagine for a
Speaker 1: company like a s mL, it has also traditionally been
Speaker 1: considered cyclical and its fortunes are sort of tied to
Speaker 1: what's going on with the actual semiconductor manufacturers. But just
Speaker 1: looking at SML's most recent results, they're forecasting basically like
Speaker 1: a boom in revenue for the next decade, something they
Speaker 1: expect to last for ten years. Is there anything that
Speaker 1: could sort of knock that revenue cycle at this point
Speaker 1: in time or is this business like, is there such
Speaker 1: a steep moat around the eu V technology that is
Speaker 1: just going to be impossible for anything to um to
Speaker 1: hit it. There's there's definitely at mote around SMILS technology,
Speaker 1: and they won't be overtaken into UV in a decade.
Speaker 1: I should say I'm mixing my metaphors and steep and
Speaker 1: impossible to overcome mote. There's no real competition that a
Speaker 1: small faces when it comes to UV. That the question
Speaker 1: is what is going to be demand for UV machines,
Speaker 1: and that's a question ultimately of final demand for the
Speaker 1: most advanced chips. A SMILS projections are are based on
Speaker 1: the assumption that we've reached a point where there's a
Speaker 1: secular increase in demand for chips, as we have more
Speaker 1: demand for data center capacity, um as we have the
Speaker 1: five G rollout and new devices that are taking advantage
Speaker 1: of five G networks. Their bat is that we're going
Speaker 1: to have more chips per g d P and therefore
Speaker 1: more demand for a SML. That's a bat that you know,
Speaker 1: it's not clear what that's going to play out. What
Speaker 1: is clear is that anyone who's producing advanced ships will
Speaker 1: have no choice but to turn to sm L and
Speaker 1: so in some ways they're perfectly exposed to the fluctuations
Speaker 1: in the semiconductor industry. The more chips that are produced,
Speaker 1: the more machines you need. But the opposite is also true.
Speaker 1: You kind of hinted at this early on. But the
Speaker 1: idea that at uh seven nnimms in below at cutting edge,
Speaker 1: maybe EUV in theory isn't the only technology. So it's like, okay,
Speaker 1: if if if EUV is the only technology that can
Speaker 1: perform the test, then there's no one who can attack
Speaker 1: as well. Are there other theoretical approaches for accomplishing the
Speaker 1: same thing besides the UV, I feel like you hinted
Speaker 1: at in the beginning, there are It's really not a
Speaker 1: question of science but of of manufacturing efficiency. So if
Speaker 1: you if you take the previous generation of lithography machines,
Speaker 1: which rather than thirteen point five nanometer light, we're working
Speaker 1: with one. It became it was possible over time to
Speaker 1: produce ever smaller feature sizes on silicon wafers by using
Speaker 1: a number of tricks. So, for example, you can shoot
Speaker 1: the light through water, and if you think back to
Speaker 1: high school physics, when light refracts differently through water, that
Speaker 1: same principle lets you shoot lithography machines through water and
Speaker 1: and carve more specific shapes. You can also use multiple
Speaker 1: steps of lithography to carve specific shapes that are more detailed.
Speaker 1: The challenges just can you do this efficiently? Um So,
Speaker 1: every step of lithography you need adds to the time
Speaker 1: it takes to produce a way for ads to your costs.
Speaker 1: And so there's no doubt that if you wanted to
Speaker 1: produce an equivalent of one of Apple's new iPhone ships
Speaker 1: using older generation lithography, you could do it in a
Speaker 1: lab and do one of them. The question is can
Speaker 1: you do a million of them as skin? And that
Speaker 1: seems pretty implausible right now. There's no really credible pathway
Speaker 1: of of how you could do that efficiently today, and
Speaker 1: especially when you project forward five or ten years, we're
Speaker 1: expecting to be making ever smaller transistors with more complex
Speaker 1: shapes on them, and it seems really implausible that you'll
Speaker 1: be able to do that using anything besides UV. Chris,
Speaker 1: is there anything any other sort of least key things
Speaker 1: do you think we've missed? And I mean, I'm sure
Speaker 1: there's a million things, but other key ideas that I
Speaker 1: think we need to get across. I think if you're
Speaker 1: interested in US China dynamics, obviously it's a big. One
Speaker 1: of the key reasons why t SMC cut off huaweih
Speaker 1: In was because the US could restrict t SMCS access
Speaker 1: to machinery, of which lithography machinery was a It was
Speaker 1: a key example. So when when the Chinese ship industry
Speaker 1: looks out and says we're we're gonna get the tools
Speaker 1: that we need, the impact of the US support controls
Speaker 1: on companies like a SML, even foreign companies that nevertheless
Speaker 1: use US technology in their systems, is a pretty fundamental
Speaker 1: roadblock that China faces, and that the big concern that
Speaker 1: SML has right now is that the US is going
Speaker 1: to expand its restrictions on what you can send to
Speaker 1: China in terms of lithography machinery, and China has been
Speaker 1: a big growth market the past couple of years for
Speaker 1: older generational lithography machines, and so SML does face a
Speaker 1: risk that the US it expands these restrictions. What inspired
Speaker 1: you to write a book all about a s m
Speaker 1: L because it is like it's not something that ms
Speaker 1: up necessarily in daily conversation. UM, so I'm just wondering
Speaker 1: how it sort of came on your radar and what
Speaker 1: is it that piqued your interest? We like the two
Speaker 1: of you. I spent the past couple of years realizing
Speaker 1: that semiconductors were vastly more important than the average person,
Speaker 1: including myself realized, and also far cooler. The technology needed
Speaker 1: to make them as extraordinary. The fact that we're able
Speaker 1: to manipulate individual atoms in some cases is extraordinary, and
Speaker 1: to do it at the scale of trillions and trillions
Speaker 1: and transistors, I thought was was was really just wild
Speaker 1: in terms of what what what was possible? Uh? And
Speaker 1: it seemed to me that I took my iPhone for granted,
Speaker 1: I took my computer for granted. I took the cloud,
Speaker 1: which is just a bunch of silicon in big data
Speaker 1: centers in IO. I took all that for granted without
Speaker 1: thinking through how complex it was too actually make these
Speaker 1: tools work. And I think for for a long time
Speaker 1: we thought of the Internet is something out there. We
Speaker 1: thought of data processing is something that happens somewhere else.
Speaker 1: But it's all actually very physical, all things being carved
Speaker 1: onto silicon by shooting light at them and depositing uh,
Speaker 1: layers of atoms and using different chemicals. And the reality
Speaker 1: that our entire digital world is in fact existing on
Speaker 1: millions and millions of silicon wafers is something I don't
Speaker 1: think we think enough about and we're just having to
Speaker 1: come directon with that with the some innunctory shortage right
Speaker 1: now that you can't just imagine an increase in computing
Speaker 1: power and increase in memory, You've actually got to carve
Speaker 1: it onto silicon in billions and billions of tiny transistors.
Speaker 1: You know, it's interesting, I mean, your assistant professor at
Speaker 1: the Fletchers School, which I associate with diplomacy and government,
Speaker 1: and that seems like another sort of like fascinating dynamic here,
Speaker 1: which is like maybe it's it feels again, or maybe
Speaker 1: it goes in cycles, but there's appreciation. And you sort
Speaker 1: of said it for your last point about yours trying
Speaker 1: to like that this particular industry is sort of inseparable
Speaker 1: from thinking about how governments relate to each other. That's right.
Speaker 1: It's it's it's crucial for for military systems, for example,
Speaker 1: it's crucial for controlling computing power in the future. And
Speaker 1: it's been a prominent tool of of of geopolitics for
Speaker 1: the past three quarters of a century. And I think
Speaker 1: we're seeing that more to the four today. But in fact,
Speaker 1: when you look at the history of lithography and of
Speaker 1: semiconductor is more generally you find that it's constantly been
Speaker 1: something that governments have thought about in in political terms
Speaker 1: as well as in economic terms, and constantly been an
Speaker 1: area of dispute between different governments as they tried to
Speaker 1: vy for a bigger chunk of the semiconductor ecosystem. Chris Miller,
Speaker 1: thank you so much for coming on. That was the
Speaker 1: the a s m L episode We needed to do it,
Speaker 1: and you are the perfect guest for it, and I
Speaker 1: just learned a lot, So thank you so much for
Speaker 1: coming out on Oblock Bain's invitation. Thanks Chris, that was
Speaker 1: so interesting. Obviously, I love that conversation, and you know,
Speaker 1: I sortaty interrupted like seven minutes in because like this
Speaker 1: idea of like thinking of like a component as in
Speaker 1: itself a supply chain story. Like the idea that really
Speaker 1: the breakthrough is how do you coordinate four thousand different
Speaker 1: suppliers of them of highly specific raw materials and machines
Speaker 1: into one thing that forms a cohesive whole. The idea
Speaker 1: that that is what the thing is is pretty fascinating
Speaker 1: to me. Here's the important question, which is, what, like
Speaker 1: what idea did you get out of that conversation For
Speaker 1: the next Semiconductor episode, so I'm sure there is one.
Speaker 1: What is the next one? Now we we we got
Speaker 1: to the end. Now it would be like really interesting actually, okay,
Speaker 1: so like it all seriousness, like I would like to
Speaker 1: learn more about that process, like the actual like the
Speaker 1: coordination the heart. It's almost like you think of like
Speaker 1: a conductor of an orchestra. Is sort of like the
Speaker 1: mental model I use for a company that has to
Speaker 1: like have four thousand parts all coming together to form
Speaker 1: thirty one units or units or whatever. It is like
Speaker 1: thinking about like how do you do that from like
Speaker 1: a management perspective even beyond this sort of tech perspective
Speaker 1: is like a super fascinating thing to explore, especially at
Speaker 1: its especially right now. I mean this is almost verging
Speaker 1: on state secrets. But we've got to get you know,
Speaker 1: we have to try to get the a s m
Speaker 1: L supply chain manager on all thoughts, so you know,
Speaker 1: a s m L hit us up. We're interested in
Speaker 1: how you're doing it. Um, and we have to keep
Speaker 1: the semiconductor series going. Yeah, No, that was fascinating, and um,
Speaker 1: Chris was the Chris was the perfect guest for that one. Yeah, definitely,
Speaker 1: shall we leave it there, Let's leave it there alright.
Speaker 1: This has been another episode of the All Thoughts podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway. And I'm Joe Wisenthal. You can follow me
Speaker 1: on Twitter at the Stalwart. Follow our guest Chris Miller.
Speaker 1: He has a book coming out next year on the
Speaker 1: chip industry. Assistant professor at the Fletcher School, he is
Speaker 1: at cr Miller One. Follow our producer Laura Carlson. She's
Speaker 1: at Laura M. Carlson. Follow the Bloomberg head of podcast,
Speaker 1: Francesca Levi at Francesca Today, and check out all of
Speaker 1: our podcasts at Bloomberg under the handle at podcasts. Thanks
Speaker 1: for listening.