The following text by comrades from Wildcat about the global micro-chip crisis is not an easy read, but of enormous importance if we don’t want to talk abstractly about ‘automation’, or ‘geo-politics’, or ‘crisis of the capitalist mode of production’. We translated the first part here.
Historically only few people within the revolutionary milieu – Marx himself, perhaps Bordiga or Alquati – managed to analyse how the technical form and material contradictions of the capitalist mode of production is shaped by the value form; and how in turn, the necessity to dominate labour within the production process through machinery and technological development impacts on valorisation.
Nowadays we see a tragic separation between people who talk about the value form in abstract or primarily in market-related terms on one side and people who focus solely on the (environmentally destructive or potentially despotic) technical side of capitalist technology on the other. The former have little understanding about actual technical processes, the latter ignore the inherent contradictions imposed by capital’s need to valorise labour. The former cannot answer the question how to overcome capitalism, because they don’t understand the challenges to materially transform agriculture, machine manufacturing or bio-tech. The latter try to find technical solutions to social problems that cannot be enforced under the conditions of profit production and crisis of valorisation.
The text largely relates to the global crisis and how it relates to investments in Germany. The UK is bang in the middle of this crisis, aggravated by Brexit. The UK economy is squeezed between the dependency on finance and technical know-how from China and the need for good relations with the US, who oppose Chinese investment in the UK. For example, in spring 2022 Business secretary Kwasi Kwarteng had to use new national security powers to reverse the sale of a microchip manufacturing plant in Wales to Nexperia, a Dutch subsidiary of Chinese company Wingtech. This was done under the pressure of the US state, after nine US congressmen have raised the sale in a letter to President Joe Biden. At the same time the US and UK compete over the profits of the global micro-chip business: Boris Johnson tried to convince the globally leading chip designer Arm to list in London rather than New York for its initial public offering. A clusterfuck!
Since the publication of this article the US-China trade war around micro-chips has intensified. On the 4th of September 2022 the FT wrote: “Fresh restrictions on exports of US chip technology to Chinese companies have provoked an angry reaction from Beijing, but beyond the rhetoric, China is expected to unleash a new wave of funding to boost domestic production of semiconductors.” In the meantime Foxconn and the infamous mining company Vedanta plan a massive semi-conductor plant in India. The massive consumption of water for the production of micro-chips will aggravate an already dire situation.
We can neither afford a primitivist external rejection of capitalist technology, nor an instrumentalist affirmation a la ‘fully automated communism’. For working class counter-engineering!
Because so much has happened, we wanted to continue the interview we made on the “chip crisis” (Wildcat 108) and met twice in mid-July to do so. Then, new developments came thick and fast! We updated the already finished article several times – and had to freeze it on the 10th of August 2022. It’s a compelling story about the importance of technological development in a key industry of contemporary capitalism, its limitations, and its devastating consequences, up to and including war. Here’s the short version:
After the 2007/8 crisis, Apple had made a highly profitable business model out of having Silicon Valley design and Taiwanese chips (TSMC) assembled by a Taiwanese company (Foxconn) in China and sold around the world (even in China, the iPhone ranks #1 with 22% market share). Highly paid developers design the product, factory workers in Asia assemble it. The industrial costs are incurred in Asia, and the profits flow to shareholders, mostly American funds. In the medium term, however, the industrial capabilities also accrue in Asia: TSMC guaranteed “technology leadership” and is now the world’s third largest semiconductor manufacturer after Intel and Samsung, and by far the largest contract manufacturer (foundry) for ‘fabless’ companies like AMD, Apple, Qualcomm, Nvidia, etc. Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing their fabrication (or fab) to a specialised manufacturer called a semiconductor foundry (fab). The U.S. has lost its leadership in industrial manufacturing of solar panels, batteries … and has also lost chips to Asia.
Foxconn and TSMC are products of the tremendously fast industrialisation of Taiwan. Besides South Korea, it is the only country that has not been caught in the middle income trap, with one-third of its workforce working in industry. Wages there are now reaching U.S. levels, and the island’s ecological resources are running out.
China would be only too happy to copy the development model – and President Biden the industrial capabilities. This is another reason why not only the chip industry, but also Taiwan in particular, is becoming a battleground for geopolitical conflict. 
With “friend-shoring,” the U.S. wants to block technological development in China. ‘Friend-shoring’ means the process of moving production to diplomatically friendly or allied foreign locations which have lower production costs. The U.S. representatives now declare the strength of the previous model to be its weakness, namely its global production chains and sales channels s (“the Ukraine war has taught us that we must never again become dependent!”). They are pushing for the construction of chip factories “in the West.” Because a current ‘fab’ costs at least $15 billion to build from scratch, huge sums have to be mobilised. (For comparison, a state of the art car factory for 150,000 to 200,000 cars a year costs a little over a billion dollars).
Meanwhile, the chip industry is slipping into crisis (with a sharp drop in sales). The “Apple model” is probably exhausted ecologically and in terms of wage development; a new one is not in sight. The USA’s geostrategic initiative would increase the ecological footprint of the chip industry many times over if the planned fabs actually start production. Can this planet even sustain so many chips?
The global race for subsidies
The EU also wants to catch up in the semiconductor industry. The EU Chips Act  aims to “double its share of global production to 20% by 2030” (by volume) with 43 billion euros. (One trillion microchips are produced annually worldwide, 10% of them in the EU). By price, sales in Europe are about 40 billion euros, and more than $600 billion worldwide.
In mid-March, it was announced that Intel plans to build two “Ångström-era” chip factories in Magdeburg. In our last conversation (Wildcat 108, mid-June 2021), you answered the question: “How realistic are new chip fabs in the low nanometer range in Germany?” You replied: “I don’t think the EU will put up ten billion – that’s the figure Intel gave…” Apparently, not quite that much was needed. The first of the two fabs is expected to cost $17 billion, about 40% of which will come from government pots: 2.7 billion euros had already been budgeted in the 2022 federal budget, and additional EU subsidies of 4.1 billion euros are expected to flow in 2024. What role will Magdeburg play for the European semiconductor industry?
At the beginning of the year Intel announced that it would be investing $88 billion in Europe to reduce its dependence on “Asian chip producers”. They are already advertising that they will be able to supply “everything from a single source” in the USA and Europe in the future. They already have important development departments in Europe, in Ireland and also in Munich. Therefore, Magdeburg is a strategic decision. Intel wants to build a new plant for packaging processes in northern Italy – planned investment five billion, the Italian state subsidises 40% of the costs. No one is playing poker as hard for subsidies as Intel. In addition, the state is expected to provide lax approval procedures, cheap electricity – which is also used for green washing – and drinking water at a ridiculous price, as we have seen with Tesla in Brandenburg.
If the EU Chips Act is ratified in time, Intel “hopes” to start the construction in Magdeburg in 2023. If that goes ahead in time the actual full-scale chip production would start in 2027 with the “Intel 3” process (which is supposed to be 5 nanometers). The fab is already prepared for “Intel 20A”. TSMC has been supplying 5 nanometer chips since 2019; 3 nanometer production starts in early 2023; 2 nanometer is announced for 2026 – so the backlog is considerable.
Intel also wants to expand its manufacturing capacities in the USA and is planning two fabs in Ohio at the cost of $20 billion. This could also turn into 100 billion for a total of eight fabs if enough government cash flows in. On July 28, the US Congress passed the Chips and Science Act to promote chip production in the USA. The total volume of $280 billion includes a 25% tax rebate for companies building new facilities or expanding existing ones. $52 billion dollars will go as direct subsidies; more than 20% of this, $11billion dollars, will go on research and workforce development. The bulk of the money will go on building fabs and will benefit Intel in particular. TSMC has also just completed the shell of a 5-nanometer fab in Arizona; from 2024, 20,000 wafers per month will be produced there. And Samsung is building a 5-nanometer fab in Texas, which is scheduled to go into operation at the end of 2024.
How far behind is Intel technologically?
Intel’s roadmap is Intel 7→ Intel 4→ Intel 3→ Intel 20A→ Intel 18A. Intel 3 would be manufactured in Magdeburg, but to date they are having great difficulty in ramping up Intel 4 (which is supposed to correspond to something between 7 and 5 nanometers). As mentioned, 3 nanometer prototypes are already available at TSMC and Samsung; larger quantities will be available in 2023.
Chips with nodes smaller than ten nanometers accounted for only 2% of global production in the first half of 2022, chips of 14 nanometers and above for 95%. Where are smaller node sizes really even necessary ? And what is this Ångström planned for Magdeburg?
As already pointed out in Wildcat 108, “nanometer” is no longer a measurable quantity. Beginning with the 45nm node, FET gate length is no longer related to smaller node sizes.  But what TSMC and Samsung market as 5 and 3 nanometers, respectively, continues to be the reference size for the sector’s development processes. The bigger the problems in technological progress become, the more creative companies become when naming their products, Intel is leading here: After producing the Intel 3, now they started the “A family”: first Intel 20A, then Intel 18A. The A is supposed to allude to the unit of measurement “Ångström” (1 Å = 0.1 nm!). Paul Alcorn of Tom’s Hardware (an online computer magazine) joked about this: “If you can’t beat them, change the name.”
Chips with nodes smaller than ten nanometers are used for smartphones, high performance computing (HPC), 6G, autonomous driving, AI accelerators, etc. Node sizes of 10-45 nanometers account for half of production; they are standard for MCU (microcontroller), standard MPU (microprocessor), “consumer Internet-of-Things”, low-cost PCs and laptops, for white goods, cars, medical technology, SmartHome (Alexa), SmartWatch and game consoles. Processes larger than 90 nanometers still account for 38% of the chips manufactured and are used in measurement and control technology, machine control and robotics in particular.
Is there a similar pressure in the car or appliance industry as there is in SmartPhones and server farms in relation to the use of smaller nodes?
For cars and industry, robust processes are far more critical than simply being smaller. Technically, there is no pressure to go to node sizes smaller than 14 nanometers – except for AI accelerators in both areas, which need 7 nanometers and smaller. Going to 7 nanometers requires different technology (manufacturing and physical design of transistors). But going from 28 nanometers to 14 nanometers might well be a good idea for cars, industry and medical technology.
You’ve mentioned “AI accelerators” several times now. “Artificial intelligence” is being advertised or threatened everywhere right now. What is meant by this is “machine learning” – and that requires not only a lot of data (big data), but also a lot of energy. An oft-cited 2019 University of Massachusetts study (Strubell et al., 2019) concluded that training a single “artificial intelligence” emits as much CO₂ as five cars in their entire life cycle. However, in the last two years, the average energy consumption to train an AI model has increased 18000-fold! AI is thus one of the biggest climate killers… 
Yes, so I totally don’t understand the current hype by the science commentariat when they talk about, “AI in the fight against climate change”. From a factual point of view, fighting climate change means drastic and rapid reduction of the release of carbon dioxide and methane. Full stop. At most, the AI models help insurance companies work through possible disaster scenarios, because that’s exactly the reduction that isn’t happening. And, of course, all energy demand met from fossil resources accelerates climate change.
In the case of AI, it’s not just about the power consumption of the server farms required for this. Even the production of a chip weighing two grams requires more than 70 grams of chemicals, 1.5 kilograms of fossil fuels and 35 litres of water… 
The Drewag network boss (energy company) said that the energy requirements of the new Bosch fab in Dresden are comparable to the needs of a small town. This is in the lower range; a 3-nanometer fab needs 6.3 terawatt hours per year (the total worldwide electricity demand is 25,000 terawatt hours). That also becomes a problem financially, because it accounts for 30% of a total fab’s operating costs, according to McKinsey.
In addition, a modern fab uses up to 45 million litres of water per day, much of it “ultra pure water,” which makes recycling difficult. The recycling rate today is 40-70%, and 80% for new fabs being built. It would be technically possible (but expensive) to recycle 90% of the water – but that would still correspond to 4.5 million litres of fresh water per day.
The importance of industrial manufacturing in geopolitics
The U.S. has chosen the electronics/semiconductor industry as a battleground for its geostrategic struggle with China. This was obvious in terms of power politics, since China depends on certain key technologies that the U.S. and its allies – the EU, Japan and South Korea – control. But how insane is it to want to draw sharp dividing lines through sanctions into what is arguably the most globally interconnected industry? Can you please briefly outline the production process again?
First, the wafers are produced in a complex process (see Wildcat 108). Then they are cut into pieces and (sometimes several of them) installed in a type of shell; this process is called “packaging”. Afterwards, printed circuit boards are assembled with these chips, which are finally installed in the end device (SmartPhone, computer, motor control, …). The chip design is done by other companies, many of which are located in the USA. All manufacturing steps (wafer, packaging, assembly, final assembly) are distributed worldwide. And what makes things even more complex: in each of the steps, in turn, subcontractors are needed.
For example, only the Dutch company ASML can currently supply lithography machines in the “extreme ultraviolet range” (EUV). To assemble such a machine, which costs 150 million euros, ASML in turn relies on 5000 suppliers; among them Zeiss for the optics. Tremendous efforts are needed to cut this complex global network into independent circles of “friendly states!”
On June 14, WirtschaftsWoche (German business news magazine) warned of the paradoxical effect of ‘friend-shoring’: “If China were to prepare for an invasion of Taiwan, it would begin to reduce its dependence on Western economies,” and it is precisely this process that Western friend-shoring is inadvertently driving.”
The Chips and Science Act also calls for friend-shoring. Subsidies are only available to companies that do not manufacture in or export to countries that pose a “threat to the national security” of the U.S.  This applies to anything under 28 nanometers, and is aimed directly at TSMC, whose Nanjing fab, which opened in 2018, makes 16-nanometer chips… (being a “threat to national security” can easily be extended to other countries, by the way!)
Friend-shoring certainly helps to dominate one’s allies – but possibly only harms China in the short term. A good example is the sanctions policy against Huawei.  In 2019, the U.S. blacklisted the company, banning TSMC from selling them chips in the 7-nanometer range (and had its chief financial officer arrested in Canada in 2020 for violating Iranian sanctions). In order for SMIC, China’s largest chipmaker, to produce 7-nanometer chips themselves, they would need the ASML EUV lithography machines I just mentioned. (SMIC is a major customer of ASML, having purchased 81 DUV machines in 2021 alone; DUV machines are the predecessor to EUV machines). However, the EUV machines use software developed in ASML’s U.S. subsidiary (American intellectual property content) and fall under U.S. sanctions. That’s why Huawei has slipped to fourth place as a handset producer – but remains the world leader in telecom equipment with a 31% share, twice as much as its nearest rivals Nokia and Ericsson. Meanwhile, the federal government is considering a ban on Huawei components in network infrastructure – even older components may be rolled out again in the face of opposition from network equipment suppliers.
In mid-July 2022, the South China Morning Post reported that the U.S. government wants to expand its export ban on ASML from EUV to DUV machines. It said that the background to this was that China had managed to use technical tricks to go below 14 nanometers even with the older DUV technology. However, the American intellectual property content in DUV machines is not high enough to support the U.S. government’s request. The real loser is TSMC.
Meanwhile, how far along is China in trying to build chip manufacturing entirely with its own equipment? How many years behind are they?
The Chinese government is investing massively in the independence of its own chip sector: developing new processes, building new manufacturing capacities and (basic) research. To this end, resources are also being diverted from other tech sectors such as social media and online retail. In 2021, 16% of global chip production (this is reported as the total area of wafers produced) came from China; 19% is forecast for 2022. However, about half of this is produced in fabs owned and controlled by non-Chinese companies.  The leaders in chip production are still South Korea with 15 % and Taiwan with more than 60% of the global foundry market.
That is the quantitative side; the qualitative is more difficult to assess. The propaganda of the Chinese Communist Party proclaims successes; the competition outside China points to failures. As everywhere where a lot of money flows, there are always reports of unfulfilled plans, unforeseen bankruptcies, corruption and corresponding accusations against fired managers in China. 
At the end of July 2022, the Taipei Times also reported that SMIC has been able to manufacture 7-nanometer chips as early as 2021; this was also quoted immediately by Heise.  SMIC calls these processes “N+1” and “N+2”. “N+1” is also referred to by SMIC as “8nm” or “early 7nm”. Rough estimates based on accessible information show it to be about midway between TSMC’s 14nm and 7nm. But obviously the people poached from TSMC brought with them the knowledge of how to go below 14 nanometers without EUV. “N+2” (7 nanometers) should be available in 2023.
Both processes use indigenous devices based on more advanced DUV. This is probably the background of why the USA now wants to enforce a ban on supplying any more (older) 14nm equipment to China either.
China’s focus is clearly on securing critical infrastructure despite all the U.S. sanctions. At the heart of this is the “3-5-2 program” which aims to replace all imported computers (especially in data centres) with Made in China equipment (30% in 2020, another 50% in 2021, another 20% in 2022 … hence “3-5-2”). In doing so, China is not simply copying what is no longer available to the country, but is relying on the creativity of a mass of highly skilled technicians (many of them trained in the U.S., Taiwan or South Korea) to find quick and workable solutions. Overall, China is likely to suffer more from general crisis developments in its financial and real estate sectors and from the zero-covid lockdowns than from the U.S. sanctions policy.
The U.S. trade war was intended to prevent China from becoming independent in cutting-edge technology. Instead, did it actually end up helping the development of China’s IT industry? The Asia Times commented on the attempted export ban on DUV equipment: Once again, the US tried to close the barn door after the horse has bolted… 
This assessment is consistent. Although even Huawei is complying with U.S. sanctions and not supplying Russia, something like a Eurasian bloc could also emerge in the semiconductor industry in the medium term. German companies such as Merck are also involved in the lithography sector. And China still has a few cards up its sleeve, such as import bans for Apple and others, export bans for rare earths, or production bans for US tech companies at Foxconn China (Intel and Apple). Apple, for example, is increasingly moving the final assembly of its devices to India and Vietnam, even if the justification for this is currently still the covid lockdowns. 
… which, after all, fits into the strategy of the USA. Shortly before Pelosi’s August 3 “hazard trip” to Taiwan, the “U.S.-Japan Competitiveness and Resilience (CoRe) Partnership,” a strategic cooperation between the U.S. and Japan on chip production, was announced. It had been ratified on July 29 during Biden’s visit to Japan. Can you assess its prospects for success?
According to an August 1st Asia Times article, they want to “bring 2-nanometer chips to production readiness” by 2025 to reduce their joint dependence on TSMC.  They are probably building on the process IBM unveiled in May 2021, but which is not yet ready for industrial production. TSMC also plans to start producing 2-nanometer chips in 2025, but is already planning the fab to do so. The Asia Times commented that the U.S. and Japan are “three or more generations behind TSMC.”
At the core of the venture are Japanese and U.S. companies such as IBM, Intel, Canon, Tokyo Electron and others. In November 2021, for example, Japan’s JSR Corporation had completed the purchase of U.S. company Inpria, the world leader in photoresists for EUV, both close industry partners of Intel. Both, the technology gap (especially with TSMC) and Intel’s difficulties in stabilising their fab processes, force the U.S. to attract TSMC and Samsung building fabs locally. Now it has become public that the U.S. and Japan are trying to set up independent manufacturing capabilities in case TSMC or Taiwan may fail to supply in future.
In fact, Pelosi met with TSMC bosses “to discuss the Chips Act as well as assistance in training engineers in the U.S.,” according to official documents. They will have had a lot to talk about! After all, historically, the U.S. had made sure that the Chinese Communist Party’s “One China Policy” was accepted worldwide, because at that time they wanted to pit China against the Soviet Union. In 1971, Taiwan lost its representation in the UN so that Nixon could meet with Mao in early 1972. In return, Mao talked about postponing reunification, possibly for a hundred years. In 1979, the U.S. cut diplomatic contact with Taiwan, etc. Today, the time has obviously come to take on Russia and China at the same time, and so it has to perform a balancing act vis-à-vis Taiwan.  The company that the U.S. needs the most suffers the most from its sanctions; so far, TSMC makes 20% of its sales with China. How many more years will “the West” need to do without Taiwan’s chip industry?
If we look at the whole process – chip design, wafer, packaging, assembly, final assembly – from the U.S. perspective, the design is not a big problem. The biggest challenge is the production of the smaller nodes in the single-digit nanometer range. TSMC and Samsung are the leaders here, followed by Intel (USA) and just behind them China (SMIC). For this production, a highly qualified, young and motivated workforce is needed, which first has to be trained in Europe and the USA, will be more expensive and who will also be difficult to motivate for the twelve-hour shifts that are common in Asia. TSMC is experiencing this right now with their new fab in the US. According to the Semiconductor Manufacturers Association (SEMI), there will be a shortage of up to 750,000 workers in the industry in the U.S. over the next few years. Sanjay Malhotra of SEMI sums up the problem: “You can have a fab, you can fill it with equipment, but if you don’t have the people to run it, what’s the point?”
Qualcomm had to experience how difficult it is to produce anything usable at all with new processes when it came to 7-nanometer processors (for smartphones): For months, the scrap rate was 100% until the first functioning chips finally came out of the factory. Still nine months after the start of production, Samsung also has a yield of just 35% for the new 4-nanometer Snapdragon8 processors.The rest is scrap.
Fabs for older processes in Germany and Europe are something else. They run quite stably and can therefore be sufficiently automated (e.g. this also applies to the new Bosch fab in Dresden). Driving industrial processes forward technologically, on the other hand, requires the constant intervention of female workers in factory shifts around the clock!
Speaking of which, how has the situation at TSMC in Taiwan evolved?
The number of employees has increased by another 25% from 2019 to 2021, to more than 65,000. After rather moderate wage increases of 3-5%over the past five years, TSMC has increased salaries by 20% in 2021 – reportedly to retain and recruit qualified workers. Wages now range from $77,500 to $136,000 per year, on par with the wages offered to applicants for U.S. fabs under construction ($63,000 to $155,000). Conversely, this also partly explains the problems of finding qualified workers in the USA.
All available resources into the chip industry?
Meanwhile, the chip industry crisis is unfolding: the inflation-driven decline in consumer electronics is affecting all sectors: TVs, PCs, smartphones, home appliances… For the first time since 1976, June figures showed that chip sales declined on a month-to-month basis…
Last year, nearly one in five people bought a new SmartPhone (1.39 billion units sold worldwide in 2021). That explains the current record profits – but also shows that they are hard to sustain. The chip industry is in a cyclical downturn. Memory chips are considered the industry’s early warning system because they are needed in all sectors. And memory chip makers such as Micron and Hynix are reporting sharply shrinking sales for the third quarter in a row. Meanwhile, all chipmakers are struggling with extended order cancellations, with stable demand coming only from data centress and the auto industry. TSMC raised its prices after its record second-quarter profit in 2022 – and cut capital spending at the same time. One reason was delivery delays of fab equipment, but the main reason is that customers’ inventories are full; they will order less. 
The chip industry has always known cycles of two to three years. But the current downturn is the most severe in more than a decade. Add to that the technical problems: the ramp-up of the 3-nanometer process at TSMC has been delayed because Intel simply can’t finish its next generation of processors – the graphics part of which they want TSMC to manufacture – and has cancelled the wafers ordered for 2023. For the first time since Moore’s Law was formulated, chip prices are rising.
Gordon Moore formulated his “law” in 1965, according to which semiconductors would be able to double the performance of chips every two years at approximately the same production costs. In 1968, he founded Intel, which was to become the market leader and top dog in the chip industry for many years. “Moore’s Law” was the basis of the “digital revolution” and the benchmark for strategic investment decisions – as long as the performance of the chips grew accordingly. Today, Intel in particular seems to be at the centre of the crisis; there is a lack of money, technological development is stagnating, competitors are passing by…
… in 2021, Samsung was ahead of Intel for the first time with more than 83 billion US dollars in sales. When Intel reported a 22% drop in sales in July, a loss of 500 million US dollars in the second quarter and a sales expectation of only 65 to 68 billion for the full year, the share prices collapsed and Intel was overtaken in market capitalisation (also for the first time) by AMD, who are also highly profitable! Intel has been in crisis for a long time, the booming demand during the pandemic had concealed that. But now it’s getting down to the wire: the PC/laptop division minus 25%, “data centres and AI” minus 16%; that means the core business is collapsing, and at the end of July 2022, Intel gave up its last own production of memory chips (Optane). The outlook is bleak: the next processor generation was supposed to come in early 2021, now it looks like early 2023;  the generation after next has been postponed to early 2024; planned investments have been cut from $27 billion to $23 billion – while Intel would have to expand investments in order not to be completely left behind! Comments from the industry are already talking about “Intel’s Kodak moment”.
“For resilience reasons”, new chip factories are supposed to be built everywhere. By the end of 2024, China wants to build 31 new fabs, Taiwan 19, the U.S. 12. Can this get the chip industry out of the crisis? Or does the reference to Kodak mean the end of a technology like analogue film back then?
If I take the discussions at the Design Automation Conference in mid-July together with a presentation by TSMC in early August, “Kodak” means the limits of a technology. Mii, TSMC’s vice president, wanted to showcase the bright prospects of ultra-high density integrated circuits. With 6G (6G is communications infrastructure plus data centres) would come a “digital data boom for HPC,” because an Internet user produces 1.5 GB of data daily, but a self-driving car produces four terabytes, and a “smart factory” even a petabyte! For its part, the DAC (Design Automation Conference) discussed the exploding energy consumption that comes with this development. For example, power consumption to train “artificial intelligences” has grown exponentially, and with 6G, 70-80% of the total energy demand occurs at the edge, i.e., the end device. The billions of devices that make up the “Internet of Things” will soon consume more energy than we can produce, said one conference participant. If there really were 100 million cars on the road with AI, the grids would fly apart (another participant). Some companies in the AI industry promise to reduce their energy needs to one hundredth (!!) in the next five years – DAC’s summary: “That’s not even close to enough!” We have entered an “era of inefficiency,” said another participant.
When Mii then proudly declares that the transition from 7-nanometer nodes to 5 nanometers brought an increase in logic gates per unit area by a factor of 1.83, and the transition from 5 nanometers to 3 brought another 1.6, his own numbers show that even TSMC can no longer follow “Moore’s Law” – with a falling trend. At the same time, manufacturing costs and the creation costs of the factories increase significantly from process step to process step!
Moore had formulated his “law” in 1965 to keep doubting investors of his then company in line. Intel has been failing to fulfill it for 15 years – and has big problems with its investors: even in the red quarter, they pushed through a further increase in dividends paid out, to $1.5 billion. Intel CEO Gelsinger, the world’s highest-paid executive earning $179 million a year, is mainly preoccupied with getting money from investors. But his narrative is no longer “progress,” but “strategic resilience,” because that’s where most of the government dosh can be made. Are we watching geopolitics and over-accumulation, exploitation and ecology collide right now?
In 2021, the number of 300mm wafer fabs increased by 14 to 153. Ten fabs are scheduled to open this year. Then 13 in2023 and 10 in2024. In 2025/26, another 17. By 2026, more than 200 such production lines would be in operation.  The buildup of duplicate supply chains in the U.S. and Europe is leading to over-investment at the same time as we’re entering a long-term downturn.
According to Bloomberg, the semiconductor industry will consume 20% of global energy demand in 2030. Add to that the enormous consumption of drinking water! In ecological terms, the chip industry’s hunger for resources is a whole different ball game from the auto industry. Almost all available resources – energy, water, labour – would have to be thrown into its growth. But nobody can explain to me why every household lamp has to contain a computer with many chips and possibly even an Internet connection! Neither chips nor data streams are free!
The question is not so much whether this capitalist cycle will come to an end, but whether it will choke on its over-accumulation before it ruins the earth.
 “Summer of semiconductors” is what Jacob Carpenter called the dramatic development around the chip industry in July and August 2022 on his blog “Manufacturing”.
 On Aug. 10, 2022, Redaktionsnetzwerk Deutschland reported on model calculations by U.S. military think tanks about how badly Taiwan would be destroyed in a military conflict with China. www.rnd.de
FAZ asked, “Can war still be avoided?”
 See European chip law at: https://ec.europa.eu
 See Wikipedia, keyword technology node
 “Klimahelfer oder Klimasünder”,[Climate helpers or climate sinners], ZEIT-online, 13.7.22.
AI Power Consumption Exploding, 15.8.2022 auf: https://semiengineering.com
 The Semiconductor Sustainability Challenge – Accenture Weighs In, 19.5.22 see: https://www.semi.org
 »recipients of Federal incentive funds are prohibited from expanding or building new manufacturing capacity for ›certain advanced semiconductors in specific countries that present a national security threat to the United States.‹« US Senate passses CHIPS Act 2022, 28.7.22 see:
 Nancy Pelosi‘s visit to Taiwan was great news for China‘s chip sector as investors welcome the prospect of a chip war boom, Fortune, 3. August 2022: »TSMC, the world’s biggest and most valuable chipmaker, stopped providing Chinese telecoms giant Huawei with advanced chip technology at the behest of Washington, which cost TSMC 30% of its revenue. (…) But Beijing still imports over $300 billion worth of semiconductors annually.« https://fortune.com/
 Tom‘s Hardware, 15.7.22 www.tomshardware.com
China‘s share of global wafer capacity continues to climb, 21.2.22 see: www.design-reuse.com/
 MIT Technology Review, 5.8.22: »Corruption is sending shock waves through China’s chipmaking industry« »China’s chipmaking industry descended into chaos last week, with at least four top executives associated with a state-owned semiconductor fund arrested on corruption charges.« »On July 30, China’s top anticorruption institution announced that Ding Wenwu, the chief executive of the China Integrated Circuit Industry Investment Fund, nicknamed the “Big Fund,” had been arrested (…) Established in 2014, the Big Fund was intended to use government money to build a supply chain of chips made in China, thus reducing reliance on the US and its allies.«
 Taipeh Times, 23.7.22. www.heise.de, 25.7.22: “Die ersten 7-Nanometer-Chips aus China: Meilenstein bei SMIC” [The first 7 nanometre chips from China – Milestones at SMIC]
 Asia Times, 14.07.2022: »China’s chip-making equipment companies are the main beneficiaries of the tech war…«
 SpOn, 8/8/2022: Apple Urges Suppliers to Disguise “Made in Taiwan” “American computer company Apple has apparently urged its Taiwan-based suppliers to label their products as made in China. This is to avoid delays in supply chains that could result from stringent or harassing Chinese customs inspections. … The “Made in Taiwan” label in these circumstances can lead to delays, fines and even rejection of an entire shipment. Taiwan itself requires that exports be labeled with the place of origin.…”
 Asia Times 1.8.22: US, Japan reaching for a 2-nm chip breakthrough.
 Pelosi Taiwan visit puts TSMC back in spotlight of U.S.-China rivalry, CNBC, 4.8.22.
In it also the point that TSMC must decide which side they are on: »TSMC meanwhile is caught in the middle of the U.S.-China rivalry and could be forced to pick sides.«. »The question is, as tensions between Taiwan and China increase, will TSMC be able to maintain its position (aligning with the West), or will it be forced to recalibrate its geopolitical strategy.«
By the way, Pelosi’s journey has also driven up the Akien prices of Chinese foundries;
Fortune, 6.8.22 :»Nancy Pelosi’s visit to Taiwan was great news for China’s chip sector as investors welcome the prospect of a chip war boom« »On Friday, shares of China’s biggest chip companies surged the most since 2020, as investors bet that the growing Sino-U.S. chips showdown would spur the advancement of China’s semiconductor sector.«
 Chip giant TSMC warns of ›excessive inventory‹ at clients – Nikkei Asia, 14.7.22 https://asia.nikkei.com
 The Register, 5.8.22 www.theregister.com
 Digitimes Asia, 8.8.22 www.digitimes.com
 elektroniknet.de, 4.3.22 “Die Zahl der 300-mm-Wafer-Fabs steigt bis 2026 um 25 Prozent.”