Do you wish to understand why trailing-edge semiconductor manufacturing matters so much? You may have heard about the most powerful chips made by leading-edge manufacturers like TSMC in Taiwan, Intel in the United States, and Samsung in South Korea, but were you aware that China is currently dominating the market on trailing edge semiconductors? Find out what this means for the semiconductor industry’s supply chain issues, why trailing edge chips are still in high demand, and what the industry can do to resolve these problems.
Semiconductor Supply Chain Issues
Even people who are not working in the semiconductor sector are aware of the shortage of chips in the past two years. This supply chain issue has affected the production of nearly every type of consumer electronic device that utilizes microchips. This is most evident in the scarcity of video gaming consoles and graphics processing units (GPUs) that utilize the more powerful chips that are in short supply. Other chip demands have affected the automotive industry which lost over US $200 billion in 2021 due to this problem.
The COVID-19 pandemic had a part to play in this problem when semiconductor fabs where the manufacture of chips is done had to be shut down for health reasons, causing production delays. With more people under lockdown, this put a higher demand for consumer electronics, telecommunications infrastructure, and advanced servers with everyone consuming entertainment from their homes. GPUs made by companies like Nvidia have skyrocketed in price, the vehicle manufacturers failed to make over 7 million cars than they otherwise would have, and it’s still very difficult to find a Playstation 5 or the latest Xbox gaming console available in a store.
While the supply chain woes for chips largely kicked off due to the pandemic, the situation has not improved much even with many countries loosening their health restrictions. The situation is more complex, and COVID-19 is not the only culprit here although it usually gets all the attention. When looking closely, it becomes evident that the shortage of chips is also due to other issues. This is where the discussion turns to the leading-edge and trailing-edge manufacturing processes as well as the big fabs that operate them.
What Is the Trailing Edge of Semiconductor Manufacturing?
Leading-edge semiconductors are what most people think of when it comes to chips built for advanced computing devices. When we talk about cloud computing servers that handle all the processing power for social media, artificial intelligence applications, and even the latest chips in premium smartphones, it is the leading-edge microprocessors that make all of this possible.
However, most modern digital devices run on more than just leading-edge technology. Apart from the flashy new cutting-edge processors that get announced at trade shows and product reveals, there are at least a handful of lower-level processors that handle less sophisticated operations of a consumer device. These chips are referred to as ‘legacy nodes’ and are used for everything from driving a smartphone display to handling the radio communications between the phone and the mobile tower. When people refer to the trailing edge of semiconductor manufacturing, they refer to the production of these legacy nodes and the fabs that continue to manufacture them.
Trailing Edge vs Leading Edge Nodes
Most large fabs of leading-edge manufacturing like TSMC in Taiwan, Samsung in South Korea, and Intel in the United States are currently focusing on chips developed at the 7nm and 5nm scale. Apart from companies like Global Foundries based in the US, most of the fabs that manufacture in the 350nm to 90nm scale are located in China which currently dominates most of this market.
Why Trailing Edge Manufacturing Matters in the Semiconductor Industry?
Chip manufacturing at the trailing edge still matters for the following reasons.
The Massive Demand for Legacy Chips
While the leading edge powers the most premium applications on consumer devices, the more mainstream processors in the trailing edge are still necessary for their basic functionality. Apart from this, there are other applications like medical monitoring equipment, Internet of Things (IoT) semiconductor chips, as well as computer devices used in automobiles that run on these chips. Even with companies like Global Foundries and others in China manufacturing at full capacity, this is not expected to meet the skyrocketing demand.
Leading Edge Manufacturing Nodes at 7nm, Not 90nm
The newer chips require more sophisticated technologies including advanced manufacturing processes, chip design software, skilled labor, and significant investments in research and development for manufacturing. With most big fabs in Taiwan and Silicon Valley focusing their efforts on manufacturing nodes at 7nm and even smaller, they have moved away from legacy processes that produce larger nodes. Therefore a vast majority of their facilities are no longer suitable for manufacturing the lower-level processors at the trailing edge.
Geopolitical Issues and Export Restrictions on China
With China controlling the majority of trailing edge chips, there have always been concerns about national security in the United States and its allies. There is also the possibility that the Chinese government could nationalize their fabs, which could limit which countries they supply to. Complicating the issue has been the recent export ban that the US imposed on China regarding semiconductor manufacturing technology.
Aside from restricting the sale of advanced chips used in artificial intelligence applications, the US has also clamped down on companies that provide Chinese fabs with US-made chip-making equipment and design software. There are also limitations for US citizens from working with Chinese fabs. Since many of the design and manufacturing software tools are made in the US, this will affect foreign companies outside the United States as well.
While the full impact of these export restrictions is still unclear, it may cause further supply chain disruptions in the future. To learn more about this, read How the China-US Chip Trade War Will Affect the Global Semiconductor Industry.
The Future of Trailing Edge Manufacturing of Chips
The good news is that efforts are underway to resolve this myriad of supply chain issues. US President Biden signed an executive order to bolster domestic production capacity, with $39 billion worth of tax credits allocated to encourage companies to open fabs within the country. GlobalFoundries remains as committed as ever to supplying legacy chips while industry-leading manufacturers like TSMC are allocating more resources than ever to increase their capacity.
The supply chain issues may not resolve for another year, but when it does settle, the demand for computing devices and the chips that power them may have grown even further. What is understood is that the trailing edge of manufacturing remains as important as the leading edge when it comes to semiconductor devices. For more on semiconductors, manufacturing techniques, and equipment, check out Inquivix Technologies!
The semiconductor sector grapples with various internal obstacles, including matters of materials management, recycling, and enhancing processes. There are also escalating external issues to confront, such as geopolitical relations linked to the availability of resources and commerce. Despite these challenges, the overall growth of the semiconductor market remains robust and swift.
A node refers to the size of a semiconductor component, which is usually measured in nanometers. The most advanced nodes being manufactured today measure less than 10nm.
A legacy node is an older microprocessor that is not at the cutting edge of technology but is used for the lower-level functionalities in many computing devices and consumer electronics today.