I have some news for you, here is a real story.

I'm a programmer, a pretty good one, I have built real products worth millions of dollars and I'm doing alright. I'm no rockstar, I'm no pundit.

I have a raspberry pi connected to a touchscreen I use for home automation, it's a nice little home IT project, I don't really spend a lot of time on it. It's a hobby and something to walkthrough/demo/make available for the kids to hack on.

I wanted to tighten up the install, get automatic updates running, get it in full kiosk mode and add a couple features. Nice little Saturday project, figured it take a couple hours on the outside, hardest part would be mapping the touchscreen again.

Claude did it for me in 20 minutes. So I got to spend an hour and a half thinking of features I wanted to include, pretty great for me! Pretty great for IT! Need doesn't enter into it.

Maybe not great if your boss is a pinhead.

The problem is it's not quite so easy.

If this was making things like cars or toilet paper, where the design and manufacturing methods are well understood, that's exactly what would happen.

Making computer chips was well understood. You take a slice of single-crystal silicon, dope its surface with something, use a photo mask and a light to etch off the doping where you don't want it. Repeat that process a few dozen or a few hundred times to etch transistors into the silicon, then slice it up into chips and package them.

Machines that do this are readily available.

The problem is, we made those transistors smaller. And smaller. And smaller. And smaller. And smaller.

Then we ran into problems like how to etch features on the silicon that are smaller than the wavelength of light. And we found solutions to that. And so we made the transistors smaller. And smaller. And smaller.

So now to create a current-gen computer chip, you need a process called EUV- Extreme Ultra Violet. Red light has a longer wavelength than blue light, so when you want smaller wavelength to etch smaller features into the chip you eventually go from red to blue to ultraviolet and eventually to extreme ultraviolet. Problem THERE is there's no EUV bulbs available, and if there were they'd be useless because atmospheric air absorbs EUV, and even if you do it in a vacuum glass absorbs EUV too so lenses don't work. So you can only manipulate this light with mirrors, which have to be ground to an absolutely insane level of precision.

The resulting machine is quite impressive. You have a giant cavity kept in perfect vacuum. In one side you have an EUV source- that's a little machine that dispenses a tiny 3-micron droplet of molten tin. As the droplet falls it's hit by a laser to blast it into a pancake-like shape, then by another much bigger laser that vaporizes it. In the process of vaporizing it releases EUV light. So by blasting 50,000 droplets per second, you have a mostly continuous EUV light source. This light is reflected by shaped mirrors carved into the surfaces of the vacuum chamber that reflect and focus the EUV into a linear beam. Below that (also in vacuum) you have the mask and the silicon wafer, and by moving them back and forth under the beam you etch features 'smaller than light' into the chip.

The result is a chip with current pathways less than 100 silicon atoms wide. And if you want to make current-gen computer memory, that's the only way we've got to build it.

EUV machines are pretty much only made by one company, ASML. They're the size of a double decker bus, they cost a fortune ($200MM+), and they're in insanely high demand. Like I've heard of a guy getting hired by a company for over million a year simply because he's friends with a purchasing manager at ASML and might be able to get the company that hired him a build slot.

And it's not just buy the machine and hit 'start', there's a ton of other stuff involved. You need machines to make the photo masks, you need an ultra-clean cleanroom, you need a robotic facility where cassettes of wafers can be whisked from machine to machine with no exposure to even clean room air. And this is all highly specialized stuff, you don't just call 1800-fab-4you and place an order.

Bottom line- even for a company that already has experience in current-gen chipmaking, setting up a fab like this costs $15-20 billion. And it isn't just 'sign a check and come back tomorrow', the process of building a fab from the project being approved to the first wafer coming off the line is 2-3 years minimum.

Now here's the bigger problem- semiconductors are always a cyclical market, or at least always have been. Demand (and thus prices) goes up, demand/prices come down. So if you invest $20 billion when prices are high, then in 2-3 years when the cycle is at its low nobody's gonna be buying your output. And of course, adding more chips to the market will affect market prices (supply and demand). So companies that are building fabs have to look 5-10 years ahead to determine if they'll get ROI on a fab before they build.

And that brings us to the next issue- with AI, we're in uncharted territory. The computing market has been pretty well understood since the early 90s. There's demand for PCs and laptops and servers and gadgets, and it goes up and down and new products come out that changes the mix of what's ordered, but the cycle more or less continues. Up and down.
Then AI happens. And suddenly we have near-instant, unheard-of levels of demand. And it's all for current-gen top-shelf stuff- HBM (high bandwidth memory) and GPUs and specialty silicon like NPUs.
Now there are more fabs being built. But it's also starting to be better understood that AI is a bubble, which almost certainly will pop. So if you're a DRAM maker and you spend $40 billion building a fleet of new fabs and then the bubble pops, you're gonna be fucked. That's why you don't see everybody+dog diving into the DRAM market face first.

Prices going down from competitors is a capitalism lie which occurs sometimes.

Even if it worked it wouldn't. Neoliberals and free-market advocates will tell you that competitors would rise up if there were no regulations.

But some industries (like silicon and microchips and other advanced tech) are just impossible to breakthrough without years or decades of setting up and operating without profit vs current players.

And those current players, given no market regulations, will still use their money to do anything possible to stifle upcoming competitors or buy them out.

The dream of capitalism was born pre industrial age, under models of "apples sold at the farmers' market".

The reality is we have advanced a lot and need mixed economies to keep things fair for most people.

CXMT is our best bet. But it takes time to ramp up production. Some article I saw said they’re building things at a quicker pace than other manufacturers typically do which is a good sign.

But when demand slumps back down then now you’re stuck with all this manufacturing capacity that’s not useful anymore. So you have to balance dealing with short term spikes vs long term demand.

A bit off topic, but what sort of mp3 player? It crossed my mind a few times that I should get one again.

unfortunately chip foundries take years to set up (just filtering the air alone takes months), so it's not really a solution - although china is attempting to do exactly this.

Nobody (aside from China, for purely geopolitical reasons) really wants to invest billions of dollars in a multiple years long process that could be instantly undermined by the popping of the AI bubble.

This level of demand is not sustainable, and the big tech companies know it.