| Well, all THREE of those scenarios (and sub-scenarios) are routinely happening. And add in some other reasons as well. 2019 was predicted to be a "low cycle point" going back to market projections in 2016. So fabs were already dialing back production. This then was amplified by COVID. So production volumes were dialed down and the boom was not expected because it didn't follow decades established cycles of supply and demand. Fabs are absolutely NOT equal even when they target the same baseline features/performance. Usually fabs from the same company can be equivalent but there are plenty of situations when the particular fab for a 2nd or 3rd tier foundry will not be up to the same standards so you'll often want one particular site to do your parts or to be avoided. TSMC is head-and-shoulders above Samsung, who is head-and-shoulders above UMC or GF. Fab services are absolutely NOT interchangeable beyond a fairly low common denominator. Fab services are NOT fungible in the general case between fab companies!! If you are forced accept a 2nd tier fab product, you WILL have to change (often radically) what your entire marketing and business plan will be. You will NOT be able to promise the same things that getting a TSMC product would allow. You will NOT be able to charge the same product prices that getting a TSMC product would allow. And that assumes you have a top-flight IC design team. This is why TSMC is the gold standard. They are entirely focused and have the best of the best of people. Being one of TSMC's vendors for anything is a very harsh but profitable duty; but that's because they are the best and demand the best (Intel sort still was like this but nothing like TSMC anymore). I've worked with other fab companies, and the difference in focus and commitment among TSMC employees is very noticeable in the details and attitudes. They are scary good. For at least a decade, TSMC and other top-flight fabs have indeed been routinely turning away or delaying fab runs to fabless clients who's order volumes or dollar cost was below a planning threshold. This is NOT new. So in many ways there's been shortages for TSMC level foundry services for more than a decade. It's only gotten much worse recently. TSMC has been conservative with expanding production capacity because they are Taiwanese and that's a cultural norm. Only "knowing someone" and/or becoming personally involved e.g. flying to Taiwan or Korea and talking directly with management, as a C-level executive of your company, will break that lock but only so much - you can and will always be outbid and then bumped. TSMC literally turns away most fabless companies that request their services from the get-go. You fit their schedule because that's where the power is due to demand. Apple is easily TSMC's largest customer with Nvidia being 2nd or 3rd. But Apple has been using TSMC for iOS/iPad processors for a long time now so they are already established and the M1 et al. merely upped an already well-established and reliable working relationship to high dollar value. They have a relationship and system of working together. Apple has special priority for everything because of their already high volume. When you enter lobbies at TSMC and all other Taiwan semiconductor fabs, there's always a sign welcoming some Apple employee for a visit that week. Apple is super-engaged with its vendors like this. So nothing is left to chance for them. Lots of other fabless do the relationship "at remote arm's length" which puts them at a disadvantage! Many IDM semiconductor companies like Texas Instruments, and others, are also using TSMC to manufacture many of their "standard digital product" ICs as well because the cost to use TSMC is cheaper than running 20-year-old+ fabs of their own. These are multi-year, high value contracts for much of TSMC's baseline volume (i.e. there is portfolio value to fulfilling them). So these are also impacting supply when demand bumps up - long term contracts trump short-term or unscheduled work. To spin up a new fab costs between US$ 30B-100B and has a 3-5 year timeline on a good day. So adding capacity is both a major capital commitment and never instantaneous. TSMC does have the money (hence the new Phoenix AZ fab already under construction) but it will not have any impact for a few years yet. This cost/delay is then multiplied by the tacit technical knowledge required which can NOT be easily spun up or duplicated. TSMC is adding new factories like crazy but even they are limited by reality. This latter tacit knowledge is why there's so much Epic Fail with Chinese semiconductor firms now (MOST are outright fraudulent scams, e.g. Evergrande and EVERY semiconductor company associated with them) and why no one can just walk in and compete with TSMC. Even Intel has not been able to jump into being a foundry. They UTTERLY FAILED when they tried become a foundry about 10 years ago - they've been an IDM too long to really have the corporate culture to make being a foundry work. As it is now, Intel is actually outsourcing a lot of their "foundry wins" to the likes of TSMC and Samsung. It's NOT THEM. Same problem to this day. I work in this market. TSMC is one of my customers. We also use TSMC fab services for custom chips we put into our products (a recent run we did required we stuff multiple chips from several groups into the same multi-chip run to get a spot - we then saw them up ourselves and package them). I've worked in semiconductor since the 1980s. I was involved in the creation of the Fabless-Foundry model back in the early 1980s (MOSIS, USC-ISI, etc.) I've been inside pretty much every fab of every company around the world over the last decades as vendor, employee or customer. |