1 00:00:00,000 --> 00:00:03,860 Computers keep getting more expensive. Why? Take a look at this. 2 00:00:03,860 --> 00:00:07,640 That right there, that's an NVIDIA GPU. Can we talk about NVIDIA, please? 3 00:00:07,640 --> 00:00:11,800 Cause I'm dying to talk about NVIDIA. NVIDIA has got the GPU market cornered 4 00:00:11,800 --> 00:00:14,920 and they're charging like it, but they're a fabless chip company. 5 00:00:14,920 --> 00:00:18,020 They're fabs, they don't exist. 6 00:00:18,020 --> 00:00:23,120 See, they get their chips from TSMC, Taiwan, Taiwan. 7 00:00:23,120 --> 00:00:27,400 Right there. They have the only fabs and they're charging like it. 8 00:00:27,400 --> 00:00:30,840 But guys, you think it stops there? No, we ain't anywhere near the top. 9 00:00:30,840 --> 00:00:34,800 See, ASML, they don't have the fabs, but they have the machines, 10 00:00:34,800 --> 00:00:42,120 the machines to make the fabs, to make the chips. And those machines, they're $200 million. 11 00:00:42,600 --> 00:00:46,720 There's no competition, no competition all the way to the top. 12 00:00:46,720 --> 00:00:49,840 What do you say about that? 13 00:00:49,840 --> 00:00:54,600 I mean, yeah, that's a problem. You're damn right it is. 14 00:00:55,600 --> 00:00:58,840 And what do you say about our sponsor? 15 00:01:08,520 --> 00:01:13,560 Here's the less manic and more thorough version. Over the last 20 years, NVIDIA's market share 16 00:01:13,560 --> 00:01:16,640 of discrete GPUs has climbed to 92%. 17 00:01:16,640 --> 00:01:20,200 Now that alone doesn't make them a literal monopoly, 18 00:01:20,200 --> 00:01:23,200 but what it does do is it allows them to act like one. 19 00:01:23,200 --> 00:01:27,440 I mean, think about it. AMD has fallen to a measly 7% 20 00:01:27,440 --> 00:01:30,480 and Intel only just broke the 1% barrier 21 00:01:30,480 --> 00:01:34,360 after three painful years in the market. So who's gonna stop them? 22 00:01:34,360 --> 00:01:37,880 Nobody. So thanks, at least in part, 23 00:01:37,880 --> 00:01:42,920 to their dominant position in the market, NVIDIA has dramatically ratcheted up their pricing 24 00:01:42,920 --> 00:01:46,020 over the years, pushing their flagship consumer GPUs 25 00:01:46,020 --> 00:01:51,020 from just $500 back in 2010 to $2,000 today 26 00:01:51,740 --> 00:01:55,340 with premium variants that cost much more than even that. 27 00:01:55,340 --> 00:01:59,740 I mean, it's no wonder then that consumers are resentful, even angry about it. 28 00:01:59,740 --> 00:02:02,780 Not angry enough to buy a radio, mind you, 29 00:02:02,780 --> 00:02:07,340 but angry enough to complain online. And I get it. 30 00:02:07,340 --> 00:02:10,380 We've become hooked on ever cheaper technology, 31 00:02:10,380 --> 00:02:17,100 even in the face of high inflation. But as it turns out, there's actually more of a reason 32 00:02:17,100 --> 00:02:21,780 for NVIDIA's pricing than just their desire for more money. 33 00:02:21,780 --> 00:02:28,380 See, neither AMD nor NVIDIA actually manufactured GPUs, the chips. 34 00:02:28,380 --> 00:02:31,380 They don't even own the fabrication plants that make them. 35 00:02:31,380 --> 00:02:37,140 Even Intel, who does own fabs, doesn't manufacture cutting edge GPUs in their fabs. 36 00:02:37,140 --> 00:02:41,140 In fact, all three of the players in the GPU space 37 00:02:41,140 --> 00:02:45,780 source from a single company called Taiwan Semiconductor Manufacturing Company, 38 00:02:45,780 --> 00:02:49,820 or TSMC. They also aren't a literal monopoly. 39 00:02:49,820 --> 00:02:55,220 Samsung and others have done their best to keep up over the years, but like NVIDIA, 40 00:02:55,220 --> 00:03:01,340 they have outcompeted their competition to the point where they are the only viable fabricator 41 00:03:01,340 --> 00:03:06,620 for the cutting edge chips that power the latest gaming GPUs and AI accelerators. 42 00:03:06,620 --> 00:03:12,660 That's not because nobody else could build them. Intel, for instance, has access to the very same equipment 43 00:03:12,660 --> 00:03:16,220 that TSMC does, but semiconductor manufacturing 44 00:03:16,260 --> 00:03:22,420 is not about access to the equipment or even about the ability to build one chip. 45 00:03:22,420 --> 00:03:28,500 It's about the ability and the knowledge to build millions of chips and to do it economically. 46 00:03:28,500 --> 00:03:32,000 So the process control has to be darn near perfect. 47 00:03:32,000 --> 00:03:35,260 Too many defects and even if you could build it in-house, 48 00:03:35,260 --> 00:03:38,300 it might actually be cheaper to outsource the production 49 00:03:38,300 --> 00:03:43,900 even if it goes to a competitor. But how did TSMC become so dominant? 50 00:03:43,900 --> 00:03:48,540 They don't even have their own CPU brand. Well, that's actually a big part of it. 51 00:03:48,540 --> 00:03:52,700 By not competing with their customers, they became the ideal partner 52 00:03:52,700 --> 00:03:57,740 for fabless chip companies around the world, which gives them the volume of business they need 53 00:03:57,740 --> 00:04:01,340 to continually reinvest and even outcompete 54 00:04:01,340 --> 00:04:05,180 vertically integrated companies like Intel and AMD, 55 00:04:05,180 --> 00:04:10,660 who used to own their own fabs, but now are just one of TSMC's many customers. 56 00:04:10,660 --> 00:04:13,880 TSMC also bet very early on a technology 57 00:04:13,880 --> 00:04:17,520 that completely overshadowed the rest of the semiconductor industry. 58 00:04:17,520 --> 00:04:22,860 EUV lithography, a chip fabrication technology that is, let's put it mildly, pretty incredible. 59 00:04:24,200 --> 00:04:29,080 EUV lithography creates and uses extreme ultraviolet light, 60 00:04:29,080 --> 00:04:32,720 an incredibly short wavelength that doesn't naturally exist on Earth 61 00:04:32,720 --> 00:04:36,800 by evaporating drops of tin with high powered lasers 62 00:04:36,800 --> 00:04:40,000 and then forcing its electrons into higher energy states. 63 00:04:40,000 --> 00:04:45,840 That light passes through a photo mask, which you could think of as kind of like a high tech stencil 64 00:04:45,840 --> 00:04:50,080 with cutouts so fine that they're measured in nanometers. 65 00:04:50,080 --> 00:04:54,280 Those cutouts form a chip's pattern. This patterned light is passed 66 00:04:54,280 --> 00:04:57,960 between highly specialized mirrors called Bragg's reflectors 67 00:04:57,960 --> 00:05:01,120 that shrink the design down before finally etching 68 00:05:01,120 --> 00:05:05,200 or printing it onto our silicon wafer. All of this takes place hundreds 69 00:05:05,200 --> 00:05:08,560 or thousands of times per chip under complete vacuum 70 00:05:08,560 --> 00:05:12,560 because even any air in the chamber would absorb that EUV light. 71 00:05:12,560 --> 00:05:16,600 Now longer wavelengths like deep ultraviolet or DUV, 72 00:05:16,600 --> 00:05:21,640 they're much easier to work with, but they simply won't pass through cutouts that small, 73 00:05:21,640 --> 00:05:27,200 which makes it impossible to pack in all of the transistors that you need for the highest performance processors. 74 00:05:27,200 --> 00:05:30,440 That's the tech in a nutshell, but if you want some more detail, 75 00:05:30,440 --> 00:05:33,680 you can check out our video on EUV lithography equipment. 76 00:05:35,200 --> 00:05:39,360 TSMC's mastery of EUV has given them a dominant market share 77 00:05:39,360 --> 00:05:42,480 in the semiconductor manufacturing space overall 78 00:05:42,480 --> 00:05:48,440 with a portfolio that, maybe more importantly, includes basically every single cutting edge chip 79 00:05:48,440 --> 00:05:52,800 on the planet. And while their pricing is shrouded in secrecy, 80 00:05:52,800 --> 00:05:56,520 what little we do know is that it has only gone up over time 81 00:05:56,520 --> 00:06:00,240 and that's a trend that is widely expected to continue. 82 00:06:00,240 --> 00:06:06,280 So then, TSMC is the big bad? Solely responsible for our gaming GPUs becoming unaffordable? 83 00:06:06,280 --> 00:06:11,040 Haha, not even close. Let's talk about ASML. 84 00:06:12,040 --> 00:06:15,040 Every time TSMC, or anyone for that matter, 85 00:06:15,040 --> 00:06:22,480 wants an EUV lithography machine, they need to dig about $200 million 86 00:06:22,480 --> 00:06:26,200 out of their couch cushions and hand that over to ASML. 87 00:06:26,200 --> 00:06:31,120 Why ASML? Well, at risk of sounding a bit like a broken record here, 88 00:06:31,120 --> 00:06:34,120 because they're the only ones who make them. 89 00:06:34,120 --> 00:06:38,680 This time, the monopoly is a literal one, not a de facto one. 90 00:06:38,680 --> 00:06:42,000 And EUV equipment has made ASML so valuable 91 00:06:42,000 --> 00:06:46,240 that the mere suggestion that it could move its growth outside of its headquarters in the Netherlands 92 00:06:46,240 --> 00:06:52,760 for better infrastructure and talent acquisition prompted the Dutch government to spend $2.7 billion 93 00:06:52,760 --> 00:06:56,520 in infrastructure to keep them in the country. 94 00:06:56,520 --> 00:07:00,920 It's also given ASML extreme latitude when it comes to pricing. 95 00:07:00,920 --> 00:07:04,120 It's new high-NA EUV lithography fab, 96 00:07:04,120 --> 00:07:11,720 which is capable of producing an even smaller wavelength for even denser chips will apparently cost $400 million. 97 00:07:11,720 --> 00:07:15,760 Double the cost of the current low-NA EUV. 98 00:07:15,760 --> 00:07:20,320 Even TSMC is bulking at that price and has said, you know what? 99 00:07:20,320 --> 00:07:25,640 We'll grab a few for R&D purposes, but for now, I think we're gonna stick with the old systems 100 00:07:25,640 --> 00:07:30,120 for our 1.4 nanometer chips. With that said, it's not like they're gonna be able 101 00:07:30,120 --> 00:07:33,840 to put off buying the new hotness forever. And when it's time to pull the trigger, 102 00:07:33,840 --> 00:07:38,120 they won't be buying just one. Production facilities need many fabs, 103 00:07:38,120 --> 00:07:41,920 cost billions of dollars, and take years to ramp up production. 104 00:07:41,920 --> 00:07:48,000 So it actually kind of makes sense that the new chips cost more than the old ones. 105 00:07:48,000 --> 00:07:52,720 But that's not the only thing putting pressure on consumer pricing. 106 00:07:52,720 --> 00:07:55,880 The big thing is that at every level, 107 00:07:55,880 --> 00:08:02,800 there's a complete lack of competition to put pressure on these major players to keep prices low. 108 00:08:02,840 --> 00:08:06,440 And the worst part is that it didn't have to be this way. 109 00:08:06,440 --> 00:08:10,480 EUV was kind of a joint venture with Intel 110 00:08:10,480 --> 00:08:15,040 who invested in ASML for EV development back in 2012. 111 00:08:15,040 --> 00:08:20,880 But then, Team Blue grew skeptical of EUV, got cold feet, and divested from ASML 112 00:08:20,880 --> 00:08:23,880 when it started cutting assets back yet another 113 00:08:23,880 --> 00:08:27,000 in a series of cell phones during that time. 114 00:08:27,000 --> 00:08:29,680 And before that time, and more recently, 115 00:08:30,160 --> 00:08:35,440 Intel, sometimes you really are the smartest nincompoops in the entire industry. 116 00:08:35,440 --> 00:08:38,880 And the really bad news is unfortunately, 117 00:08:38,880 --> 00:08:43,080 things are likely to get worse before they get better, if they get better. 118 00:08:43,080 --> 00:08:47,260 The AI boom has gotten to the point where the very silicon wafers, 119 00:08:47,260 --> 00:08:52,240 like the big discs that they make chips out of, even those are in shortage. 120 00:08:52,240 --> 00:08:57,200 Why? If you guessed, because the production is controlled 121 00:08:57,200 --> 00:09:02,160 by a surprisingly small number of players who, like everyone else, feel they ought to be entitled 122 00:09:02,160 --> 00:09:06,200 to a bigger slice of that delicious AI money pie, 123 00:09:06,200 --> 00:09:12,120 you guessed right. Now, competition in cutting edge chips is coming, 124 00:09:12,120 --> 00:09:15,400 but not in a way that's guaranteed to benefit consumers, 125 00:09:15,400 --> 00:09:20,440 at least not consumers outside of China. Chinese fabs are ramping up new facilities 126 00:09:20,440 --> 00:09:25,240 that use creative approaches to, ostensibly, make competitive products 127 00:09:25,240 --> 00:09:29,320 without EUV technology. This matters because Western sanctions 128 00:09:29,320 --> 00:09:32,520 make it difficult for them to purchase ASML's cutting edge machines. 129 00:09:32,520 --> 00:09:36,760 The other thing is that even if their efforts pan out, building new fabs takes a long time, 130 00:09:36,760 --> 00:09:41,320 and there's no telling where the rest of the industry will be by the time they're pumping out chips at scale. 131 00:09:41,320 --> 00:09:48,200 Closer to home for many of our viewers, Intel is investing heavily in ASMC's new high NA EUV fabs, 132 00:09:48,640 --> 00:09:55,600 but any payoff from that is gonna be a long way away. And realistically, until a certain bubble pops, 133 00:09:56,480 --> 00:09:59,520 we're likely to be stuck with the skyrocketing prices 134 00:09:59,520 --> 00:10:03,280 that it has created. But hey, at least now you know 135 00:10:03,280 --> 00:10:09,320 where your headache's coming from. Maybe from too many segues to our sponsor. 136 00:10:09,320 --> 00:10:14,360 If you guys enjoyed this video, why not check out the time that we toured ASML's facility? 137 00:10:14,360 --> 00:10:18,760 Yes, thermonopoly, and yes, that kinda sucks right now, 138 00:10:18,760 --> 00:10:22,240 but that doesn't take anything away from how cool their stuff is.