Rebirth 08: Rise from copycat phones

Chapter 635 Top-Tier Semiconductors That Shocked the World
Tongcheng is the 32nd factory under Zhiyun Microelectronics.

Xu Shenxue visited this advanced factory again after several months. This time, in addition to inspecting the production of chips such as the S1203 chip that use advanced N4 or N5 processes, he also came to check the research and development progress of the N3 process, which is equivalent to a three-nanometer process.

Despite having visited several times before, Xu Shenxue is still awestruck by this advanced semiconductor factory every time he comes here again!
This factory exudes a futuristic, sci-fi-industrial aesthetic in every corner, while also reeking of money... Zhuyun Group has invested over $25 billion in this factory for initial construction, subsequent expansion, and upgrades.

For its first-phase factory, which is designed to meet the production capacity of 50,000 wafers per month using the equivalent 5-nanometer process, Zhuyun Group had already invested a massive $20 billion.

Subsequently, approximately five billion US dollars was invested in technology upgrades to enable the factory to produce equivalent three-nanometer processes.

Such a huge investment has made this factory the most technologically advanced, largest, and highest-capacity 5-nanometer process factory in the world, and the only factory currently capable of producing equivalent 3-nanometer processes... well, currently only in terms of hardware facilities, which are sufficient to meet the production needs of equivalent 3-nanometer processes.

However, the fact that the factory's hardware meets the requirements does not mean that it can now produce chips using an equivalent 3-nanometer process.

SMIC also purchased HEUV-300B and 300C lithography machines, but it still can't even develop 7-nanometer technology... Samsung and Intel also purchased EUV lithography machines of the same level from ASML in the Netherlands, but they still can't keep up with Zhiyun Microelectronics in terms of technology, and they are even inferior to TSMC.

Advanced chips cannot be made without the corresponding equipment, but even with the equipment, it is not guaranteed that they can be made.

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Zhiyun Microelectronics' Plant 32 is currently the most technologically advanced logic chip factory under Zhiyun Microelectronics. It is equipped with a large number of top-of-the-line semiconductor equipment, including hundreds of types of equipment such as lithography machines and etching machines.

It is either a world-class or world-leading technology.

In this factory, you won't find any equipment that's even at a second-rate global level... because even second-rate equipment isn't sufficient to meet the production requirements of an equivalent 5-nanometer process.

The most crucial, expensive, and technologically advanced of these is the EUV lithography machine!

The HEUV-300C lithography machine boasts an overlay precision of 1.5 nanometers. This precision is sufficient to enable the machine to meet the mass production requirements of equivalent 7-nanometer or even equivalent 5-nanometer processes in a single exposure, with a production capacity of 180 wafers per hour. Its production efficiency is significantly better than that of the previous generation HEUV-300B lithography machine.

This lithography machine is currently one of the most advanced mass-produced lithography machines available to humankind... It is said to be one of the most advanced because ASML in the Netherlands also has a lithography machine of the same level.

However, there are huge differences in the lens technology of these two lithography machines. Gulf Technology uses a double-sided reflective lens in its EUV lithography machine, which is characterized by a significant reduction in the absorption of extreme ultraviolet light, a significant increase in the energy utilization rate of extreme ultraviolet light, and thus a significant reduction in power consumption, as well as a reduction in the power technology requirements for the light source.

Due to physical limitations and current materials science capabilities, approximately 30% of the energy of extreme ultraviolet light is absorbed each time it is reflected by a lens. Therefore, the fewer mirrors used, the higher the energy utilization rate of extreme ultraviolet light.

Compared to ASML's six-sided mirror system, the double-sided mirror system used by Gulf Technology has lower engineering difficulty in the objective lens system, lower technical difficulty in the light source system, lower manufacturing cost, and is easier to maintain. And the most obvious feature is that it consumes less power, only about 10%.

Of course, electricity costs account for a small percentage of the production cost of chips using advanced processes.

The bulk of the cost of advanced process chips is the depreciation cost of the huge investment cost of semiconductor factories. A five-nanometer semiconductor factory can easily cost tens of billions of dollars, and these costs need to be depreciated in just a few years. The depreciation cost per year is extremely high.

Then there's the cost of a lot of semiconductor consumables, such as silicon wafers, photoresist, and special gases, which are also expensive.

Next is the cost of electricity. Semiconductor factories consume a lot of electricity, and all kinds of equipment are power guzzlers, so the cost of electricity is not low. Zhuyun Microelectronics Group pays a very large amount of electricity bills every year.

Finally, there's the labor cost, which is a very small percentage... Discussing labor costs in advanced semiconductor processes is actually meaningless because it accounts for such a small proportion.

Because semiconductor factories consume a lot of electricity, and the biggest power consumer is the EUV lithography machine, it is important to reduce the power consumption of EUV lithography machines... In this regard, Shanghai Gulf Technology's EUV lithography machines have a significant energy consumption advantage.

However, this advantage is not a significant one when considering the overall production cost of advanced processes... because electricity costs are not a major expense for advanced processes and account for a very small percentage.

Gulf Technology's EUV lithography machine and ASML's EUV lithography machine may seem to have similar performance and the same principle, but their specific technical routes are actually quite different.

Moreover, ASML's lithography machines of the same level are a product of the integrated industrial system of Europe, Japan and South Korea. ASML is responsible for the overall design and assembly. The major subsystems include the light source system and alignment and control system from the United States, the objective lens system from Germany, the stage and positioning system developed by ASML itself, the mask stage system provided by Japan, and many other components from multiple countries.

Without the subsystems from any one country, ASML in the Netherlands would not be able to assemble an EUV lithography machine.

Gulf Technology's HEUV-300 series lithography machines are entirely from a domestic supply chain... and Fairy Mountain Holdings researched and assembled all the subsystems itself.

Gulf Technology was responsible for the design and assembly.

Nanfang Optics is responsible for the objective lens system.

Nanjiang Hi-Tech is responsible for the light source system.

Longjiang Technology is responsible for developing the workbench and positioning system.

Then, several other subsidiaries of Fairy Mountain Holdings are also responsible for other subsystems of the EUV lithography machine project.

However, behind these subsidiaries of Fairy Mountain Holdings are thousands of enterprises and research institutes of various types in China... Without upstream enterprises and research institutes, Fairy Mountain Holdings alone could not have developed EUV lithography machines.

Ultimately, to put it bluntly, the lithography machine subsystem suppliers under Fairy Mountain Holdings are only responsible for the research and development and production of the subsystems. They still need a large number of suppliers to provide more parts, raw materials and even production equipment.

Fairy Mountain Holdings' ability to develop and produce EUV lithography machines, if broken down layer by layer, reveals that it has impacted almost the entire industrial system of China!

This is a product made possible by the collective efforts of the entire nation.

In the present world, apart from China, there is no other country that can independently manufacture such a top-level piece of equipment as the EUV lithography machine, a crucial national asset... because no other country has such a complete and advanced industrial system.

Even the United States won't do it!
Even if China were to be able to produce it, besides the heavy investment from Xu Shenxue and related investment institutions over the years, the high quality cultivated by the education system over the years, and the large number of top science and engineering talents... it would also rely heavily on Xu Shenxue's research system.

Without this research system, it would have been impossible to develop it in such a short time!

After all, the Western system is the result of decades of deep technological accumulation, especially in the fields of materials and precision machining.

However, given the lack of such advanced industrial foundation in China, it will not be easy for the country to catch up in a short period of time.

A large number of top talents are needed... and Xu Shenxue's research system is just the right one to enhance the capabilities of these top talents in batches.

There's a saying that goes something like this... decades of accumulation by an ordinary person are not as good as a flash of inspiration from a genius!
Based on the HEUV-300C, Gulf Technology is actively promoting an improved model, namely the HEUV-300D lithography machine... This will be the ultimate improved model in this series of lithography machines. Its biggest performance feature is to improve the overlay precision to one nanometer, in order to meet the requirements of EUV lithography machine double exposure, which is equivalent to the large-scale production requirements of processes below three nanometers.

In short, its effect is to significantly improve the yield of EUV double exposure and reduce the cost of advanced chips such as equivalent three-nanometer chips and even future equivalent two-nanometer chips.

The current HEUV-300C lithography machine, although capable of producing chips with an equivalent 3-nanometer process in terms of technical specifications, has a low yield and is expensive.

Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since and was Dean of the Department of Fine Art from -. In – she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.

However, the current HEUV-300D lithography machine is still in the prototype manufacturing stage. It will be available for production and delivery at the earliest next year. And it will be the year after next at the earliest for the HEUV-300D lithography machine to be installed, debugged and put into mass production.

It takes too long; Zhuyun Group can't wait that long.

Therefore, Zhiyun Microelectronics could only rely on the HEUV-300C lithography machine for the early production of the equivalent three-nanometer process.

Pushing the physical limits of existing lithography machines to manufacture more advanced chips is also an area where Zhuyun Microelectronics excels.

In the era of DUV immersion lithography, Zhiyun Microelectronics once used the HDUV-600 series lithography machine to produce an equivalent 7-nanometer process through quadruple exposure technology... At one point, they even tried to use this lithography machine to play with octet exposure and develop an equivalent 5-nanometer process, which was an incredibly crazy technology.

However, EUV lithography machines were soon put into mass production and use, so this crazy plan was abandoned.

However, this has also led to Zhiyun Microelectronics having a very deep accumulation of technology in the field of multiple exposure.

Now, Zhiyun Microelectronics is also continuing to use multiple exposure technology on EUV lithography machines, and is preparing to use the slightly less powerful HEUV-300C lithography machine to force the achievement of a large-scale mass production equivalent to a three-nanometer process.

At Factory No. 32, Xu Shenxue also witnessed in the laboratory the process of the HEUV-300C lithography machine producing equivalent three-nanometer process chips through double exposure, and finally saw the finished experimental chip.

Ding Chengjun said, "In fact, we are already able to manufacture chips with an equivalent three-nanometer process using the HEUV-300C lithography machine and other top-notch equipment, but the yield is too low at the current level of technology."

"Currently, the yield of our equivalent 3-nanometer process is only 40%. If we use this yield to produce chips, the chip cost will be relatively high, which is not worthwhile from a commercial point of view."

"Our goal is to increase the yield rate to 60% within the next six months, and strive to reach 75% by April next year. This will allow us to keep manufacturing costs at an acceptable level when OEMing the S1303 chip and the APO7000 GPU core next year!" "If the more powerful HEUV-300D process is also put into use in the future, the yield rate of the equivalent 3nm process can be increased to over 85%. With a few more years of technological accumulation, it's possible to increase the yield rate to 90% in the future!"

Xu Shenxue said, "Yield rate is still very important. We not only need the most advanced chips, but also a large number of chips with the most advanced processes. Mass production costs must also be taken into account. Otherwise, chips that are manufactured at too high a cost will be difficult to promote and use!"

"If the yield rate is too low and the cost is too high, then in the future, only APO series graphics cards may be affordable!"

APO series graphics cards are known for their extremely high gross profit margins, with an overall gross profit margin of over 85%, and some models even reaching 90%. This high gross profit margin supports higher component costs.

Even if the cost of a GPU core using a 3-nanometer process doubles, it would only be a few thousand dollars more... which is nothing for an APO advanced graphics card that costs three to four hundred thousand dollars.

However, this is problematic for products with lower profit margins, such as mobile phone SOC chips and computer CPU chips.

The N4 process mobile phone SoC is already very expensive to use, and in order to save costs, it can only be used in phones of the Max series and above.

If the cost of future N3 process mobile phone SOCs doubles... then in order to maintain the gross profit margin of mobile phone products, Zhiyun Group will have no choice but to raise the price of mobile phones, and the price increase will be several hundred yuan.

If it were a phone from another brand, it simply wouldn't be affordable.

For example, Vcool Electronics' Little Blue MAX series can't afford such expensive chips... They lose money selling every single one.

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Advanced chips not only need to be technologically advanced, but also need to be cost-effective.

This reflects one of the core technological pursuits of semiconductor manufacturing plants: yield!
The difference between a 45% yield and a 75% yield of an equivalent 3nm process is enormous!

The former means that only special products like computing power cards can afford their high costs.

The latter means that the cost of the SOC in high-end mobile phones can also be afforded.

If the yield rate is further improved to over 80% or even higher, and the equipment depreciation cost decreases significantly over time, while chip production is still large enough, then some mid-range mobile phones will be able to use chips with an equivalent 3-nanometer process.

The yield rate of advanced process chips is directly related to the cost, which in turn affects the scale of application. The scale of application, in turn, can affect the chip design cost and the amortization of the early tape-out cost.

This process is interconnected, and when it comes to actual production applications, a difference of just a few percentage points in yield can lead to a huge difference, not to mention a difference of tens of percentage points in yield—that's a world of difference.

One of the most core technology research and development tasks at Zhiyun Microelectronics is to continuously improve the yield of the equivalent 3-nanometer process, striving to achieve a yield of around 70% as soon as possible... or at the very least, around 60%, so that the chip cost can be barely acceptable.

Only when the cost becomes acceptable will Zhuyun Semiconductor, a subsidiary of Zhuyun Group, place large-scale orders and produce more advanced equivalent 3-nanometer process chips.

As Xu Shenxue listened to Ding Chengjun and others' introduction, he himself held a pre-manufactured three-nanometer chip in his hand... or more accurately, an experimental version of the S1303 chip.

The design of the S1303 chip from Zhiyun Semiconductor was completed a month ago. The next step is tape-out testing and inspection to check for any problems. If any problems are found, continuous improvements will be made.

On the other hand, Zhiyun Microelectronics is using the S1303 design provided by Zhiyun Semiconductor to experiment with the newly developed 3-nanometer process, and is constantly improving it to increase yield.

Once Zhiyun Microelectronics improves the yield rate, that will be the time for the S1303 chip to be mass-produced!
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I toured around Factory No. 32, and gave a small speech in the factory's small auditorium. I talked about the importance of advanced semiconductor technology, the spirit of hard work and dedication, and announced some new welfare policies.

For example, improving the quality of free meals within the factory area, providing preferential housing loan subsidies for engineers who reach a certain level, and increasing the salaries of technical personnel who reach a certain level.

To get people to work hard and diligently, you have to improve their benefits and compensation.

Although the current compensation level of engineers at Zhiyun Microelectronics is already at a level that is drastically ahead of the domestic level, it is still somewhat lacking compared to the level of their counterparts in large international semiconductor companies... After all, the salary level and cost of living in China are generally lower than those in developed countries.

However, this does not mean that the actual standard of living is worse!

In reality, while the income of semiconductor engineers at Zhiyun Microelectronics may seem lower than that of engineers at semiconductor companies like Intel, their actual standard of living is not worse than that of their international counterparts, and may even be better in some areas, considering various price levels.

After all, Zhuyun Microelectronics is a wholly-owned subsidiary of Zhuyun Group, and its salary level is comparable to that of Zhuyun Group headquarters and other core subsidiaries.

The salary and benefits offered by Zhiyun Group are among the highest in China, and this is no exception at Zhiyun Microelectronics.

The only problem is that Zhiyun Microelectronics operates in a very special semiconductor manufacturing industry, which has a characteristic: it treats top talent like cattle and horses...

There's no other way. Semiconductor factories operate 24 hours a day, and apart from necessary equipment maintenance time, they absolutely must keep production running as long as possible. Otherwise, an unplanned shutdown for even one day would result in losses of hundreds of millions!
Therefore, semiconductor factories using advanced processes rarely shut down.

However, advanced semiconductor manufacturing plants have very high requirements for technical personnel, especially some key production technicians, who are mostly highly educated talents with master's or doctoral degrees. Ordinary people really can't do the job.

This means that even these highly skilled personnel have to work around the clock to keep up with the factory's production schedule.

Very busy!
Working at Zhiyun Microelectronics can be very lucrative, but it's also incredibly busy; many people are so busy they don't even have time to spend money.

Being busy is something Xu Shenxue can't change... After all, there are only so many top semiconductor talents in China right now, even though Zhiyun Microelectronics has joined forces with many key universities in China in recent years to increase the scale of talent training in the semiconductor manufacturing industry.

However, talent development takes time, and Zhiyun Microelectronics has been expanding continuously. As technology continues to advance, the more advanced the semiconductor factory, the higher the requirements for technical talent. Of course, the main reason is that Zhiyun Microelectronics is too large in scale and has too much demand for semiconductor talent, resulting in a shortage of semiconductor talent.

Given the limited pool of highly qualified personnel and the need to ensure production capacity, Zhiyun Microelectronics can only do its utmost to demonstrate the spirit of hard work and working overtime every day.

Therefore, all Xu Shenxue could offer was more money!
When Xu Shenxue announced the newly added benefits and treatments on stage, especially the salary increase, the technical backbone of Factory No. 32 in the audience were all overjoyed... Even though these key technical backbones belong to the high-income group, with annual salaries generally exceeding one million, they are already considered genuinely wealthy compared to ordinary people.

However, buying a large apartment in a nice neighborhood costs money, my wife's beauty and shopping costs money, my child's private international school costs money, and supporting my parents costs money...

In short, there are many places where money can be spent in all aspects.

Even a million-dollar annual salary isn't enough to live on!

Who wouldn't like a raise now!

When Xu Shenxue left Factory No. 32, he was in a good mood... This project, which cost a huge amount of money and was the largest single investment project in the many years since the establishment of Zhiyun Group, was currently in a state that he was very satisfied with.

The capacity utilization rate of the 5-nanometer process can reach almost 100%, with a full capacity of 50,000 wafers per month.

In addition, both the 29th and 36th factories have carried out technological improvements to meet the technical requirements for producing five-nanometer processes.

The 5nm process capacity of Zhiyun Microelectronics has increased from the initial 50,000 wafers per month to the current 200,000 wafers per month, and it is still increasing. It is expected to reach a scale of 250,000 wafers per month by the end of the year.

This production capacity is sufficient to meet the massive demand for 5nm chips from the Zhiyun Group, mainly for S1103 chips, S1203 chips, W1306 chips, WZ400 series server CPUs, and WZ 80 series mobile CPUs.

Then there are the APO6000 GPU core, which occupies a large amount of production capacity, the ZY40 large-scale data processing chip, the automotive-grade EYQ6 chip, and the EYEQ7 chip, etc.

These 5-nanometer chips are used in mobile phones, tablets, laptops, conventional servers, general-purpose supercomputers, artificial intelligence computing centers, robots, virtual devices, and smart electric vehicles, and many of them are also sold externally.

It is precisely because of such huge demand that Zhuyun Group can support its large-scale investment in the semiconductor field... Otherwise, the huge five-nanometer process capacity would be unusable.

To some extent, only Zhuyun Group has sufficient funds, technology, and, more importantly, huge demand to aggressively and massively promote the mass production of 5-nanometer technology and invest heavily in the technological research and development and capacity building of 3-nanometer technology.

The 32nd factory is only conducting preliminary equivalent 3-nanometer production.

During this period, Zhiyun Microelectronics has started construction in Shenzhen on its first advanced factory, the 41st Factory, which uses EUV multiple exposure technology as its core technology and is expected to use the HEUV-300D lithography machine to produce equivalent 3-nanometer technology at low cost in the future, and even equivalent 1.5-nanometer technology.

The projected production capacity of Plant 41 is also very large. With its advanced technology and massive production capacity, the investment scale of this plant is even more extravagant than that of Plant 32: the initial investment plan has reached 30 billion US dollars!
This marks another record for the largest investment in a single project by Zhuyun Group!
This news shocked the global technology community!
Let alone laymen, even semiconductor industry insiders would be speechless upon seeing this investment amount... Investment in advanced semiconductors is getting bigger and bigger. If this continues, what will happen when we reach the two-nanometer, 1.5-nanometer, or even one-nanometer era?

Aside from behemoths like Zhiyun Group, which have plenty of money, what other companies can afford to play this game?
(End of this chapter)