Introduction:
In 2021, China invested an estimated $150 billion in the semiconductor industry, of which a significant portion went to legacy node production.
China is currently building or planning to build over 20 new semiconductor factories, many of which will focus on legacy node production.
SMIC is the largest chipmaker in China. It is currently building a new factory in Shanghai that will focus on legacy node production.
Yangtze Memory Technologies (YMTC) is a Chinese memory chipmaker that is developing 19nm and 14nm memory chips.
Nexchip is a Chinese chipmaker that is developing 28nm and 40nm logic chips.
What exactly is going on. Everyone in the world is investing heavily in Advanced node while China, in order to win the chip war, is going back.
Have you ever wondered why is that? Let’s figure out.
What are legacy nodes?
In the context of semiconductor manufacturing, “legacy nodes” refer to older technology nodes that have been surpassed by more advanced and smaller nodes in terms of process technology and transistor density.
These legacy nodes are characterized by larger transistor sizes and often have larger feature sizes (measured in nanometers) compared to the most cutting-edge semiconductor manufacturing nodes.
Legacy nodes were state-of-the-art in their time, but as semiconductor technology has advanced, manufacturers have been able to create smaller transistors and pack more of them onto a single chip.
This trend, known as Moore’s Law, has led to significant improvements in performance, power efficiency, and cost-effectiveness for integrated circuits.
Iphones:
The iPhone uses a mix of legacy nodes and advanced nodes. The A15 Bionic chip, which is the most powerful chip in the iPhone 13 lineup, is manufactured on a 5nm node. The other chips in the iPhone, such as the modem, display controller, and image signal processor, are manufactured on legacy nodes, such as 28nm and 40nm.
Here is a breakdown of the iPhone 13 Pro Max in terms of legacy nodes and advanced nodes:
- A15 Bionic chip: 5nm
- Modem: 28nm
- Display controller: 28nm
- Image signal processor: 28nm
- Other chips: 28nm and 40nm
The percentage of the iPhone that is made using legacy nodes is difficult to estimate, but it is likely to be around 60%.
This is because the A15 Bionic chip is the most expensive and complex chip in the iPhone, and it is also the only chip that is manufactured on an advanced node.
The other chips in the iPhone are less expensive and complex, and they can be manufactured on legacy nodes.
The use of legacy nodes in the iPhone is a cost-saving measure. Legacy nodes are less expensive than advanced nodes, and they can be used to produce chips in larger volumes. This is important for Apple, as it needs to produce millions of iPhones each year.
Read more: China’s Chip Hunger: How the Country Is Quietly Recruiting Top Talent to Close the Gap
A real world example:
Imagine you have a smartphone that’s a few years old. It works perfectly fine for your everyday tasks like calling, texting, and browsing the internet. Now, new smartphones with super advanced features are being released, but they’re also more expensive.
Your older phone uses what we can call a “legacy” technology – it’s not as fancy as the new ones, but it gets the job done at a much lower cost.
Here are some real-life situations where legacy technology is important:
Old Video Game Consoles: Think about classic gaming consoles like the PlayStation 2 or the Nintendo 64. These consoles were made a long time ago and use older technology. People who love these games still want to play them, so companies might keep making parts using the old technology to repair these consoles.
Elevator Systems: Elevators in buildings often have control systems that were built using older technology. If something breaks, it’s easier and cheaper to find replacement parts that match the older tech rather than completely upgrading the system.
Car Parts: Cars have many electronic parts inside, like engine control units. Sometimes, newer cars are designed using the latest technology, but if you have an older car, it might use chips made using older technology. If one of those chips fails, you’ll need a replacement that matches the older technology.
Industrial Machines: Large machines used in factories might have computers in them to control their operations. These computers might be using older technology, and if they need fixing, it’s important to have replacement parts available, even if they’re not the latest and fastest.
Medical Equipment: Some medical devices, like MRI machines, are incredibly expensive and built to last a long time. These machines might have components using older technology. When those components wear out, hospitals might prefer to replace them with similar older tech rather than redesigning the whole machine.
In all these cases, even though newer and more advanced technology exists, using the older technology (legacy nodes) is important because it’s often cheaper, more compatible, and fits the needs of specific situations where bleeding-edge performance isn’t necessary.
Why are legacy nodes relevant ?
Legacy nodes are still relevant and important for several reasons:
Cost-Effectiveness: Manufacturing semiconductor chips at smaller nodes can be more expensive due to the complexity of the processes involved. Legacy nodes, being well-established and mature technologies, can be more cost-effective for producing chips that do not require bleeding-edge performance or power efficiency.
Long Lifecycle Products: Many industries, such as automotive, aerospace, and industrial applications, have products with long lifecycles. These products were designed using older technologies and may not be easily adaptable to newer nodes. Legacy nodes allow manufacturers to continue producing components for these applications.
Retrofitting and Replacement: Some systems and equipment rely on specific chips that were designed and manufactured using legacy nodes. In cases where complete redesign and requalification of these systems might be prohibitively expensive, using legacy nodes for replacement parts can be a practical solution.
Functional Compatibility: In some cases, chips produced on legacy nodes may exhibit specific behaviors or performance characteristics that are essential for certain applications. Transitioning to newer nodes might require significant adjustments to compensate for these differences.
Supply Chain Stability: Relying solely on the latest semiconductor nodes can create supply chain risks, as these nodes are subject to rapid technological changes, supply shortages, and fabrication facility limitations. Having the option to use legacy nodes can provide stability in the supply chain.
Niche Markets: Certain niche markets and specialized applications might not benefit from the latest semiconductor technologies. In such cases, legacy nodes can offer a balance between performance and cost that aligns better with these market needs.
While legacy nodes may not offer the same performance or power efficiency as the latest nodes, they still have a significant role to play in the semiconductor industry due to the factors mentioned above. Manufacturers often maintain a portfolio of different nodes to cater to a wide range of applications and customer requirements.
Why china is investing in legacy nodes?
China is investing in legacy nodes for a number of reasons, including:
To reduce its reliance on foreign chipmakers.
China is currently the world’s largest consumer of chips, but it is also the world’s largest importer of chips.
By investing in its own chip production capabilities, China can reduce its reliance on foreign suppliers, which could be disrupted by sanctions or other political events.
To gain a strategic advantage in the global chip market.
Legacy nodes are still used in a wide range of products, including smartphones, cars, and medical devices.
By becoming a major player in the legacy chip market, China can gain a strategic advantage over its rivals.
To support its domestic industries.
Legacy chips are still important for many Chinese industries, such as telecommunications, aerospace, and defense.
By investing in legacy chip production, China can help to ensure that its domestic industries have access to the chips they need.
Chip war
China’s investment in legacy nodes is also seen as a way to counter the US government’s restrictions on its access to advanced chip manufacturing technologies.
The US has imposed sanctions on Chinese chipmakers, such as SMIC, and has restricted the export of chipmaking equipment to China. By investing in legacy nodes, China can continue to produce chips even if it is unable to access the latest technologies.
The US and other countries are concerned about China’s investment in legacy nodes. They fear that China could use its dominance in this market to disrupt the global chip supply chain or to gain a strategic advantage in other industries.
However, China has argued that its investment in legacy nodes is necessary to protect its national security and to support its domestic industries.
The investment in legacy nodes is just one part of China’s broader strategy to become a leader in the semiconductor industry. China is also investing in advanced node production, as well as in the development of new chip technologies. It remains to be seen whether China will be successful in its quest to become a self-sufficient leader in the semiconductor industry, but its investment in legacy nodes is a significant step in that direction.
Interesting world, isn’t it?
