Hi, this is Wayne again with a topic “AMD Doesn’t Make CPUs”.
That’S right, you read this video’s title correctly, amd actually doesn’t make chips, and for that matter neither does nvidia. So why the heck do people call them? Chip makers, amd and nvidia are examples of what we call fabulous companies, no, no, not fabulous, but jensen sure knows how to rock a leather jacket, fab less meaning the company doesn’t own fabrication plants or chip factories commonly just called fabs, but these companies are huge. Why don’t they own any fabs? At the time we wrote this video team, red and team green were worth over a combined 610 billion dollars, but despite their massive resources, they outsource all of their actual manufacturing. It turns out this isn’t unusual. Throughout the tech, industry, qualcomm, broadcom and even apple all use fabulous business models, but it wasn’t always this way.
It used to be common for the same company to both design and manufacture its own chips. But, as is the case with many industries being responsible for every step of the chip, manufacturing process is difficult and costly. I mean you, don’t expect arby’s to slaughter its own cows out back. Do you, although that would help my anxiety about mystery meat? The fabulous business model got its start in the 1980s.
Back when in stark contrast to today’s chip shortages, semiconductor manufacturers had excess fab capacity and started accepting contracts to make chips designed by smaller firms. It was a win-win situation. The big boys made more money, while the little guys got a chance to actually bring their products to market, as it cost around 10 times as much to start a chip company with fabs than without them. But naturally it wasn’t long before people realized.
There was a real opportunity to bring even more of that sweet sweet paper by doing nothing but making other people’s chips. With that in mind, tsmc was founded in 1987, becoming the world’s first company to focus exclusively on contract manufacturing, since tsmc wasn’t designing their own processors. They put all their effort into figuring out how to build chips inexpensively quickly and at scale, not only that they could be a heck of a lot more flexible than other companies manufacturing products designed by someone else.
We’Ll tell you more right after we thank secret lab for sponsoring this. Video secret lab chairs are engineered to keep you incredibly comfortable for long hours at work and play their titan evo 2022. Chair keeps you feeling comfortable for longer hours, with their four-way lumbar support. Ultra comfortable lines of different seat, material and more all chairs, come with up to a five-year, extended warranty and a 49-day return policy so head to the link in the description and check out secret lab today. Now, if you were a smaller fabulous firm, paying a huge company like intel or texas instruments to make your product for you, you would have to play by their rules. You could only order as many chips as they had excess capacity to make and you’d have to adapt your design to whatever equipment and processes they used. By contrast, tsmc focused on using more standardized methods that gave customers greater control over what they wanted made, and companies that did chip design didn’t have to worry about tsmc competing with them. This idea proved to be extremely popular and around the mid 90s fabulous manufacturing really took off, especially as it allowed. Companies like nvidia to grow they’ve been fabulous all the way back to the days of their first ever product, the nv1, which was released in 1995., but some companies ended up learning the hard way that going fabulous had its advantages.
Although amd is now fabulous, they actually got their start as a second source chip manufacturer for none other than their now rival intel. But in the mid to late 2000s amd fell on some seriously hard times. Their expensive acquisition of ati, along with years of poor cpu performance next to intel, meant that they were finding it more and more difficult to keep their pricey fabs running by this time. Contract manufacturing had become so popular that it was seen as a commodity, meaning amd’s fabs were not only expensive, they weren’t even really necessary anymore, so they were spun off into the business now known as global foundries in 2009, but the world isn’t divided into fabulous designers And contract chip makers intel still owns its own manufacturing, as they became absolutely massive thanks to developing the x86 cpu before it became incredibly expensive to build fabs after x86 became the processor of choice for pcs. Intel focused more on leadership in selling their products. On a large scale, rather than being at the absolute cutting edge of innovation and they succeeded, leaving them as one of the few companies big enough to afford both ship design and manufacturing.
But despite intel, success at and recent focus on remaining vertically integrated. The future may become increasingly fabulous as we try to make chips with tinier and tinier transistors. A single machine capable of making chips on the two nanometer process costs over 300 million dollars. Tsmc is getting one, but i don’t see a whole lot of chip designers lining up to fork over that kind of cash.
Elon musk was absolutely right, as he occasionally is when he said that the real challenge wasn’t the machine, but the machine that builds the machine. Just like a waffle, iron or maybe more appropriately, a waffle iron making machine, and thanks for watching the output of this tech, wiki producing machine like the video, if you like it dislike it, if you’re disliked it check out our other videos, comment below with video suggestions And don’t forget to subscribe and follow to keep the machine turning. We just kind of got ta keep spitting these out until until something happens, .