A few weeks ago I described in this column the disturbing financial situation that sustains the current artificial intelligence fever: a circular cycle of investments between suppliers and customers that overvalue the real income of the sector and that are reminiscent of both the ‘dotcom’ bubble and the accounting engineering of the late 90s.
However, that is only one of the pillars that shape the colossal house of cards on which the contemporary digital revolution is based. The other, perhaps even more fragile, it is the global semiconductor supply chain itself that underlies artificial intelligence itselfan ecosystem so unlikely that it is enough to remove a single piece for the entire system to collapse.
The explanation is known among experts, but it is rarely verbalized in all its crudeness: 90% of the most advanced chips on the planet come from a single company based on an island of barely 23 million inhabitants. Taiwan Semiconductor Manufacturing Company (TSMC), founded in 1987 by Morris Chang, is today the axis on which the future of computing gravitates. Its dominance in advanced nodes (from 5nm down) is absolute. Without TSMC, there would be no chips to train AI models, no data centers capable of sustaining the energy load that powers ChatGPT, no mobile phones, no electric cars. Nor practically anything.
But TSMC is just the first piece of this very particular domino. Its technological hegemony would not exist without the extreme ultraviolet (EUV) lithography machines it manufactures ASMLa Dutch company whose history is an anomaly in itself: emerged in 1984 as a ‘spin-off’ of Philips, today it is essential for the continuity of Moore’s Law. No other manufacturer on the planet is capable of producing these systems whose price exceeds 350 million dollars per unit.
And yet, ASML is not self-sufficient either. It depends, in turn, on an even more unique supplier: Carl Zeiss SMT, the only company in the world capable of producing the nanometer-precise optical mirrors necessary for EUV equipment to work. We are talking about authentic masterpieces of engineering that require polishing on an atomic scale, that take a year to manufacture and that are only produced in Germany under controls that border on scientific obsession.
The chain continues, in case you had thought that interdependence ended here. He laser generated by the light source of the EUV machines comes from Takea company based in San Diego and owned, since 2013, by ASML itself. Without that light source – a plasma generated from tiny droplets of tin – we would not be able to manufacture a single chip anywhere in the world.
Nor would the industry exist without the photoresist high purity developed by Japanese firms such as JSR, Shin-Etsu Chemical o Tokyo Ohka Kogyowhich tightly control a good part of the world market. Japan, whose leadership in advanced chemistry is less in the media, almost exclusively supports the printing processes of each transistor.
And we arrive, perhaps, at the ultimate symbol of systemic fragility: Spruce Pine (North Carolina), the small American town where it is located the purest quartz deposit in the world. From there come the materials that allow us to produce silicon wafers of sufficient quality to manufacture next-generation chips. There is no other deposit on the planet with that purity. A geological obstacle that now represents global interdependence like no other.
The list in this field is much longer, and equally worrying: noble gases such as neon, essential for lithography, They traditionally came from Ukraine (before the war, it produced about 50% of the world’s purified neon) and from Japanese companies specializing in ultrapurification. hydrogen fluorideessential for wafer etching, also depends largely on Japan and Korea. Rare metals and critical earths (cobalt, high-purity copper, dysprosium or neodymium) are extracted and refined in countries such as the Congo, Chile or China, where the concentration of the chain is so vertical that causes recurring geopolitical tensions.
For many readers, semiconductors are the stuff of companies like Nvidia, AMD, Qualcomm, Apple or Broadcom. They all design, but usually do not manufacture their chips. And in any case, For these designs they also depend on equally monopolistic software tools (EDA).such as those from Synopsys, Cadence or Siemens EDA. Without these programs – whose development takes decades – no technological sovereignty is more than a political headline.
So, to keep the wheels of artificial intelligence turning, we need (and depend on) countless elements of a fragile chain do not suffer any alteration. We need that OpenAI and its competitors do not fail or fail to meet their investment commitments, that TSMC does not suffer a stoppage – whether due to an earthquake or a war -, that Zeiss continues to maintain its dizzying pace of production, that Japan’s chemical industry functions with precision, that the Spruce Pine mines do not collapse, that Ukraine does not suffer further damage to its noble gases industry, that there are no blockages to the scarce EDA tools…
From the financial house of cards represented by the sector’s big announcements, we arrive here at a material circularity where each piece of the value chain depends on another. It is an industrial palimpsest that allows no margin for error. And, as with houses of cards, it only takes one card to bend and the entire set falls into nothingness.