The skills and risks in different parts of the chain are different. Having access to excellent photo-lithography machines is not enough to guarantee having an excellent foundry or process - that much should be evident from ASML supplying TSMC and Intel, and observing Intel's struggles with 10nm.

The machines ASML produces allow you make ultra precise and tiny patterns of material. You still need to choose what those materials are, figure out how you're going to create the material (as in what dopants are you adding in what quantities), what your geometry actually is, and on and on and on.

Philips is fractured and a shadow of its former self. They used to both make the machines and the chips now its ASML and NXP

And ASMI too.

Signify is another subsidiary, the former lightning division from Philips.

Philips itself is doing very well in medical equipment. A sensible, sustainable and profitable pivot: in an age where every Chinese factory can churn out toasters or radio's with near zero margins, it makes little sense to remain worlds' leader in toasters or radio's.

Can't fault that argument. I mean Philips made and invented some nice products - CD's, LED lighting, my wake-up light - but when it comes to production they just can't keep up, and I'm confident the profit margin on electronics like that has completely tanked. Especially when their designs and inventions quickly get copied shamelessly.

Corporate espionage is still a big thing; my girlfriend told me a story about a company presenting their new device at a trade show (iirc it was a jewelry casting machine or something). The Chinese competitor that had a stand not far from them had their stand empty, but on the third day there was a replica of that same casting machine at half the price.

Medical equipment is a lot more specialized and probably harder to duplicate, and maybe more importantly, not a race to the bottom.

> in an age where every Chinese factory can churn out toasters or radio's with near zero margins, it makes little sense to remain worlds' leader in toasters or radio's.

Surprise for you, Chinese factory can't run with near zero margins.

Electronics industry been on the downsizing trend in China for the last 10 years.

It now costs less to hire labour in flyover states in USA, than South China.

Chinese factories themselves are rushing to relocate to South Asia.

> Surprise for you, Chinese factory can't run with near zero margins.

I am aware of that. But when they can "outsource" most R&D (read: copy or steal IP) a lot of businesses have a very hard time competing against those margins.

For example, when all the costs you make is plastics (raw materials), amortisation on your machines, wages and electricity, and some Ali-express fees, you can compete with a company like Lego easily. Because Lego has those same costs, but also marketing, R&D, legal, QA, distribution and so on.

I'm not saying that any of those are "wrong" per sé. Maybe Lego is in the wrong business or on a dead end, and maybe that is not bad: IDK. But I do see why many companies are pulling out of this race-to-the-bottom and either becoming "almost entirely marketing" (Nike, Adidas, etc.) or pivoting to niches with other easier to defend moats, like Philips.

Also what kind of protections do low level employees have in China? If an employee is harmed on the job, does the company have many repercussions? Can employees organize and negotiate as a group? What about healthcare costs? Or taxes? If the factory owner is in with the local government and/or the party, do they have to pay much in the way of taxes? What about public accountability? Are companies publicly listed and subject to financial disclosure rules? It’s my second and third-hand understanding that all of these factors contribute to an exceedingly low labor cost in China. I think we enjoy cheap stuff at the cost of supporting a pretty dismal situation for many ordinary Chinese.

I cannot evaluate if what you say is true. But it does not really matter when both the European Philips and the Chinese brand Pilhips, or both the Lego Harry Potter™ and "Justice Magician Bricks" are made under the same conditions. Both reap the same "benefits".

This unfair advantage would only matter if the European Philips or Lego keeps all its production (of the entire chain) in Europe, which they do not.

Did you hear about integrated circuits in school?

Did anyone offer you a course on how to design ICs in university?

I heard that Singapore NTU has 100+ graduates with PCB and IC design skills each year. If I was a chip-foundry-to-be, I'd build my factory where the employees are.

> Did anyone offer you a course on how to design ICs in university?

Yes, standard courses in Computer Engineering, at least here at Vienna's Institute of Technology, which with comp. eng. and masters in similar fields (just a slight focus shift to, e.g., the modelling/verification side) there's about the same order of magnitudes of students graduating per year too.

Chip foundries do not go where their employees graduate, but where they get gov incentives for building their fabs.

Processor design was a required class during my undergraduate, and from what I’ve heard several other universities have very similar classes.

It sounds like a chicken / egg problem. We had some in school, as part of the software engineering curriculum. The electrical engineering department probably touched on it as well.

I went to university in Sweden and they promoted a VLSI track

Given the amount of money ASML is printing, they could easily build a decent fab that will over time compete directly with eg TSMC. But I doubt they have the balls to compete against their customers, which is a shame.

(by "easily", of course, I mean "super hard but possible"). If there's any European company that knows how to source and train people who can operate fabs, it's ASML.

Doesn't have to be ASML itself, they can branch off and start a company near it though and develop close ties to it and the local university.

Why? The EU very much wants to be able to make their own chips. The world is clearly moving towards each bloc wanting to be more self-sufficient.

There are other semiconductor plants in the EU.

There's no especial reason in a globalized economy for the different parts in a tooling chain to be right next to each other. Germany already makes specialized machine tooling that gets sent all over the world to be actually used, this is just a more specialized example.

The Netherlands is a very dense country with an agricultural economy, and fabs take up a lot of land and dirty a lot of water; but nonetheless, there is already a fab there, belonging to NXP (formerly Philips) https://www.nxp.com/company/about-nxp/worldwide-locations/ne...

different skillset. making equipment and running a profitable fab is like Apple and Orange.

Intel with its years of experiences in semis industry and yet Intel is not in the semis equipment business and Intel was in the very early stage of semis industry.

It's a dirty, dangerous industry. I imagine that running it in the neatherlands would be more expensive. That's one of the reasons it went abroad in the first place.

Just a supplier of certain machines for the process doesn't make you a successful foundry. I.e. ASML heavily relies on Laser technology by Trumpf Werkzeugmaschinen (a German company) - which besides Laser technology is mostly in the sheet metal machine business. Focus on what you can do best, they say.

They probably don’t have the manpower. The Asian countries produce hardware engineers at 10x that of the west, and with a much larger population, have a vast talent pool.