# Chip fabs are a rare, tightly coupled supply chain Markdown copy of https://realalpha.app/s/chip-fabs-are-a-rare-tightly-coupled-supply-chain/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy. - Speaker: [Andrew Feldman](https://realalpha.app/builders/andrew-feldman/) · Andrew Feldman is cofounder and CEO of Cerebras Systems. · Co-founded and leads Cerebras Systems, whose wafer-scale engine is the largest processor in computing history. - Host: [Jack Altman](https://realalpha.app/people/jack-altman/) · General partner, Benchmark · Co-founded Lattice and ran it until 2023, then started his fund, Alt Capital. - Show: Uncapped - Episode: [Andrew Feldman on Building Cerebras and the Future of Chips | Ep. 57](https://realalpha.app/v/HFOhG1jH2tk/), Sep 15, 2026 - Moment: 16:13 to 23:06 of the episode (7 min), playing on https://realalpha.app/s/chip-fabs-are-a-rare-tightly-coupled-supply-chain/; the episode from there: https://realalpha.app/v/HFOhG1jH2tk/?t=973 ## Quote > “a fab and especially a fab that builds at cutting edge geometries is a modern pyramid. It's one of the **greatest things humans make**.” > — [Andrew Feldman](https://realalpha.app/builders/andrew-feldman/) at [16:49](https://realalpha.app/v/HFOhG1jH2tk/?t=1009) · Uncapped ## Takeaways 1. A cutting-edge fab can cost $40–50 billion and take years to build. 2. ASML is the only company making the leading lithography machines. 3. Fab skills and supporting suppliers are concentrated in few places. ## About this segment Andrew Feldman traces how silicon becomes chips, from ASML’s lithography machines to TSMC’s fabs, and explains why capacity cannot scale quickly. Decades of offshoring also weakened the U.S. supplier base. From “Andrew Feldman on Building Cerebras and the Future of Chips | Ep. 57”, Sep 15, 2026. [Watch the full episode](https://realalpha.app/v/HFOhG1jH2tk/) ## Transcript Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there. [16:20](https://realalpha.app/v/HFOhG1jH2tk/?t=980) and because there's cameras on, I get to ask you a really simple question, and I get to be humored with it. So could you explain, sort of in a somewhat simple way, how do we go from like sand to a chat gpt answer dude it's just tsmc there's a black box we call that tsmc fed by another black box called asml and out the other end comes comes great we're supply constrained but i don't know what this can you teach me what the supply how it works yeah i i think the first thing to to to think about is that that a fab and especially a fab that builds at cutting edge geometries is a modern pyramid. It's one of the greatest things humans make. What is it? It is a collection of machines that take a chunk of silicon and use a photolithographic process in which they etch transistors into that piece of [17:19](https://realalpha.app/v/HFOhG1jH2tk/?t=1039) silicon, such that when you deliver power to it, they do calculations. And it is a collection of, I mean, this is a factory. It's just a reasonable way, a real factory. It costs 40 or 50 billion to make. It has a four or five year lifetime. How big is it? Football fields. When Samsung was building a factory in Texas, they began building a power plant. The power plant was used to make concrete they ran concrete trucks hundreds of concrete trucks 7x24 for years to pour enough concrete to build the foundation on which to put the fab right these are unbelievably complicated things so asml makes the machines asml makes makes uh the the machine that does the photolithography um what's that machine like it's the size of uh each machine is what is it 50 or 60 feet long and 20 feet high costs what half a billion yeah they're they're expensive um what's interesting [18:26](https://realalpha.app/v/HFOhG1jH2tk/?t=1106) is that they sell the same machines to different fabs and fabs use them in different ways and are able to do different things with tsmc able to to to achieve things that others can't and can anyone else make these machines? Is it really just ASML that can make these machines? Right now it's only ASML. In the world? In the world. That's weird, isn't it? Yeah. Yeah. I mean, there are very few things that this is a true monopoly, not born of what De Beers did, which was try and control supply. They have technology that others haven't been able to replicate. Are we supply constrained on lithography machines um probably not i i think the the challenge in our business is that that demand moves extremely quickly and if you've looked at sort of a great company like NVIDIA's demand it's it's exponential but you you can't build fabs that fast if the fab takes five years [19:24](https://realalpha.app/v/HFOhG1jH2tk/?t=1164) to build right and you see demand increasing there's no way anybody would have expected demand to shoot up the way it has for chips. They're always behind. And they're investing huge capital blocks in the construction of these facilities. And demand is racing past the ability to make these huge five-year bets. And we have the same problem right now with data centers, right? AI is moving at the speed of software, and data centers are moving at the speed of real estate. And that's why we're behind. That's just it. [19:58](https://realalpha.app/v/HFOhG1jH2tk/?t=1198) Good articulation is good. OK. So. TSMC buys the lithography machines. Right. So TSMC buys lithography machines. They have decades of experience. They wrap it together. They take an ingot, which is a tube of silicon. It's sliced into disks we call wafers. The wafers are sent through the process. The process etches through a lithographic process, transistors, into the silicon. It moves through the process. [20:27](https://realalpha.app/v/HFOhG1jH2tk/?t=1227) they're cut, we call it diced, or in our case, they're not cut. Out the other end comes chips. And what's amazing about this is you take sort of some of the smartest people you've ever met and you put them on a project for two years and you send the results to TSMC and they run it through a factory that cost $40 or $50 billion to make and took years to make. And out the other end comes a $22 chip. [21:04](https://realalpha.app/v/HFOhG1jH2tk/?t=1264) It blows your mind. What do you think about it? Each one of these took sort of the smartest people in their field decades. It's the most impressive thing humans have ever done. Right. It's among the most impressive things And a burrito is $23. That's right. Right, exactly, right. And you go down the street here in the Mission District and you pay $17 for a burrito. That's right. Right, and so... But once you have the chip, you're done, right? [21:26](https://realalpha.app/v/HFOhG1jH2tk/?t=1286) Then you're good. Once you have the chip, you've solved about a fourth of your problems. Okay, but TSMC, they receive a design, they operate the machine, they give you the chip. Yes. But that itself seems like not replicable. Like we don't have fabs like this in the US. We have them run by TSMC and by Samsung. And Global Foundries have got one, too. How much of the bottleneck is at the TSMC level? [21:53](https://realalpha.app/v/HFOhG1jH2tk/?t=1313) A huge amount. Okay. Why? Huge amount. Is that because of the speed of building fabs? Yeah, it's because the demand has outpaced the ability to build fabs. And it's not like an apartment building where there are hundreds of builders you could choose to build your apartment building. The actual making of the fab is skills that only TSMC has. And even there, they can't do 12 at once, right? The skills to make these things are so rare and in so few hands that you can't just knock them out. [22:31](https://realalpha.app/v/HFOhG1jH2tk/?t=1351) It's not a cookie cutter. And that's why we don't have enough of them right now. And the fact in the US, sort of three decades of bad policy that pushed the fabs away. When the fabs left, the tool vendors, the collection of vendors who provided services to them, they all left. The next step in the process called packaging, and those are companies like Amcor and ASC, they left. And we just punted a strategic industry.