Billionaire investor Warren Buffett is warning about a major storm that is about to strike the US real estate market. This 1.4 TRILLION dollar debt fueled tsunami has already started to hit the real estate market as we speak. However, this is just the beginning of the quote “consequences” Buffett sees of this real estate bubble. The real impact is set to start in just a few months. Here’s what Buffett had to say.
Over the last 15 years, the US real estate market has been fueled by massive amounts of cheap debt. Take a look at this chart of the US federal funds effective rate, a proxy for interest rates in the economy. We can see here that interest rates spent the better part of the last 15 years at 0%. These low interest rates incentivized the use of massive amounts of debt and pushed real estate values to sky high levels. Let me explain.
Imagine someone is buying an office building in your hometown. For a nice round number, let’s say the cost of this building is 1 million dollars. The buyer of this building likely doesn’t have an extra 1 million dollars of cash sitting in his bank account to purchase this building outright. Likely what this buyer is going to do is go to a bank to get a loan to fund the majority of the purchase price. In this example, our buyer here is contributing 350,000 dollars of the purchase in the form of what is referred to as “equity”. Think of this as just a fancy word for downpayment like when someone is purchasing a house. Our buyer then goes to a small, local bank to get a loan for the remaining $650,000. How profitable this purchase is for the buyer is dependent on many things, but one of the most important is the interest rate on the loan.
*Disclaimer: Neither this video, not any content produced on this channel should ever be considered investing advice or official financial advice. All content is made for entertainment and educational purposes.
Inside this smartphone are 62 microchips containing a total of 90 billion transistors.
These microchips are incredibly powerful and the cornerstone of all technology.
But how are billions of nanoscopic transistors manufactured into a microchip the size of a tiny
ant? Well, all these microchips were manufactured in a semiconductor fabrication plant like this
one. Inside it is a clean room which spans the area of eight football fields and is filled with
hundreds of machines ranging in size from that of a van to that of a city bus and costing anywhere
between a few million and 170 million dollars. Within this microchip factory, silicon wafers
travel from machine to machine and undergo around a thousand processes over a three-month period.
And by the end of production, each silicon wafer will be covered in hundreds of CPU chips,
each containing 26 billion transistors. When we zoom in, we can see the nanoscopic transistors
at the bottom and over a dozen layers of wires above. This integrated circuit is then cut out
from the wafer, tested and packaged so that it can be installed into your desktop computer.
In this video, we're going to explore the entire microchip manufacturing process and show you how
billions of nanoscopic transistors and an impossibly complex 3D maze of wires are manufactured in one
of the world's most technologically advanced microchip factories. It's an incredibly complicated
process, so stick around and let's jump right in. A portion of this video is sponsored by Brilliant.org.
There are two sides to understanding how microchip manufacturing works. The first is the sequence of
steps and processes needed to build the nanoscopic transistors and the labyrinth of wires, whereas
the second is how the semiconductor fab and multi-million dollar equipment of the clean
room floor work. And we'll be flipping between these two sides to get a complete picture.
Let's start by opening up this desktop computer, focusing on the CPU and taking a look at what's
inside. Here we have an integrated circuit, or die, which we'll refer to as a chip. This chip
has 24 cores, a memory controller, a graphics processor, and many other sections. Within one
of the cores, we can see its block diagram and the various elements. Zooming in on this multiply
block, we find a layout of 44,000 transistors that physically execute 32-bit multiplication
and constitute just 0.00017 percent of the overall 26 billion transistors in the CPU.
Zooming in even further, we see layers of metal wires, or interconnects, and at the very bottom
are the transistors that form the basic logic gates. Note that these layers of metal interconnects
aren't floating, but rather the empty space that you see is filled with insulating materials,
thus providing structure and preventing the metal wire layers from touching. Furthermore,
here we're only showing the transistors at the bottom and five layers of metal interconnects,
with vias traveling vertically between the layers. In actuality, there are a total of 17 metal layers
of wires in the CPU, and each successive set of levels uses larger and larger interconnects.
At the bottom are local interconnects that move data around this 32-bit multiply circuit.
In the middle are intermediate interconnects that move data around the core, and at the top
are global interconnects that move data around the entire CPU. You might be wondering how small
are these transistors? Zooming in again and past the interconnect layers, we find FinFETs, which are
transistors whose channel dimensions are 36 by 6 by 52 nanometers, with a transistor-to-transistor
pitch of 57 nanometers. Clearly, the transistors are incredibly small. Here's a mitochondria,
a dust particle, and a human hair for size comparisons. Now that you have a sense of
what the transistors and labyrinth of metal interconnects look like, let's explore how
they're manufactured. We'll begin with an analogy. Imagine baking a cake that's 80 layers tall,
with each layer cut to a unique shape. To make this cake, there are 940 steps in the recipe,
which takes 3 months to complete and includes hundreds of exotic ingredients. And if any
measurement, baking time, or temperature is more than 1% off, then the cake is entirely ruined.
That's kind of what it's like to make a microchip. But microchips are even more complicated.
Let's look at a single layer of this integrated circuit and run through a simplified set of steps
used to build it. To start, a layer of insulating silicon dioxide is deposited on top of the wafer,
and then a layer of light-sensitive photoresist is spread across the top. Next, using UV light
and a stencil, a pattern is applied to the photoresist. Solvents then are used to remove
the areas hit by the UV light, thus creating a patterned mask layer. Using the mask,
the revealed silicon dioxide is etched away down to the previous layer. Next, the mask layer is
removed, and a layer of copper is added to cover the wafer and fill in the areas that were just
etched away. Finally, the surface is ground down and leveled off to reveal the copper and
insulator patterns, and thus a single layer is completed. In order to build the next layer,
which is a vertical set of metal vias, we repeat the same set of steps but use a different pattern
for the photomask. Since these layers are all built using the same set of steps, it's more
effective to visualize the steps as a circle, like a clock. To build all the 80 layers of the die,
this sequence is repeated over and over, resulting in 940 steps. One important note is that the
FinFET transistors at the bottom are even more complicated than the metal wires, and thus
additional steps are needed to fabricate them. Furthermore, cleaning the wafer to wash away
dust particles that may have landed on the wafer, as well as inspecting the wafer to make sure
everything is being built properly, happens frequently, and these steps need to be added
to the circle. A different tool is used to complete each of these process steps.
Now that we have an understanding of the steps, let's take a look at this semiconductor
fabrication plant. This CPU is manufactured on a 300 millimeter silicon wafer, which can fit
230 CPU chips. In contrast, DRAM chips are considerably smaller, and thus 952 of them
can fit on a wafer. These silicon wafers are carried in stacks of 25 using a container called
a front opening universal pod, or FUP. This sealed plastic wafer carrier is transported around the
clean room floor using an overhead transport system, which lowers the FUP onto the tool's
landing pad. Inside the tool, robotic arms transport the wafer through vacuum load locks,
and to different process chambers, where materials are added, removed, or processed in ways that we'll
explore later. The wafers are then returned to the FUP, resealed inside, lifted up to the overhead
transport system, and carried to and dropped onto the next tool, where the next step in the process
is completed. To build the entire chip composed of 80 different layers, it takes three months of
traveling from tool to tool, where at each stop, one of the 940 process steps is completed.
In order to increase the microchip mass production capabilities of a semiconductor
fabrication plant, or FAB, typically there are dozens of the same semiconductor tools
organized in rows that perform the same process. On the clean room floor, there are a total of 435
semiconductor tools, resulting in the FAB's production capacity of 50,000 wafers, or 11.5
million CPUs a month. These tools have rather complicated names, so we'll start by categorizing
them according to their functionality. There are six groups, making the mask layer, adding material,
removing material, modifying the material, cleaning the wafer, and finally, inspecting the wafer.
We've color-coded the different functional groups to the various tools and
process steps to help you not get lost. Let's next look at each of these semiconductor tools
and see how they process the wafer in various ways. We'll start with the ones that are used
to make the mask layer or the nanoscopic stencil on the wafer. These tools include the photoresist
spin coater, photolithography tool, developer, and photoresist stripper. First, the photoresist spin
coater applies a light-sensitive layer to the surface of the wafer and sends it through a soft
bake, where the wafer is heated in order to evaporate the solvent from the photoresist.
Next, the wafer goes to the lithography tool, which shines UV light through a stencil, which
is technically called a photo mask. The light passes through the stencil and is then demagnified
or shrunk down to produce a nanoscopic pattern on the wafer. Wherever the light from the stencil
touches the wafer, the photoresist is weakened. The wafer then goes to the developer and the
photoresist is washed away, leaving only the patterned nanoscopic stencil on the wafer.
The wafer is then sent through a hard bake to harden the remaining photoresist. Next,
the wafer travels to other tools to undergo processing, and once these processes are
completed, the wafer goes to a photoresist stripper, which uses solvents to dissolve
and remove the photoresist mask layer. And that's how a mask layer is formed and then removed.
The photolithography tool is one of the most important, so let's take a look at it. Inside
is a UV light source, a set of lenses to focus the light, a photo mask which contains the stencil,
or design of the layer to be patterned, and a wafer carrier. The photo mask is 6 by 6 inches
and, based on the dimensions of the CPU, can fit two copies of a single layer of the CPU design.
The purpose of using a photo mask with these crazy optics is because it's a reliable way to copy and
paste a design for billions of nanoscopic transistors and wires onto 230 identical CPUs
on a single wafer in a few minutes. After the light passes through the photo mask,
the UV light goes to more lenses in order to shrink down the pattern by a factor of four
and print a single layer of the design onto the photoresist. The wafer carrier steps from
position to position, printing the photo mask image at each stop until all 230 chips are patterned.
Let's clarify one detail. In our previous examples, we talked a lot about the CPU having 80 layers.
Specifically, what we were referring to is the number of photo masks and mask layers used to
create all the different layers of patterns on the wafer. Therefore, one complete CPU chip uses
80 different photo masks, each costing $300,000. With only one mask layer being patterned at a time,
this CPU chip will undergo 80 separate visits to the lithography tool. We could spend another
hour talking about photolithography, but let's move on to the next category of tools.
Deposition tools are used to add or deposit material onto the wafer. A lot of times we use
the mask layer from the photolithography step to add materials to the areas uncovered by the mask
layer, kind of like spray painting through a stencil. Due to the wide range of elements and
compounds used to create the layers, deposition tools have a wide range of variations with
complicated names and acronyms for each variant. But essentially, there are three key groups of
materials that are added or deposited onto the wafer. Metals such as copper or tantalum,
insulators, which are typically called oxides, and crystalline layers of silicon. Each group of
different materials uses different physics and chemistry principles to deposit the material
on the wafer, and therefore has a different technical name for the tool that deposits the
material. Deposition tools typically have a central wafer handling chamber with the various chambers
attached to the edges, each one dedicated to adding just a single element or compound. The next
category of machines do the opposite, which is to remove material. There are two key methods.
The first is etching. Etchers use either corrosive chemicals or high-energy plasmas
to react with and remove materials from the surface of the wafer. They're typically used
with the mask layer stencil in order to remove the material exposed by the mask, thus creating a hole
that can be later filled by a deposition tool. The second method to remove material is CMP, which is
chemical mechanical planarization. CMP applies slurry and uses abrasive pads to grind and polish
away the top surface of the wafer, making it perfectly flat. CMP levels off the top layers
of the wafer and is typically used as the last step in a cycle of processes in order to prepare
the wafer for another layer to be added. The fourth category are tools that modify the silicon
and are called ion implanters. These tools use the photomask stencil to bombard the unmasked regions
with phosphor, boron, or other elements in order to make the P and the N regions required to form
the transistors themselves. Therefore, ion implanters are only used in the front end of line.
You might think that this is adding material. However, ion implanters only add around one atom
of phosphor or boron for every 10,000 atoms of silicon. Additionally, while other machines spray
paint a layer on top of the wafer, ion implanters hurl atoms deep into the silicon lattice, kind of
like a cannon launching a baseball six feet into a concrete wall. This process typically damages
the silicon lattice, which is why the following step is to repair the silicon by heating a wafer
using a separate tool called an annealer. The fifth category of tools are used to clean and
remove any contaminants or particles from the wafer. These wafer washers use ultra-pure water
to clean the wafer and then dry it with nitrogen or hot isopropyl alcohol. Cleaning the wafer
happens rather frequently in order to remove any stray particles that may have fallen onto the
And finally, sixth are tools that inspect the transistors and metal layers for defects and
are called metrology tools. A common metrology tool uses a scanning electron microscope with
nanometer level resolution to take pictures of the top surface of the wafer and determine if
there are defects such as improperly patterned layers or particles on the surface. When
fabricating an integrated circuit that takes three months to complete, it's important to
repeatedly monitor the progress and make sure that each of the processes is being executed
with nanometer level precision. Now that we've covered each of the categories, here are the
color-coded process steps along with the layout of the tools in the semiconductor fabrication plant.
Let's run through the complete set of steps used to manufacture a single metal interconnect layer.
First, a layer of insulating silicon dioxide is deposited onto the wafer. Next, photoresist
is spread across the surface and the wafer is sent through a soft bake to remove the solvent.
The wafer then travels to the photolithography tool where the design from the photomask is
transferred to each of the chips on the wafer by weakening the areas of photoresist hit by the
light. The wafer next goes to the developer to wash away the sections that were hit by the light
from the lithography tool and then through a hard bake to harden the remaining photoresist.
With the mask layer built, the wafer goes to an etching tool where a plasma etcher removes a
vertical column through the exposed silicon dioxide until it reaches the previous layer's
metal lias. Next, the wafer is sent to a photoresist stripper where the mask layer is removed. The wafer
then travels to a physical vapor deposition tool where a sequence of metals fills in the exposed
pattern and coats the wafer in metal. Finally, the wafer is sent to a chemical mechanical
planarization tool where the metal is ground down so that all that remains is a flat layer
of insulating silicon dioxide and conductive copper interconnects that match the pattern
from the photomask. A single metal layer is now completed and the wafer is ready for the next
cycle to begin where insulating silicon dioxide and the vias will be added. Note that cleaning
and wafer metrology or inspection steps occur in between many of these other steps. Furthermore,
the process steps to make the transistors are less straightforward and utilize the ion
implanter and thus we'll cover them in a separate video on transistor physics and design.
These steps are for building the integrated circuit on the wafer. However, there are
additional steps in manufacturing a microchip which we'll explore in a little bit. But before
we get there, one important thing to note is that the semiconductor industry is incredibly secretive
regarding the exact tool layout and the process steps and recipes used to make the transistors.
We wanted to make the best video on how microchips are made and it took us 180 hours of scouring the
and using what we found, we spent 205 hours modeling each of these tools, the many layers
of the integrated circuit and the semiconductor fab. Furthermore, writing the script took about
100 hours and then animating all these visuals took more than 825 hours. As a result,
this video took over 1300 hours to make and it's entirely free to watch. We want to make
more videos like this one where we explore computer architecture and how transistors work
and we can't do it without your help. The best way you can help is by taking a few seconds to
scroll down, write a comment below, like this video, subscribe if you haven't already and then
share this video on social media or send it to a friend or colleague. Truly, just a few seconds of
your time helps far more than you think. Additionally, we have a Patreon page where we'll be
releasing behind-the-scenes footage of our work and updates for upcoming videos. If you find what
we do useful, we would appreciate any support. Thank you. So then, what are the additional steps
in manufacturing a microchip? Before chip manufacturing at the fab, we first have to
manufacture the silicon wafers by refining quartzite into pure silicon and then growing
a monocrystalline ingot and cutting it into wafers. For reference, these 300 millimeter wafers
are around three quarters of a millimeter thick. They have a barcode on the side and a small notch
in them to indicate the direction of the crystal lattice. Furthermore, these wafers are incredibly
delicate and shatter into hundreds of shards when broken. A single wafer costs around a hundred
dollars, but after being populated with CPUs, it's worth closer to a hundred thousand dollars,
making it quite literally 10 times more valuable than its weight in gold.
Moving on to the steps after chip manufacturing, the completed wafer is sent to a separate building
where each of the CPUs undergoes rigorous testing to figure out if it works as intended. If a CPU
works, that's great, but frequently a particle or photomass defect has damaged a section of the
integrated circuit, rendering that section defective. These semi-functional circuits are
then categorized or binned based on what still works. These Intel 13th Gen processors are sold
as an i9, i7, i5, or i3, depending on how many cores are functional with different product lines
of CPUs whose onboard integrated graphic sections are defective. These wafers are transported to
another building where the chips are cut out using a laser, flipped over, and placed on an
interposer, which distributes the connection points to a printed circuit board, while a protective
heat conductive cover is placed on the backside. The printed circuit board holds the landing grid
array that interfaces with the motherboard, as well as various electrical components. Next, an
integrated heat spreader is mounted on top, and the entire assembly is tested one last time
before being packaged for sale. Finally, the CPU is now ready to be mounted onto the motherboard
and installed into your desktop computer. It's important to understand that chip manufacturing
requires an incredible amount of science and engineering, and there's a free and easy way
to learn the basic principles inside each of these complex tools, and that's with this video's
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is in the description below. Microchip fabrication is a massive topic, and thus we have two more
equally complex videos that we're working on. The first will be an in-depth 3D animated factory tour,
and the second will explore transistor physics, FinFETs, and the next generation of transistors.
We're also working on a series of videos on GPUs and a separate one on CPU architecture,
so make sure to subscribe so you don't miss any of our videos. We're thankful to all our Patreon
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