Capital investment. Each iteration pushes the cutting edge requiring millions to billions in R&D with enough Ph.D.'s and new findings textbooks have to be rewritten regularly to show what was impossible a few years ago is now a fielded procedure. That accounts for high costs to start with.
Next problem is each iteration into deep, submicron processes uses smaller tooling fighting more physics and noise with ever more sensitive instruments. Figuring out each issue requires lots of expensive tooling and experiments. Those vendors gotta make their money back. So, each tool in semiconductor process can cost millions to tens of millions of dollars. Each are custom built. The fab has to buy dozens to hundreds of these plus recover their investment with profit. They do it in wafers sold mainly.
So, given each market converges on a few players, it's easy to see that only a few players will have the volume to sustain the investments into new tech. On top of it, the nodes seem to double in cost ever so many steps trimming off even more competition. It got down to the lowest nodes that make high-end CPU's and mobile SOC's having only five or six companies fabbing them. Still plenty of work, esp for analog/RF, at higher nodes like 180-350nm. Yet, even an older fab might have to do $10-50mil a month in business just to keep their doors open.
Needless to say, people aren't going to do deep-submicron in their garages any time soon. Most companies with deep pockets gave up on fabs, too. Even IBM is selling theirs IIRC. So, most use a "fabless" model where they design hardware then send files that remaining fabs turn into hardware. There's a few companies that keep their own fabs on mostly obsolete nodes that are still useful to them. Yet, almost everyone else is fabless.
Next problem is each iteration into deep, submicron processes uses smaller tooling fighting more physics and noise with ever more sensitive instruments. Figuring out each issue requires lots of expensive tooling and experiments. Those vendors gotta make their money back. So, each tool in semiconductor process can cost millions to tens of millions of dollars. Each are custom built. The fab has to buy dozens to hundreds of these plus recover their investment with profit. They do it in wafers sold mainly.
So, given each market converges on a few players, it's easy to see that only a few players will have the volume to sustain the investments into new tech. On top of it, the nodes seem to double in cost ever so many steps trimming off even more competition. It got down to the lowest nodes that make high-end CPU's and mobile SOC's having only five or six companies fabbing them. Still plenty of work, esp for analog/RF, at higher nodes like 180-350nm. Yet, even an older fab might have to do $10-50mil a month in business just to keep their doors open.
Needless to say, people aren't going to do deep-submicron in their garages any time soon. Most companies with deep pockets gave up on fabs, too. Even IBM is selling theirs IIRC. So, most use a "fabless" model where they design hardware then send files that remaining fabs turn into hardware. There's a few companies that keep their own fabs on mostly obsolete nodes that are still useful to them. Yet, almost everyone else is fabless.