How Semiconductors Ruined East Germany

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[mbontekoe]

Note - every East German company was called VEB - literally "people's own works".
I worked In Berlin (west) in the late 70' s and was able to travel to the East fairly easily. I worked in semi conductors.
In the late 80's I worked at senior level for Toshiba in Germany when they were then the world no.1 in semiconductors. Around the time of the opening up of the East we were instructed not to make any comments to the Press about any questions relating to Toshiba and Eastern Germany. Quite soon after I became involved in the (previously eastern) German semiconductor industry initially via the Treuhand an organisation set up to get investment into the previously DDR industries -The problem was efficiency within the company there was no commercial understanding, nor logistics.
The company at Erfurt was split into 3 separate entities Thesys the major 6" fab, X-Fab made higher voltage Cmos for automotive applications on 4 inch wafer where geometry was not important. and a solar cell company whose name I forget.
Dresden site became ZMD with a 5" fab, . The Frankfurt an der Oder site specialising in Bipolar became GED and eventuality purchased by ELMOS.
I was involved at the sites in Erfurt, Dresden and F Oder
Simply the failure of the companies in the DDR was due to their inability to connect to any of their customers and to produce what their customers needed. Marketing did not exist.
Erfurt had around 40, 000 employees and a reasonably functional 6 inch facility where they ran 3 micron Cmos which was exactly the Toshiba unified process that allowed migration to smaller geometries, Much of the process machinery was from Canon and had allegedly been delivered as combine harvesters (!) -but on top of this they manufactured the Z80 processor which held around 90% of the local market share without the knowledge of Zilog.
They also manufactured a processor "very similar" (hand copied) to the Intel 286. Intel issued a cease and desist order, while Zilog just issued a license and purchased from Erfurt at a very low price.
Thesys took only 400 of the 40, 000 employees of the VEB workforce and X-Fab and the solar cell company took less - so 39, 000 people were made redundant .
Dresden (ZMD literally Dresden centre for microelectronics) had been the R&D centre for Eastern Germany and so had a smaller 5 inch Fab - 5 inch was never a popular format - it did still manufacture 256K DRAMs -(the 1M never made production) and some SRAMs - all had very poor yields and each device had to be burnt in even for commercial grade product - so profitability was nonexistent. Their main product became subcontracting TV ICS for Phillips.
ZMD received senior management from Siemens/ Infineon for guidance. But Infineon built and opened a huge fab on the doorstep of ZMD and then stole all the competent personnel. AMD also opened a Fab in Dresden with the same result.
Thesys was initially backed up by supplying wafers to Zilog and ZMD by selling Wafers to Philips - Both companies followed the idea of becoming mixed signal Asic companies but neither had the engineering staff or the market credibility to get the volume orders in time to grow their businesses to compensate for when the Zilog and Philips business ran out.
In 1998 Thesys was sold to the Austrian company AMS but this has failed and AMS was forced to sell back its shares to the minor company X-Fab. X-fab has become like a mini TSMC handling designs customer make - Soon After X-Fab has taken over the Fab in Dresden, and ZMD was sold for 1Dm to a local investing company but it declines and was eventually taken over by IDT in 2016. Xfab has continued to grow is now headquartered in Belgium and has acquired many other fabrication facilities. It is worth ~ circa 750M$ per - but still maintains the sites in Erfurt and DResden

[svdlaan]

A typical joke from the latst years of the GDR I heard back then:
A delegation of Japanese visits the GDR and of course is shown many important companies and places. At the end, they are asked "What did you enjoy the most?"
"The three great museums: Pergamon, Pentacon and Robotron."

[fsbayer]

As an East German history buff and "insider" of sorts (my dad was East German), this is overall a very well-researched video, but I do have a few corrections near the beginning:

0:40 - East Germany did not inherit a strong industrial base at all. The low population was due to comparatively low industrialisation. Most of German industry was concentrated in the Rhine-Ruhr region in the far west (which is Germany's most populous area to this day). What little industry did exist in the East was pretty thoroughly destroyed by allied bombing, particularly in and around Berlin and Dresden. By 1945 there was literally not a single still functioning heavy industrial facility in the whole territory of East Germany.

1:00 - This is a grammatical nitpick rather than a content correction, but "strike" in the sense of "stop working" rather than "hit" is a defective verb, meaning it has no past tense. So "workers struck" is incorrect in this context, you need to use a circumlocution like "workers went on strike" instead.

2:20 - VEB is not the name of the works. VEB stands for "Volkseigener Betrieb" ("undertaking belonging to the people") and just describes the type of legal entity, much like "Inc" or "LLC" in the US and "Ltd" or "plc" in the UK. So calling VEB Halbleiterwerk the "VEB works" is like calling Alphabet's headquarters the "Inc headquarters".

[klopferator]

The VEB Halbleiterwerk seen at 2:15 was in Frankfurt (Oder), it's not the VEB in Teltow. My brother learned and worked there. Now he's working in Teltow for a chip manufacturer.
Some of my professors were working in Dresden on that stuff during the 70s and 80s, they told us how difficult it was because the GDR basically had to figure out the manufacturing almost entirely by itself instead of buying the proper machines on the world market. Growing of silicon crystals, slicing the wafers, manufacturing the chips, bonding the wires etc. They also said that often the "help" from the Stasi wasn't very helpful at all, but they had to incorporate the stuff (even if they wanted to do their own designs instead of just copying Western chips) because the state paid too much for it to ignore. They were proud of what they had achieved, but agreed that economically it was a pointless excercise. One of those professors later was a technical advisor for Infineon.

[LaurentiusTriarius]

Great! That's the episode I always wanted you to make one of my grandpa came to Canada after spending a couple of years in France and a decade working as an engineer for various german electronics industries, he had tons of stories about the silliness of different German industrial fighting each other and trying to corrupt different bunches of officials. My grandma always said they moved to France with some secret research but tbh I never believed that story lol

[markymarc]

Great video! There used to be a saying amongst the East-German people in those last days: "Die Mikroelektronik der DDR ist nicht klein zu kriegen." which has a double meaning of "The east-german microelectronics industry cannot be defeated." as well as "The east-german microelectronics can not be shrunk".
Still there is an undeniable legacy left behind in the current industry in Germany's east.
I would love to see a video about the Siemens-Infineon-Qimonda downfall and partial resurrection...

[dawnadmin]

13:36 The DEC engineers were actually trying to say, “CVAX: When you care enough to steal the very best” (a pun on Hallmark’s slogan, “When you care enough to send the very best.”) The joke didn’t translate, and the word-for-word translation they came up with didn’t even make any sense, so the East German team probably translated it from pidgin Russian into German in the way that they thought their bosses would want to hear.

[nvsv_wintersport]

I've worked in Eastern Germany in 1992 at a meat factory, where they used a PDP-11. This was imported from the US and they told me that there was a regular inspection to see if it was still being used driving the factory (and not rockets).

[snap_oversteer]

Great video, it's interesting how much of Western tech managed to get behind the iron curtain, my dad was working in early 1970s as mainframe computer serviceman, on American UNIVAC computers! I have no idea how they managed to get them into Czechoslovakia, but he was even sent abroad to be trained how to maintain them. But with limited parts supply, he had to innovate lot of repairs - substituting unobtainable parts with local production and obviously doing board level repairs, but that was common even in the West at that time. The computer centre was located on Wenceslas Square, Prague of all places. I wish I would've asked him about more stories when I had the chance :(

[pn]

I got to work in the Dresden Global Foundries Dresden factory in 2003, it was pretty interesting to see the remnants of East Germany, and the rebuilding of the Frauenkirch which was about halfway done at the time. Making chips is no easy task, so many intricate technologies are involved, from optics, to vacuum pumps, spectrometry, to mass flow control, and precision temperature, and on and on. I am always amazed anything works at all.

[RsD]

I used to work for a chip manufacturer in East Germany a few years ago, in a room right next to my office was a western ion implanter from the 1970s which was smuggled to the GDR some decades ago. The implanter was still being used in production :) working in the cleanroom there was like working in a museum 😄

[charlesrosenbauer]

19:30 that 32-bit processor from Intel - the iAPX 432 - is a really great story on its own. What was intended to be a future-proofed magnum opus turned out to be a hilariously bad design, and the purposely-near-sighted chip that was meant to merely fill the market for a few years - x86 - is still with us to this day.

If you don't make a video on it, I might wind up writing a Substack article on it eventually.

[ohwingman]

Back in the early 70's the FBI were surveilling a suspected individual for suppling iron curtain nations with technology, particular computer and electronic items. The FBI became aware of the fact that the person they were watching was preparing a large shipment to go to Sweden. When the two crates were shipped the crates were weighed. When they arrived in Sweden a Swedish national received them and immediately arranged for shipment to the USSR. The crates were then weighed again and sent off to Russia. When the crates were opened in Russia there was a problem. There were no semiconductors or computer parts. Instead, they were filled for Somewhere along the line some one had removed the contents and then replaced them with rocks that weighed exactly what the original contents had weighed. One has to assume it was the FBI since they arrested the individual they were watching shortly after.

[ArmchairMagpie]

My uncle worked at VEB Elektronik Gera, and in general, my family had a lot of interest in electronics and electrical engineering, a lot of my relatives worked in these jobs. The companies often had very skilled people there who often had to make do with poor quality parts, and it was very difficult to even get the good parts for simple stuff like capacitors. These were always at risk to be traded at black market, especially since there was a big DIY scene in the GDR. Due to poor accounting, it remained that way until the end. I remember the propaganda about the first megabit chip made in GDR, which was to be produced in Erfurt too at even higher capacity. The plan was to cure the economy through cheap sales of Mbit chips. We mocked the incessant trumpeting of progress by state media constantly because we knew how dire the situation really was. My uncle instantly found a highly paid job as electronic engineer at a big company in the Bodensee region after the fall of the Berlin Wall, and remained there until retirement.

In general, the electronics sector was symptomatic for the entire GDR system. They had lofty goals that mismatched with their capacities and most importantly: their ideology. Many progresses were hampered because the SED didn't like it. They especially didn't like individual thinking from people below their assigned positions. The GDR was very reliant on exports, which usually happened at a net loss already. They often had to rob Peter to pay Paul. Improving or development of technologies was seen as a waste of money and time. They only wanted to produce according to silly five year plans, and due to the planned economy being extremely slow and inflexible, they hoped for a fairly static world. This worked for the two decades after the war, but eventually the changes across the globe happened too rapidly, too rapidly and too costly to adapt.

[toresbe]

Great video, as always. A fun tidbit: The Norwegian minicomputer company Norsk Data asked the COMECON embargo council what the difference was between a minicomputer, and a superminicomputer - which was subject to strict export controls. They replied, well, a superminicomputer is a 32-bit computer. Luckily, due to the segmented memory architechture of the ND-500 series, one could simply cut wire A31 on the backplane, and it was now a 31-bit computer - no longer a supermini. Nobody needed to map the full 4GiB into memory, so there was just no performance loss. This way, ND sold a great many very high-performance computers - they would run circles around a VAX in floating-point performance - to the Soviet Union, completely legally. They would regularily call the embargo council to make sure they were still within the law.

[NekiCat]

East Germany did not inherit a strong industry after the war. In fact, the few industrial machines that were still functioning were dismantled and shipped as war reparations to the Soviet Union. Even many kilometers of train tracks were dismantled. Overall, East Germans paid 130 times more than West Germans, and East Germany paid the highest war reparations of the century. It culminated in the protests 53, after which the reparations were dialed back significantly.

Interestingly, some of the taken machinery lacked operators in the Soviet Union, and so ended up rusting away in fields...

[TestTest]

Thing is, looking at GDR alone it might look like a failure. Compared to what Russia and the rest of USSR produced- GDR was quite high quality and advanced. My dad used to love it when he got his hands on any East German kit. As a kid I remember playing with a Robotron 8086 clone at Dad's work- it was standing next to a Russian mainframe using magnetic tapes, with another Russian mainframe still using punchcards a couple of rooms down the hallway.

[tookitogo]

10:55 I literally laughed out loud when you said “and fridges”, cuz no 1970s fridges used transistors. They’re not needed for any key part of a refrigerator, which can be made entirely of electromechanical (not electronic) components. Even today, the transistors in a fridge (if it has any) will only be in a digital temperature controller, and maybe in an LED lamp driver. But simple ones will be purely electromechanical.

Like every Asianometry video I’ve watched so far, you get the broad picture right, and find interesting topics, but get tons of little details (and sometimes bigger ones) wrong.

[hugodesrosiers-plaisance]

Your videos that focus on a historical perspective rather than the more technical aspects of modern tech are really what keep me coming back to your channel. The technical stuff goes *way* over my head so to my ears, you may as well be speaking a language I don't understand, but as a hardcore History geek, I can't find this sort of historical/technological perspective anywhere else. Your video about the Soviet oil industry is another example of the videos I mean. This here video is some really great work. Cheers.

[valentinstoyanov]

My country (Bulgaria) experienced a similar semiconductors hype in the 70s and the 80s, although in a much smaller scale. And this hype is still a breeding ground for domestic myths about how Bulgaria was so "technologically advanced" during the communism. Of course, it wasn't but at least 30% of my compatriots still believe that. And these are the same 30% who believe that Putin is a great leader... Thank you for the video!