China will not attempt to invade Taiwan (at least not now).
But the threat of invasion will be continued to played up in US politics in order to support increased military spending and aggressive industrial policies towards US allies (in particular Taiwan but also South Korea).
Japan, South Korea, Taiwan, Isreal. The US reliably puts its money in places that are under threat.
That's not something a profit - driven free market would normally do. It is US setting the geopolitical stage.
South Korea is not 100 miles from China and has a massive US military presence. This article is about the very real danger that China invades Taiwan - which it has already stated it wants to do (in case the military flyovers were not convincing) - and cuts off the world from the best silicon.
No, they wouldn't deliberately stop selling the product of intact, fully staffed fabs after gaining control of them.
But we're not talking about a corporate takeover. We're talking about a naval invasion of a very densely populated and well defended island. That might involve heavy artillery bombardment and prolonged urban combat, maybe a guerilla war and sabotage actions.
There is no guarantee that the fabs are still operational after all that.
China's interest in Taiwan has nothing to do with economy.
The CCP and Xi in particular have turned "reunification" into a matter of national and personal pride.
More substantially, they see Taiwanese independance as a threat because it could serve as an example to independance movements in Hong Kong, Xinjiang, Inner Mongolia and probably a few more.
Yeah, that's basically true, partly though, for example I won't agree to that quotation mark.
And what's wrong with national pride? And in what way do you think waging a war could boost pride? I thought we learnt that after two WWs. You might want to check China's current economy and civilian living status, we are not like some middle east country with nothing to lose, no offense.
An actual peaceful reunification is just not going to happen anytime soon, especially given how things are developing in Hong Kong. And if it involves the military, it's conquest, not a reunification.
> And what's wrong with national pride?
It is all too easily used by populists to gather support based on an "us vs them" mindset. And (like personal pride) it can compel you to do self-destructive things to avoid losing face.
> And in what way do you think waging a war could boost pride?
"We beat them, so we're better than them". Dumb, but people do think like that.
> You might want to check China's current economy and civilian living status, we are not like some middle east country with nothing to lose, no offense.
Then why all the fuss about Taiwan?
A truly great nation could say "look, how about you strike down that silly idea about retaking the mainland, give back our national treasures, and in return we'll reconize you as an independant country?"
> What fuss about Taiwan? we always declare Taiwan is part of China.
Status quo is that it's not part of China, and hasn't been for well over 100 years. This doesn't hurt China in any way. So why not simply accept that status quo?
> By all means what you're saying is "this man wants war, let's fight him".
I have no idea what you're trying to say here.
> Maybe because you think like that and assumes people are like you.
Quite exactly the opposite.
But I guess you've just arrived at the point where you can't argue your position in good faith anymore.
Not sure how that's relevant, 5G is an entirely different topic.
The reason advanced chip factories are located in China is that they are expensive and Chinese authorities can't be trusted.
Adding to that is that sending your chip designs to China, is a sure way to get them stolen.
Lots of companies don't sell the latest tech in China. And don't manufacture in china because their designs would be stolen. This is not a problem for cheap manufacturing, but for high tech stuff it might be...
I'd like to remind you, TSMC's most famous clients, Apple, Qualcomm, NVIDIA, AMD, happens to be US companies, IF what you said really happens, basically China gets a steaming pile with barely any use.
China is doing everything it can to create a domestic chip industry, even going so far as to poach TSMC engineers to support SMIC. To suggest that they have no domestic use for TSMC and its products is ignoring reality.
Here is another one. World relies on only one relatively obscure dutch company for its EUV lithography equipment. For DUV the market is divided between 3 players two in japan and the aforementioned one. Apps market for semiconductors is also cornered by two companies. This whole space has consolidated in last decade or so. Everyone wants to have full control over their supply chain, so everyone is trying to buy their entire supply chain.
No real competitors. They own the EUV market because they own the only company making EUV sources (Cymer). They also work very closely with Zeiss and co own some of the important patents I think (but don't quote me on this). A Japanese company Gigaphoton made a EUV source, but I am not aware of any orders from any major fab to them. I think since 2018 they are just trying to be second source for source parts (guessing from the fact that they have stopped publishing HVM numbers and are more focused on proving they can make reliable parts). Its become so sad that they don't even mention their EUV source on their website, but then again these type of companies rarely pay attention to their web presence.
Cymer is not the only company producing EUV sources. There are some Japanese companies that do produce them too, (e.g. Ushio). And ASML itself uses Trumpf's (Germany) lasers instead of Cymer.
Trumpf doesn't make the EUV source it makes the CO2 laser which produces the plasma in Cymer's EUV source. Ushio does make a EUV source but thats not for manufacturing, its for inspection. The power difference itself should tell you that its a different ball game entirely.
The very question indicates that we live in different universes, and in your China never threatens Taiwan with violent reattachment nor plays provocation games with military jets.
For the record I'm saying "US is far more dirtier" not "someone else has a dirty conscience too", that's a pretty good defense IMHO, you see, somebody else in this post suggested US should stick a military/naval base in Taiwan, what do you think?
"you do not seem to deny that ...", I didn't deny it immediately since it's a bit far fetched to argue comparing to the previous paragraph, we even bombed a small island with no people for twenty years(keyword: Second Taiwan Strait Crisis), but that's history, does Xi want Taiwan back? of course, does Xi want to go down as a tyrant? of course not, look at history, we got HK and Macau back, peacefully, remember that.
On the other hand, recently, Taiwan government refused vaccines from China, I think they really went too far.
East Asian IC supply chains in general, PRC/TW/JP/SKR accounts for ~75% of global IC capacity. Losing TSMC in war over TW will set the world back 1-2 nodes and ~10 years. Having expansive regional war (i.e. US trying to defend TW from JP/SKR bases) that knocks out the regions semi will set world back decades of capex. It's almost like MAD for semiconductors until enough gets reshored away from east asia.
It's interesting to think about what the solutions to this problem are. The advantages of buying from TSMC are presumably they have a lead in both technology and cost that will make your product better and cheaper. The disadvantages are that in natural disaster or war/military event the chips won't be available and you'll have difficulty shipping your products.
It's very hard for a company to take the latter seriously (like the supply chain issues that arose due to covid) when it is a very rare event that will likely have other large effects on your market and your competitors also.
Governments stepping in to subsidise/force use of other companies will likely reduce the short term profitability or commercial appeal of your product.
Perhaps, if all the rest of the security council members and other countrises recognize it individually. You can veto a UN decision but not a sovereign country decision.
There is no way Russia will join other countries in such a UN recognition of Taiwan, as it will open a very nasty door for them regarding the Crimea...
So 2 of the 5 permanent members of the UN is already not going to do this.
And it is not only limited to non-western countries, the same argument holds for Spain with Catalonia for instance.
Recognition of a country does not require the security council, a general assembly vote is all that is needed. That said, the UN isn't exactly a body known for it's lawfullness or fidelity to procedure. When the UN General Secretary Ban Ki-moon rejected Taiwan's bid because of resolution 2758, there was no real legal basis for him to do that, but people just went along. Neither is there a "supreme court" of the UN that can settle these disputes, as the ICJ is intended to resolve disputes between two member nations, not disputes between the General Assembly and the Secretary General.
It's best to think of the UN as a meeting place where consensus can form, rather than as a law making body with a well functioning appeal and dispute resolution process for its own deliberations.
"For anyone waiting for US to exercise justice on this matter, might want to read that article about Secretary Clinton considering selling Taiwan to China."
There's something to be said about going nuclear. For all that shit about proliferation, the ability of a small country to inflict drastically disproportionate damage to a larger country really cripples military offensives.
How would that be a solution? What does Taiwan’s standing (or lack thereof) in the UN have to do with protecting the chip supply chain? Isn’t the US already defending it?
If done by a majority of countries, it would greatly reduce the military threat of China invading Taiwan, because it would imply that those countries would not ignore an invastion or only protest inconsequentially, which is what China can currently assume rather confidently.
Even the US has been very carefully not fully committing to a defense of Taiwan, giving China the impression (according to some reports) that they might get away with it if they just act quickly enough.
Of course, none of this affects non-military threats to TSMC's production, like earthquakes.
The investments needed to improve processes have been going up every year. There can only be so many companies that can pour billions of dollars into R&D each year.
If you want to sustain a local cutting-edge manufacturer even when its capacities are redundant or too small to be economical then the pot of subsidies would have to increase yearly and not be spent wastefully. Is there a precedent for that?
The solution is to collectively, clearly, and politely tell the Communist Party of China to get fked. A lot of companies will lose money and a lot of things will get expensive, but it’s either rip the bandaid off now or amputate a limb later. Does the world have the courage to do it?
Unfortunately, it seems the path the world is taking is to become less dependent on Taiwan and China while avoiding upsetting China.
We're going to see a repeat of these events 20 years from now when Vietnam's economy grows, thanks to manufacturing relocation, and we're just as dependent on them for various things. Right now the world is hoping and praying that Vietnam will liberalize when money flows in, but it's more likely they'll follow a similar path as China, albeit less powerful.
They tried to relocate manufacturing to Vietnam (and Thailand?) due to labor cost increase in China, then labor cost increased in Vietnam/Thailand too, not a very successful story.
Looking at the Sudetenland crisis of 1938, it doesn't.
It took several iterations of territorial expansion for Germany to be considered an actual fightable foe. Austria, Memel, Sudetenland, the rest of the Czech lands, Poland. Even after the invasion of Poland, when war was declared, it was a Phony War in the beginning. The fighting in the West only really started in 1940.
The world didn't tell Russia to get fked when they occupied Crimea and started a shadow war with Ukraine.
There is a very simple way of telling a country to revert course: deem their passports no longer valid. Fundamentally, the right to move between countries is provided by the International Covenant on Civil and Political Rights Article 12 which says "Everyone shall be free to leave any country, including his own" but then continues "The above-mentioned rights shall not be subject to any restrictions except those which are
provided by law, are necessary to protect national security, public order (ordre public), public health
or morals or the rights and freedoms of others, and are consistent with the other rights recognized in
the present Covenant".
For China, it'd be even easier since they signed but didn't ratify this treaty despite it has been signed in 1966 and in force since 1976.
I doubt it would have been the same if Crimea(or Ukraine in general) had the world leading chip manufacturer
on their territory. Unfortunately other powerful countries had little reason to care about it, outside of some sense of duty or agreements which were signed decades ago and no one really felt like enforcing.
TSMC are a critical piece of the world's infrastructure. The fact that car makers are grinding to a slowdown and for particular assemblies, a complete halt, is very telling. The automakers themselves now fully appreciate just how critical TSMC really are. If they weren't critical, then they'd already have an alternate supply ready right now. But they don't. Its TSMC being pressured to increase production capacity, not an eager competitor taking up the slack. They wouldn't be furloughing employees otherwise. The Germans and many others wouldn't be sending letters to Taiwan requesting higher production. So TSMC is critical.
Does this mean there are absolutely no alternatives? Likely not, but TSMC are essentially the only game in town. At scale. At quality. With a useful track record of known production characteristics.
The stuff car makers buy doesn't solely rely on TSMC and can also be produced by GloFo or Samsung or maybe even other smaller fabs. No everything needs bleeding edge. It's a more general trend.
TSMC isn't the only one, there are still a few big players in the semiconductor fab market. The problem is its an extremely inelastic industry. Creating a new foundry is a very slow and expensive process. If you had predicted this and starting building one in 2019 to take advantage of the demand you still wouldn't be in business yet.
The combination of it being a very specialized and expensive industry with high upfront costs, extremely high RnD, cut throat competition and patent landmines means that as time has gone on ther have been fewer and fewer players. The only ones really capable of filling orders for chips using process tech from the last 5 or so years would be TSMC, Samsung, Global Foundries and Intel. Intel just recently opened up to third party production so they wont have an effect on the global supply for awhile.
The combination of it being a very specialized and
expensive industry with high upfront costs, extremely
high RnD, cut throat competition and patent landmine
What prevents (companies in) Western nations from creating their own fabs on their own home soil?
Obviously, labor costs are much lower elsewhere. But the massive capital expenditures involved mean that labor is a comparatively much lower % of overall costs compared to, say, spinning up a factory to make cheap shirts.
I wonder if Western nations/companies will be spurred by this chip shortage to start prioritizing their own foundries. Like energy independence, except... silicon independence.
They have and are. Intel has major fabs in the US but until recently didn't sell foundry services. Global Foundries has fabs in the US, Germany and various other places. Samsung of course has its fabs in Korea. There are more fabs elsewhere that aren't on the absolute cutting edge.
The problem isn't that TSMC is the only fab. Its that semiconductor fabrication is inelastic, in other words it cant respond quickly to changing demand. The lead time to start producing a given chip design is fairly long and a fab like TSMC will have its available capacity contracted out in advance. They were already running at capacity before COVID because their 7nm process was very popular.
You cant just build a fab overnight and start producing chips. Just building the place and getting the appropriate equipment installed takes over a year and then there is a lead time for adapting the chip design to your process. You actually design your chips with the proprietary fab process in mind. So if you had contracted with TSMC but they cant fill your order and you have to move to one of the newly available Intel fabs your engineers must adapt your design before you can start producing again. Every step of this process takes time that means that no reaction due to COVID would be showing results yet. There will be a shortage for the foreseeable future.
Why is news like this not driving the stock price up?
I mean to me this sounds as if TSMC could easily raise prices and increase profits and their customers will still buy the exact same amount... Because they have to.
The risk TSMC faces is that competitors will bring up new capacity and deal with improved performance, the stock projects the value of profit "forever" not just for the next couple years.
Nothing is “priced in” and prices really highly on historical volatility
One way to tell is to look at how nearer term options are priced than LEAPS are. LEAP pricing is telling you nobody knows a damn thing and they are consistently undervalued.
The (first) Foundation was set up on a small, insignificant planet, surrounded by belligerent powers. Its continued existence was made possible only by playing those powers off against one another.
And the Foundation itself: highly advanced technology that those very powers came to rely on...
I wonder if China will invade. If the last few years have told us anything, it's that China can do whatever it likes. The rest of the international community is fractured like never before. There may never be a better time, if and only if China can get it done quickly and reliably. Xi (Winne the Pooh) is in a strong place to do it politically.
I suspect China is overestimating the strength of their hand. Their economy is dependent on foreign corporations voluntarily choosing to manufacture there. If they start acting like a third-world kleptostate, they'll be branded as unreliable business partners and have to go back to sorting trash.
>corporations voluntarily choosing to manufacture there
I'm not sure how true that is anymore. Companies trying to manufacture elsewhere have to cope with 101 issues that increase costs. Everything from JIT logistics not working to lack or workers to uncooperative governments. China is getting more expensive and some low skill work is going elsewhere. But for most companies, setting up elsewhere means prices much higher than the market will tolerate.
China has the 2nd largest (and according to some sources, probably the largest) consumer market on Earth, and is currently, by a large margin, the largest market for Cars, Smartphones, PCs, Fashion, and a host of other product categories. In 2020, China was the only major country where global corporations didn't see a significant decline in sales growth.
China is also, again by far, the largest e-commerce market and the largest mobile payments market on Earth.
I apologize for sounding like an infomercial, but these are basic economic facts that one would expect a reasonably well-read individual to be aware of. I would advise that in future you get better informed before coming here to advertise your ignorance.
Been thinking about this for a few weeks. Taiwan is profiting immensely from semiconductors, that means demand for semiconductors is very high. This was also the case before 2020. So, manufacturing semiconductors is profitable.
It is clear to me that if semiconductor production was doubled overnight, many new industries making use of the newly available cheap chips could arise and bring innovation. Why only Taiwan? Those factories are very expensive. Think of what Taiwan has to offer so that we can compare the rest of the world:
- Access to sea
- 20% corporate tax
- (comparatively) sober, stable politics. The rules don't change much.
Then I thought about where I would build one, given this profitable circumstances:
1. Cannot be in (most) of Europe, due to high taxes and advanced and advancing work regulations. Standards are too strict to allow for innovation. Most of low tax Europe are tax heavens unsuitable for high scale industries. Estonia and Georgia give some breathing room, but are friendlier to services.
2. I cannot build it in Africa: high taxes, extreme corruption and high risk of politics affecting the company.
3. I might be able to build it in the US. Being close to the client is not as important as having access to sea. US politics are turbulent and if corporate tax is raised, then there's no competition to be made.
4. South America is a bag. Almost all SA countries have corrupt governments at every layer, but there are a few business friendly ones. Most countries cannot be considered. Panama is already focusing in other things, Uruguay (25% corporate) and Brazil (~34%) cannot compete.
5. I'm unsure about Middle East, I don't see anything there
6. Asia is massive:
6.a. China could happen.
6.b. South East Asia is too erratic compared to Taiwan, investors will go to Taiwan instead, or invest in something else. Singapore is too small.
6.c. Japan is an stagnant economy and there is too much bureaucracy and regulation involved.
7. Australia ~26% corporate tax rate is not going to make the cut. I'm not knowledgeable about regulations.
I probably have missed something, I tried to put onto words my thinking process on why Taiwan might still be the most profitable place to make these industries. The whole world is in the middle of a shortage of this material, yet alternatives to Taiwan don't seem to arise.
You could, but profit still needs to be larger than real interest rate. Also, in that circumstance you like would invest it in Taiwan, as it would give higher returns
I don't think it has anything to do with corporate tax rates (at least no to the extent you suggest it is). It has everything to do with access to cheap skilled labor, resources (water), incentives, and supply chain. Taiwan offers all four through years of honing this industry. After all TSMC is pretty much critical to Taiwan's economy and national security.
Secondly, TSMC is so far ahead of the curve that any competitor will take years and billion of dollars to get to where they are right now. ASML develops the technology in close collaboration with TSMC and I suspect TSMC owns many of the patents required to operate EUV successfully.
The industry is happy with the status quo because TSMC offers the best technology at the best prices.
“Taiwan invested a hundred billion dollars into semiconductor R&D. To remain competitive and guard our national security interests, we also require investment in the same scale, from which we would profit handsomely.”
Not at the level that TSMC does. TSMC gets their lithographic machines from ASML, which leads the industry by a large margin. So far, China has not been able to acquire its most cutting-edge machines. They are currently relegated to using older fab generations.
Among the rest this means mainald China also depends on importing Taiwan-produced chips (and probably wouldn't want to disrupt their supply) doesn't it?
TSMC is in the process of installing foundries in both the US and Japan. Imagine where we'd be if they weren't in existence. And how many decades they've been doing their thing. What a stupid assertion around risk. The WSJ should do an article about how the fact that most bicycles are manufactured in Taiwan poses global a risk to public health and transport (or whatever you fit in the blank).
106 comments
[ 3.7 ms ] story [ 204 ms ] threadWhile not 100% watching it I feel as though China<-->US relations have whole strategies around Taiwan.
Of course, if war over Taiwan breaks out, I plan to hit up my local computer shop, preferably within the hour.
You will hit up your local draft station instead.
Even if an immediate retaliation would not not happen, it will within years.
But the threat of invasion will be continued to played up in US politics in order to support increased military spending and aggressive industrial policies towards US allies (in particular Taiwan but also South Korea).
It's dangerous exactly because we don't know what will happen.
Although arguably NAND and DRAM are commodities, and US already has a back up strategy ( Micron ).
But what make you think China will "cut off the world" IF that happens?
That's not how this works, that's not how any of this works.
But we're not talking about a corporate takeover. We're talking about a naval invasion of a very densely populated and well defended island. That might involve heavy artillery bombardment and prolonged urban combat, maybe a guerilla war and sabotage actions.
There is no guarantee that the fabs are still operational after all that.
I mean, we're on different political sides, not good vs evil, please acknowledge that.
One of the sides runs a series of concentration camps. Sells organs from political prisoners, etc.
But yes, I suppose it's just politics. Personally, I think genocide is slightly evil, but feel free to disagree.
If, I mean If, China is evil, wouldn't that make any country not declaring war to China evil too?
Independent media across the globe and across political spectrums have reported that China has locked away >= 1M people in concentration camps.
Claiming that the Uyghur genocide is made up is just trolling. These things have been documented for years.
And the Uyghur is not the only minority to be persecuted.
Tell me who is the Dalai Lama working for?
> wouldn't that make any country not declaring war to China evil too?
I think you'll have to ask a philosopher, if evil is a transitive property :)
But my two cents is
(1) NO!
(2) War is not the solution.
Honestly, war is very rarely a good solution. Sanctions a political pressure might be better tools.
"Independent media"
The CCP and Xi in particular have turned "reunification" into a matter of national and personal pride.
More substantially, they see Taiwanese independance as a threat because it could serve as an example to independance movements in Hong Kong, Xinjiang, Inner Mongolia and probably a few more.
And what's wrong with national pride? And in what way do you think waging a war could boost pride? I thought we learnt that after two WWs. You might want to check China's current economy and civilian living status, we are not like some middle east country with nothing to lose, no offense.
An actual peaceful reunification is just not going to happen anytime soon, especially given how things are developing in Hong Kong. And if it involves the military, it's conquest, not a reunification.
> And what's wrong with national pride?
It is all too easily used by populists to gather support based on an "us vs them" mindset. And (like personal pride) it can compel you to do self-destructive things to avoid losing face.
> And in what way do you think waging a war could boost pride?
"We beat them, so we're better than them". Dumb, but people do think like that.
> You might want to check China's current economy and civilian living status, we are not like some middle east country with nothing to lose, no offense.
Then why all the fuss about Taiwan?
A truly great nation could say "look, how about you strike down that silly idea about retaking the mainland, give back our national treasures, and in return we'll reconize you as an independant country?"
That's your speculation, are we at war now?
What fuss about Taiwan? we always declare Taiwan is part of China.
By all means what you're saying is "this man wants war, let's fight him".
> "We beat them, so we're better than them". Dumb, but people do think like that.
Maybe because you think like that and assumes people are like you.
A conditional statement is not speculation. Also:
https://www.theguardian.com/world/2021/apr/12/largest-chines...
https://www.france24.com/en/live-news/20210105-taiwan-says-c...
https://www.businessinsider.com/chinas-military-buildup-atti...
> What fuss about Taiwan? we always declare Taiwan is part of China.
Status quo is that it's not part of China, and hasn't been for well over 100 years. This doesn't hurt China in any way. So why not simply accept that status quo?
> By all means what you're saying is "this man wants war, let's fight him".
I have no idea what you're trying to say here.
> Maybe because you think like that and assumes people are like you.
Quite exactly the opposite.
But I guess you've just arrived at the point where you can't argue your position in good faith anymore.
You think leading US chip designers would send their designs to China?
The well organized state of industrial espionage by China, is a pretty good reason this won't happen.
Furthermore, the rest of the world would be forced to embargo anything related to Taiwan.
The reason advanced chip factories are located in China is that they are expensive and Chinese authorities can't be trusted.
Adding to that is that sending your chip designs to China, is a sure way to get them stolen.
Lots of companies don't sell the latest tech in China. And don't manufacture in china because their designs would be stolen. This is not a problem for cheap manufacturing, but for high tech stuff it might be...
https://www.laserfocusworld.com/blogs/article/14039015/how-d...
And China has about as much right to govern Taiwan as the Habsburg-Lothringen dynasty to govern Czechia.
But you do not seem to deny that China acts in a hostile way towards Taiwan. You switched to "someone else has a dirty conscience too" defense.
"you do not seem to deny that ...", I didn't deny it immediately since it's a bit far fetched to argue comparing to the previous paragraph, we even bombed a small island with no people for twenty years(keyword: Second Taiwan Strait Crisis), but that's history, does Xi want Taiwan back? of course, does Xi want to go down as a tyrant? of course not, look at history, we got HK and Macau back, peacefully, remember that.
On the other hand, recently, Taiwan government refused vaccines from China, I think they really went too far.
It's very hard for a company to take the latter seriously (like the supply chain issues that arose due to covid) when it is a very rare event that will likely have other large effects on your market and your competitors also.
Governments stepping in to subsidise/force use of other companies will likely reduce the short term profitability or commercial appeal of your product.
So 2 of the 5 permanent members of the UN is already not going to do this.
And it is not only limited to non-western countries, the same argument holds for Spain with Catalonia for instance.
Real-politik is complicated.
It's best to think of the UN as a meeting place where consensus can form, rather than as a law making body with a well functioning appeal and dispute resolution process for its own deliberations.
I think if I were Taiwan, it would be US bases or we leave the NPT and build some warheads...
My previous comment on a previous post: https://news.ycombinator.com/item?id=26382543
Seems relevant.
Even the US has been very carefully not fully committing to a defense of Taiwan, giving China the impression (according to some reports) that they might get away with it if they just act quickly enough.
Of course, none of this affects non-military threats to TSMC's production, like earthquakes.
If you want to sustain a local cutting-edge manufacturer even when its capacities are redundant or too small to be economical then the pot of subsidies would have to increase yearly and not be spent wastefully. Is there a precedent for that?
We're going to see a repeat of these events 20 years from now when Vietnam's economy grows, thanks to manufacturing relocation, and we're just as dependent on them for various things. Right now the world is hoping and praying that Vietnam will liberalize when money flows in, but it's more likely they'll follow a similar path as China, albeit less powerful.
It took several iterations of territorial expansion for Germany to be considered an actual fightable foe. Austria, Memel, Sudetenland, the rest of the Czech lands, Poland. Even after the invasion of Poland, when war was declared, it was a Phony War in the beginning. The fighting in the West only really started in 1940.
There is a very simple way of telling a country to revert course: deem their passports no longer valid. Fundamentally, the right to move between countries is provided by the International Covenant on Civil and Political Rights Article 12 which says "Everyone shall be free to leave any country, including his own" but then continues "The above-mentioned rights shall not be subject to any restrictions except those which are provided by law, are necessary to protect national security, public order (ordre public), public health or morals or the rights and freedoms of others, and are consistent with the other rights recognized in the present Covenant".
For China, it'd be even easier since they signed but didn't ratify this treaty despite it has been signed in 1966 and in force since 1976.
Does this mean there are absolutely no alternatives? Likely not, but TSMC are essentially the only game in town. At scale. At quality. With a useful track record of known production characteristics.
The combination of it being a very specialized and expensive industry with high upfront costs, extremely high RnD, cut throat competition and patent landmines means that as time has gone on ther have been fewer and fewer players. The only ones really capable of filling orders for chips using process tech from the last 5 or so years would be TSMC, Samsung, Global Foundries and Intel. Intel just recently opened up to third party production so they wont have an effect on the global supply for awhile.
Obviously, labor costs are much lower elsewhere. But the massive capital expenditures involved mean that labor is a comparatively much lower % of overall costs compared to, say, spinning up a factory to make cheap shirts.
I wonder if Western nations/companies will be spurred by this chip shortage to start prioritizing their own foundries. Like energy independence, except... silicon independence.
The problem isn't that TSMC is the only fab. Its that semiconductor fabrication is inelastic, in other words it cant respond quickly to changing demand. The lead time to start producing a given chip design is fairly long and a fab like TSMC will have its available capacity contracted out in advance. They were already running at capacity before COVID because their 7nm process was very popular.
You cant just build a fab overnight and start producing chips. Just building the place and getting the appropriate equipment installed takes over a year and then there is a lead time for adapting the chip design to your process. You actually design your chips with the proprietary fab process in mind. So if you had contracted with TSMC but they cant fill your order and you have to move to one of the newly available Intel fabs your engineers must adapt your design before you can start producing again. Every step of this process takes time that means that no reaction due to COVID would be showing results yet. There will be a shortage for the foreseeable future.
I mean to me this sounds as if TSMC could easily raise prices and increase profits and their customers will still buy the exact same amount... Because they have to.
Nothing is “priced in” and prices really highly on historical volatility
One way to tell is to look at how nearer term options are priced than LEAPS are. LEAP pricing is telling you nobody knows a damn thing and they are consistently undervalued.
The (first) Foundation was set up on a small, insignificant planet, surrounded by belligerent powers. Its continued existence was made possible only by playing those powers off against one another.
And the Foundation itself: highly advanced technology that those very powers came to rely on...
I'm not sure how true that is anymore. Companies trying to manufacture elsewhere have to cope with 101 issues that increase costs. Everything from JIT logistics not working to lack or workers to uncooperative governments. China is getting more expensive and some low skill work is going elsewhere. But for most companies, setting up elsewhere means prices much higher than the market will tolerate.
China is also, again by far, the largest e-commerce market and the largest mobile payments market on Earth.
I apologize for sounding like an infomercial, but these are basic economic facts that one would expect a reasonably well-read individual to be aware of. I would advise that in future you get better informed before coming here to advertise your ignorance.
Then I thought about where I would build one, given this profitable circumstances: 1. Cannot be in (most) of Europe, due to high taxes and advanced and advancing work regulations. Standards are too strict to allow for innovation. Most of low tax Europe are tax heavens unsuitable for high scale industries. Estonia and Georgia give some breathing room, but are friendlier to services. 2. I cannot build it in Africa: high taxes, extreme corruption and high risk of politics affecting the company. 3. I might be able to build it in the US. Being close to the client is not as important as having access to sea. US politics are turbulent and if corporate tax is raised, then there's no competition to be made. 4. South America is a bag. Almost all SA countries have corrupt governments at every layer, but there are a few business friendly ones. Most countries cannot be considered. Panama is already focusing in other things, Uruguay (25% corporate) and Brazil (~34%) cannot compete. 5. I'm unsure about Middle East, I don't see anything there 6. Asia is massive: 6.a. China could happen. 6.b. South East Asia is too erratic compared to Taiwan, investors will go to Taiwan instead, or invest in something else. Singapore is too small. 6.c. Japan is an stagnant economy and there is too much bureaucracy and regulation involved. 7. Australia ~26% corporate tax rate is not going to make the cut. I'm not knowledgeable about regulations.
I probably have missed something, I tried to put onto words my thinking process on why Taiwan might still be the most profitable place to make these industries. The whole world is in the middle of a shortage of this material, yet alternatives to Taiwan don't seem to arise.
Secondly, TSMC is so far ahead of the curve that any competitor will take years and billion of dollars to get to where they are right now. ASML develops the technology in close collaboration with TSMC and I suspect TSMC owns many of the patents required to operate EUV successfully.
The industry is happy with the status quo because TSMC offers the best technology at the best prices.
TLDR: not there, at least yet.
The CCP does.