Gonna be interesting to see who's bluff (USA or China) will be called. Almost all the plants in Taiwan are on the coast line and are almost collateral damage if China decides to go for it.
This is why TSMC building its most advanced semiconductor plant in Phoenix. Likely spending $30B. Intel also building huge plant there. Domestic supply is coming. May not be enough though.
The US plants (active after 2023) will be printing the old fab chips while all the latest stuff (3nm) will still be coming from Taiwan. Taiwan know the US and co are protecting them heavily because of their heavy reliance on TSMC for now. China will probably hang around until US decreases its reliance (and therefore protective capacity) on Taiwan in the future, they play a long game.
The engineers working in semis I talked to in Taipei all said (well, n=2 so take it as you like) that if China invaded (impossible right now anyway for so many reasons too long to list here) they would never be available to access the TSMC factories because :
- they have instructions to destroy them before the chinese can get a hand on them. Or at least damage them enough (and the replacement parts will come from ASML, in Netherlands, which will never send them. No other place in the world can fabricate them right now)
- it's way too complex to retro engineer them even if they have access to the factories
- they even don't have the technology and the know how to make them work if they were intact (possibly a few taiwanese engineers will be willing to help them but enough? Doubful if they attack the country by force)
Problem with 🇨🇳 imho is that Xi is in danger of losing his face completely if he doesn’t react on Pelosis visit. This is getting serious I fear. PLA has already sent two aircraft carriers out. How many carriers are in the Taiwan strait now, 5, 6? And 🇺🇸on the other hand simply can’t let 🇨🇳dictate if one of its representatives will visit Taiwan or not. Also 🇨🇳has one more ☢️option. What if they dump their billions of 🇺🇸-treasuries over night all at once? Sure, they’d also feel that pain. But do we really think that a communist state has a lower pain resistance than a western democracy?
It’s definitely going to be an interesting week. I can see arguments on both sides.
Xi needs the distraction. His rule is not absolute and this year is when he is attempting to make himself king for life. Things in China are not going well, perma lockdown and the collapse of the savings plan of your entire country (real estate) don’t play well. Attacking Pelosi could definitely give the populous a distraction to get behind.
All that being said I think Russian invasion has given him pause. Russia should have been done with this take over by now and the consequences for Russia have not been trivial. China (unlike Russia) absolutely needs food and energy imports in addition to someone to export to. US sanctions would mean mass joblessness for them (absolute fear of the Chinese gov). In addition if the US sticks a carrier at the straight of Hormuz blocking oil China is done.
I give higher odds to Xi being all talk at this point...
Trying to read the tea leaves. So China less likely to invade until US plants build knowing US more likely to defend at this time as has no alternative?
Also seems hot war would damage the plants and also damage China’s economy as they depend on the chips as well
The US has a variety of chip manufacturing capabilities coming within the next few years which should help with the semiconductor issues. In general, both TSMC and Samsung are working on 3nm tech using ASML lithography equipment, which that company is Netherlands based.
TSMC: Plant in Arizona operational 2024 (5nm)
Samsung: Plant in Texas operational 2024 (5nm, maybe 3nm?)
Intel: Arizona expansion (7nm, not sure of date), Ohio (not sure, but they're talking about getting the high-NA EUV - Extreme Ultraviolet Lithography machine from ASML around 2025 to leap frog into 2nm apparently).
No clue, have to see what the plan is but given the size and scope it would be a massive massive issue.
While Sam (below) says you can move some to Samsung, the capacity isn't there (volume). It's just math, you can't just "replace" 65% of the entire production. If Samsung is the other 35% (not sure if that's true didn't check) but assuming they are... they can't just triple production overnight.
Short term would swap to South Korea (Samsung). While firmly in 2nd place they're only a little behind TSMC e.g. when TSMC was doing 7nm Samsung was on 8nm.
Gonna be interesting to see who's bluff (USA or China) will be called. Almost all the plants in Taiwan are on the coast line and are almost collateral damage if China decides to go for it.
This is why TSMC building its most advanced semiconductor plant in Phoenix. Likely spending $30B. Intel also building huge plant there. Domestic supply is coming. May not be enough though.
The US plants (active after 2023) will be printing the old fab chips while all the latest stuff (3nm) will still be coming from Taiwan. Taiwan know the US and co are protecting them heavily because of their heavy reliance on TSMC for now. China will probably hang around until US decreases its reliance (and therefore protective capacity) on Taiwan in the future, they play a long game.
Yeah why would TSMC put their top IP on soil outside of which they can control.
Their main concern is theft, not just going to hand top tier manufacturing to anyone (not USA not China)
The engineers working in semis I talked to in Taipei all said (well, n=2 so take it as you like) that if China invaded (impossible right now anyway for so many reasons too long to list here) they would never be available to access the TSMC factories because :
- they have instructions to destroy them before the chinese can get a hand on them. Or at least damage them enough (and the replacement parts will come from ASML, in Netherlands, which will never send them. No other place in the world can fabricate them right now)
- it's way too complex to retro engineer them even if they have access to the factories
- they even don't have the technology and the know how to make them work if they were intact (possibly a few taiwanese engineers will be willing to help them but enough? Doubful if they attack the country by force)
Problem with 🇨🇳 imho is that Xi is in danger of losing his face completely if he doesn’t react on Pelosis visit. This is getting serious I fear. PLA has already sent two aircraft carriers out. How many carriers are in the Taiwan strait now, 5, 6? And 🇺🇸on the other hand simply can’t let 🇨🇳dictate if one of its representatives will visit Taiwan or not. Also 🇨🇳has one more ☢️option. What if they dump their billions of 🇺🇸-treasuries over night all at once? Sure, they’d also feel that pain. But do we really think that a communist state has a lower pain resistance than a western democracy?
It’s definitely going to be an interesting week. I can see arguments on both sides.
Xi needs the distraction. His rule is not absolute and this year is when he is attempting to make himself king for life. Things in China are not going well, perma lockdown and the collapse of the savings plan of your entire country (real estate) don’t play well. Attacking Pelosi could definitely give the populous a distraction to get behind.
All that being said I think Russian invasion has given him pause. Russia should have been done with this take over by now and the consequences for Russia have not been trivial. China (unlike Russia) absolutely needs food and energy imports in addition to someone to export to. US sanctions would mean mass joblessness for them (absolute fear of the Chinese gov). In addition if the US sticks a carrier at the straight of Hormuz blocking oil China is done.
I give higher odds to Xi being all talk at this point...
Trying to read the tea leaves. So China less likely to invade until US plants build knowing US more likely to defend at this time as has no alternative?
Also seems hot war would damage the plants and also damage China’s economy as they depend on the chips as well
Does having ASML in Europe, which TSMC depend on, somewhat compensate strategically?
Don't know enough about it, guess you're asking if Europe would choose to side with the USA or China? No idea
The US has a variety of chip manufacturing capabilities coming within the next few years which should help with the semiconductor issues. In general, both TSMC and Samsung are working on 3nm tech using ASML lithography equipment, which that company is Netherlands based.
TSMC: Plant in Arizona operational 2024 (5nm)
Samsung: Plant in Texas operational 2024 (5nm, maybe 3nm?)
Intel: Arizona expansion (7nm, not sure of date), Ohio (not sure, but they're talking about getting the high-NA EUV - Extreme Ultraviolet Lithography machine from ASML around 2025 to leap frog into 2nm apparently).
Some decent sources:
https://seekingalpha.com/article/4479113-taiwan-semiconductor-a-clear-winner-at-7nm-nodes-versus-samsung-and-intel
https://arstechnica.com/tech-policy/2022/01/intel-says-ohio-megafab-will-begin-making-advanced-chips-in-2025/
Building up on your analysis, for sub 10nm chips, Taiwan's capacity market share is ~92%, rest being South Korea (Samsung)
https://www.stratfor.com/sites/default/files/styles/wv_small/public/CW-Global-Wafer-Fabrication-Capacity-07302021.png?itok=I9vntT_b
I can imagine war in Taiwan would send chip technology (and all complex electronics) back to 2010 in a wink
Do you think that American companies would stop buying the chips until they could be manufactured in the US?
No clue, have to see what the plan is but given the size and scope it would be a massive massive issue.
While Sam (below) says you can move some to Samsung, the capacity isn't there (volume). It's just math, you can't just "replace" 65% of the entire production. If Samsung is the other 35% (not sure if that's true didn't check) but assuming they are... they can't just triple production overnight.
No chance. Imagine the bottleneck that this scenario would create. They’d go to bed with China before even thinking of this
Not unless they plan to collapse the global economy.
Global economy is collapsing by design. It's not surprising if attacking Taiwan causes another hit
Short term would swap to South Korea (Samsung). While firmly in 2nd place they're only a little behind TSMC e.g. when TSMC was doing 7nm Samsung was on 8nm.