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.<p>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.
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.<p>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.<p>Governments stepping in to subsidise/force use of other companies will likely reduce the short term profitability or commercial appeal of your product.
Here is another headline, The world relies on two chip marker in South Korea for NAND and DRAM, leaving Everyone Vulnerable.<p>Although arguably NAND and DRAM are commodities, and US already has a back up strategy ( Micron ).
While the world wouldn't grind to a complete halt without Taiwan, they are a (the?) major player in high end chips.<p>While not 100% watching it I feel as though China<-->US relations have whole strategies around Taiwan.<p>Of course, if war over Taiwan breaks out, I plan to hit up my local computer shop, preferably within the hour.
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.<p>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.<p>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.
Reminds me of Asimov's "Foundation" (<a href="https://en.wikipedia.org/wiki/Foundation_series" rel="nofollow">https://en.wikipedia.org/wiki/Foundation_series</a>).<p>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.<p>And the Foundation itself: highly advanced technology that those very powers came to rely on...
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).
Why is news like this not driving the stock price up?<p>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.
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.