US, Europe 'unrealistic' in fab expansion drive, says TSMC chair

It may be true that TSMC and Samsung can meet demand during normal times, but it completely misses the point that NA and EU want significant production capacity locally not to reduce costs, but to secure a critical supply chain. Is this a situation where he may be concerned that significant expansion of production capability away from Taiwan and SK will reduce the West’s reliance on TSMC, which may be a security risk for TSMC or Taiwan? I’m nowhere near an expert on this sort of thing, I’m honestly curious.

TSMC is probably completely accurate. Their contention is that moving the supply chain would create &quot;non-profitable capacity&quot;. However, national supplies do not need to be profitable if they are subsidized or fully funded by a state.<p>The state is free to, and often does, engage in non-profitable production to ensure essential domestic needs can be satisfied.<p>This doesn&#x27;t make sense from a market perspective, but it can often make sense from a needs based perspective.

I think TSMC over estimates how state sponsored fabs would look like. I can predict now that it will be a disaster and many billions will be funnelled to bureaucrat friends through questionable procurement. If there is going to be a miracle and they actually build a fab, it will be lacking as they will not find specialists willing to work for EU wages and level of taxation.

Sounds like someone wants to hold onto unsustainable monopoly.<p>Edit: chip shortage has been a known variable for over a year now. I think TSM overplayed its hands a bit. They didn’t want to expand and get caught when the demand would subside, which is very understandable. But what they didn’t foresee is that the US govt would get involved in propping up its competition in direct response.

&quot;We built enough capacity for the world so you shouldn&#x27;t build any local capacity to ensure resiliency of supply chains because this will harm the current efficiency of our monopoly position.&quot;<p>These people are awful.<p>That&#x27;s like saying you should never use anything other than RAID0 because anything else costs you more for the same performance. Yeah, sometimes cost&#x2F;performance aren&#x27;t the only important metrics!<p>The pandemic has literally been a real-life example of the downsides of the approach he is advocating.

Semi is oil now, there&#x27;s more strategic&#x2F;geopolitical considerations than supply&#x2F;demand curve. US&#x2F;EU&#x2F;CN do not want Taiwan to have semi dominance, it&#x27;s not in anyone&#x27;s interest. Current TSMC position is happenstance due to poor industrial policies that countries are scrambling to address. IMO press releases and capex spending around Arizona announcement suggest TSMC wasn&#x27;t prepared to built US fab, let alone 6. US pressured them, EU failed to. There&#x27;s a good chance TSMC&#x2F;Taiwan will try to delay their silicon shield evaporating for as long as they can. Probably not a coincidence big ticket US weapons sales are scheduled around when fabs would be up. Future will be priority sourcing from domestic fabs, let TSMC whither, by design.

Is Liu misunderstanding the Western plans or am I? I was under the impression that the US and Europe intended to get <i>some</i> onshore fab capacity as a second-source and backup in case Taiwan is blockaded or worse.<p>If the plan was to replace TSMC entirely, well, I&#x27;d think he was justifiably concerned as (a) a threat to his business and (b) evidence that the US was decoupling from Taiwan. But I don&#x27;t think that&#x27;s the case.

It would be nice if they reported on the reasons given in support of the claims instead of just the claims on their own.

This gives a little overview: <a href="https:&#x2F;&#x2F;fortune.com&#x2F;2020&#x2F;08&#x2F;10&#x2F;us-china-trade-war-semiconductors-chips-tsmc-chipmakers&#x2F;" rel="nofollow">https:&#x2F;&#x2F;fortune.com&#x2F;2020&#x2F;08&#x2F;10&#x2F;us-china-trade-war-semiconduc...</a><p>Sounds like a tricky situation for everyone, don&#x27;t want to alienate Taiwan or Apple or China. And TSMC is building capacity in the US. It isn&#x27;t really a West vs. East game.

Doesn&#x27;t this imply that it would be unrealistic to create large amounts of new supply to satisfy local strategic needs in a global economy?<p>for a large market like the US&#x2F;Europe couldn&#x27;t they choose to not participate in the global market for chips? or tip the scales such that local competitors are favored?<p>I don&#x27;t see any reason why certain products couldn&#x27;t be on a sliding tariff scale dependent on how much is imported. 20-40% imports = no tariffs, 80% triggers a sliding tariff scale. This would allow for strategic preservation and global competition. Once you fully outsource an industry it&#x27;s hard for it to ever grow back - even if it makes sense for it too.

What is the distribution of education-level of workers at a typical fab? Is it like 90% researchers, or more like 90% production workers?

I think Liu is trying to dismiss the west’s concerns on the only basis that he can: the short term economics. In reality there is a more important strategic priority at the core of these initiatives, but that’s a whole lot harder to play down.

The whole world economy relies on 3 countries in balistic rocket range of each other; not great. Having foundries distributed around the world sounds way more resilient to any conflicts or disasters that might arise in that particular region.

As if like Champagne it can only be called a chip if made in Taiwan? GTFO

I guess they would say that, right?