The China Thread

[Jacob]

True enough, but congress could still declare war. Trump might look pretty bad if he vetos that (can he veto a declaration of war?)

[HVC]

True enough, but congress could still declare war. Trump might look pretty bad if he vetos that (can he veto a declaration of war?)

Why would they do so, though? They've seemed pretty reluctant to go against the wishes of the cheeto in chief.

[Jacob]

True enough, but it's part of the calculations Xi will have to be making.

[HVC]

True enough, but it's part of the calculations Xi will have to be making.

Fair.

On the grand scheme of things I never got china's obsession with Taiwan.  Its not like they'll ever wrest control over the mainland. But I guess nationalist pride isn't always logical.

[DGuller]

I imagine tech bros wouldn't be too thrilled about losing all the chip supplies.

[HVC]

I imagine tech bros wouldn't be too thrilled about losing all the chip supplies.

How are the plans for homegrown chips coming along? I'm guessing that's the real ticking clock for Taiwan.

[DGuller]

I imagine tech bros wouldn't be too thrilled about losing all the chip supplies.

How are the plans for homegrown chips coming along? I'm guessing that's the real ticking clock for Taiwan.

I suspect they won't come through anytime soon.  Making chips is not like making sneakers, it takes years and years of know-how accumulation to do it economically, and astronomical investments to do it at all.

[grumbler]

I imagine tech bros wouldn't be too thrilled about losing all the chip supplies.

I'm pretty sure that the tech bros think they can just buy them from CCP Taiwan.

[Tamas]

I imagine tech bros wouldn't be too thrilled about losing all the chip supplies.

Seeing how they have been acting, I am assuming in case of an imminent Chinese invasion they'll lobby Trump HARD to have him make it clear the US won't intervene and to coerce Taiwan into a surrender to spare those chips.

[DGuller]

I imagine tech bros wouldn't be too thrilled about losing all the chip supplies.

I'm pretty sure that the tech bros think they can just buy them from CCP Taiwan.

Doesn't Taian have plans to destroy the foundries?  If I heard about it, so have they.

[Baron von Schtinkenbutt]

I suspect they won't come through anytime soon.  Making chips is not like making sneakers, it takes years and years of know-how accumulation to do it economically, and astronomical investments to do it at all.

The issue is more complicated than often portrayed.  There are foundries all over the world.  However, TSMC in particular has three key features making them critical to the advanced integrated circuit market.

First, they currently have the most advanced process nodes in the world.  This is important for cutting-edge chips, especially GPUs.  It's less important for older generations.

Second, they have enormous capacity.  Gauging capacity is always a tricky thing, but from the available information TSMC's capacity, even for older processes, dwarfs pretty much everyone except Intel, Samsung, and possibly SMIC.

That leads to the third, and in my opinion most crucial, feature.  TSMC is a dedicated contract chipmaker.  They only manufacture chips for the fabless semiconductor companies.  This is important because they have the engineering experience taping out these third-party designs.  It's a different skillset than taping out designs for your company's own engineers, which the process engineers at integrated device manufacturers usually lack..  Samsung has some experience with this.  Despite being largely an integrated device manufacturer, they have done some contract work with their most advanced processes, particularly for Nvidia.  Intel, though, is a pure integrated device manufacturer, and their attempts at contract manufacturing in the past have not gone well.

It would be painful, but not impossible, to fall back on older chip designs that don't require TSMC's 5nm or smaller processes.  This is especially true in situations like the GeForce RTX 30 series that weren't manufactured by TSMC in the first place (capacity issues notwithstanding).  Also, TSMC has a 5nm line operating in Chandler, Arizona, and will have a 3nm line open there in the middle of next year.  So, there is some capacity outside Taiwan, and there will be more in the near future.  It's not nearly enough for demand, though.

The double whammy of losing all the capacity and contract manufacturing expertise in Taiwan is the killer.  Some of the expertise could be exported inf the shit hit the fan, but I would assume the worst case that all the knowledge stays bottled up in Taiwan with the fab capacity.  Samsung and Intel could help alleviate the pain of losing it, but Samsung is already overloaded with advanced memory chip demand, and Intel... is Intel, and has enough problems getting their own designs fabbed (though they have been a bit better in recent years).

That said...

I imagine tech bros wouldn't be too thrilled about losing all the chip supplies.

I'm pretty sure that the tech bros think they can just buy them from CCP Taiwan.

Doesn't Taian have plans to destroy the foundries?  If I heard about it, so have they.

In my opinion, the "destroy the foundries" thing is overplayed and not as significant as portrayed.  As I said above, I see the critical value of TSMC's operation being the combination of total capacity and contract manufacturing expertise.  The primary effect of sabotage would be to deny China the advanced process technology.  It would cripple capacity for a bit, but the biggest weakness in this strategy is SMIC.  They also have significant contract manufacturing experience, as well as process engineers experienced in some fairly advanced processes.  Not TSMC's cutting-edge stuff, but good enough to get most of TSMC's capacity back on line within a couple years.  The contract manufacturing experience also means they could step right in to the void, capacity permitting, to support the fabless companies.

The tech bros may be somewhat deluded in downplaying how severe the disruption would be, but to a degree they will be able to get their chips from new management.