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TSMC head says drive to onshore chip supply chain is 'unrealistic'

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Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#101

Post by joe_the_user »

gnulinux wrote: post #6

Well, of course, TSMC doesn't want chip supplies to be onshored. It's everyone other than TSMC and Taiwan willing to do so. West wants to have reliable access to chips without potential war with China. In addition to geopolitics, wouldn't overproduction of chips be beneficial to consumers in the form of cheaper chips and greater variety?

The thing about chips that is causing all the paradoxical effects we're seeing is that chip production extraordinarily specialized and capital intensive. You can't just build more chips - you have to build more chip factories for the type of chip you want. And if you build more chip factories than you need or factories of the wrong type, some of those factories will be unprofitable, will shutdown, at high cost, and then you will have fewer chips than you need, again.

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#102

Post by pphysch »

jaywalk wrote: post #25
flyinglizard wrote: post #11

Earlier quoted context omitted.

Vague geopolitical considerations are very secondary and policy dependent compared to the real and abrupt chaos which will ensue if TSMC is taken out.

This is exactly correct. If China took out TSMC, we would have an unimaginable global catastrophe on our hands that would make Covid look like nothing. There are far too many eggs in that basket.

This is absurd. No, we definitely wouldn't. Most people wouldn't notice if TSMC disappeared.

In a couple years they might go, hey, why isn't my iPhone 42 any faster than my iPhone 35.

But most devices and datacenters would keep running for literally years. Occasionally there would be a disaster that is hard to recover from due to missing supplier inventory. The average warranty on such devices is like 3 years, and many can perform long beyond that.

This should be compared with critical commodities like oil. The oil produced yesterday will not last anywhere close to 3 years. Mass starvation would happen within weeks if the oil supply was cut off.

Not to mention a lot of critical technology doesn't need <10nm chips, and can use less advanced chips manufactured outside of TSMC.

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#103

Post by 55873445216111 »

rednerrus wrote: post #88
joenathanone wrote: post #77

Earlier quoted context omitted.

The lithography machines and factories are prohibitively expensive, it can take years of production to break even, if you over build you may just end up in the red. Additionally the fabs have a limited lifespan when they are cutting edge and able to produce premium chips.

Then shouldn't the government be involved in ensuring we have what's necessary? Seems like strategic reserves are in order here.

In practical terms, the government is just too slow to actually help. They always shoot behind the target. The semiconductor market is cyclical. By the time the CHIPS Act, etc, actually get passed and implemented, the market will already be in oversupply and voters/politicians will complain about government handouts for these companies.

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#104

Post by JumpCrisscross »

dragontamer wrote: post #45
jacobolus wrote: post #40

Earlier quoted context omitted.

How useful are anti-ship missiles in Ishigaki Island (Japan), Batanes (Philippines), etc.? If Taiwan is loaded with anti-ship missiles, cruise missiles, naval mines, loitering munitions, artillery, modern fighter jets, etc., any Chinese invasion is at the very least going to come at very steep cost in life/military hardware. And then the economic costs (to everyone in the world) are going to be extreme.

> How useful are anti-ship missiles in Ishigaki Island (Japan), Batanes (Philippines), etc.? Better than nothing, but the Chinese mainland has literal highways and railroads to deliver more-and-more missiles. When all else is equal, the winner is decided by logistics. Who can "deliver" more missiles to a location first? I'm willing to bet that Chinese highways and Chinese railroads have superior logistics / delivery…

> When all else is equal, the winner is decided by logistics

Which is why it’s almost public policy that the opening salvos of this war would involve raining down missile fire on those logistical chains.

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#105

Post by cjsplat »

55873445216111 wrote: post #51
gnulinux wrote: post #6

Well, of course, TSMC doesn't want chip supplies to be onshored. It's everyone other than TSMC and Taiwan willing to do so. West wants to have reliable access to chips without potential war with China. In addition to geopolitics, wouldn't overproduction of chips be beneficial to consumers in the form of cheaper chips and greater variety?

Historically, excess wafer fab capacity is what bankrupts semiconductor companies. An underloaded fab very rapidly eats up profit. Over the last 10 years, the industry has become very cautious not to overbuild capacity. We have now arrived at the opposite end of the long term (~10 year) cycle and we have accumulated a serious underinvestment in capacity.

The wash out in the memory industry was generally the opposite.

DRAM was a boom and bust market and during bust/oversupply windows vendors that under invested in the next node technology got washed out when the next boom cycle happened. When the market is high volume, price per bit, and new nodes are every 2 or 3 years, you can't really compete it your are nearly 2x as expensive (30% linear improvement => 70% squared cost per bit).

Of course you need to survive the dry times, but you make maximum margin when you are on the next fab node and your competition isn't.

I think what you are saying makes more sense when applied to contract manufacturers than all semiconductor companies.

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#106

Post by potta_coffee »

dragontamer wrote: post #27
JumpCrisscross wrote: post #18

Earlier quoted context omitted.

> Taiwan will be surrounded by half a dozen Chinese aircraft carriers Every time U.S. aircraft carriers enter a discussion, the reams of developments in anti-ship missile and swarming tactics with aerial or maritime drones (or fast boats) comes up.

That's because China can launch anti-ship missiles from any Chinese highway to threaten US Carriers. In contrast, the weapon-platforms of Taiwan / US Navy are simply more constrained. Sure, US Destroyers / Cruisers are good missile platforms and US Aircraft Carriers / F35 fighters are also good delivery mechanisms for anti-ship missiles... But China has the advantage of land-based missiles, land-based air force, AND…

This is precisely why USMC infantry training pivoted back toward more traditional (for the Marines) landing tactics in the Pacific, away from desert operations.

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#107

Post by etiam »

pavon wrote: post #74
flyinglizard wrote: post #11

Earlier quoted context omitted.

Vague geopolitical considerations are very secondary and policy dependent compared to the real and abrupt chaos which will ensue if TSMC is taken out.

On the other hand, if China assumes control of Taiwan and TSMC with it, that need not have any impact on the rest of the world. Rather, it would provide a strong financial incentive not to push back as hard on China as we have on Russia. In other words, part of the desire to onshore chip fabrication (and other manufacturing) is in part so we can sanction China harder if need be. Dependence on TSMC weakens our resolve…

"Taiwan should destroy TSMC if invaded, suggests US military paper"

https://news.ycombinator.com/item?id=31012442

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#108

Post by pphysch »

themgt wrote: post #54
pphysch wrote: post #7

Earlier quoted context omitted.

This is an oft-repeated meme that doesn't align with the historical facts. TSMC is a distant secondary factor in the geopolitical competition over Taiwan, which is a continuation of the Chinese civil war that started in 1927 and has never officially ended. If TSMC didn't exist, or was located in e.g. Vietnam, Taiwan would still be a vital strategic asset in Washington's stated policy to contain Communist China (as pa…

The problem is TSMC points a gun back at us. Look at the Ukraine playbook: "ok Russia go ahead and try to invade, we'll turn it into a bloodbath for you while we cut you off from as much of the global economy as possible" The threat to wreck China's economy if they invade becomes a lot less credible when we'll be cutting the legs of the entire global economy in the bargain. It becomes more of a mutual suicide pact an…

Again, this narrative doesn't align with the facts.

Suppose TSMC never existed. USA would still be totally economically dependent on China in 2022. If USA declares war on China, USA will have an acute economic crisis within weeks due to half a trillion $ in missing imports. This has nothing to do with chips from TSMC.

The geopolitical leverage of TSMC is vastly overstated by people who get their geopolitics from geopolitical non-experts like Zeihan and Stratechery.

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#109

Post by 55873445216111 »

hoseja wrote: post #55
55873445216111 wrote: post #51

Earlier quoted context omitted.

Historically, excess wafer fab capacity is what bankrupts semiconductor companies. An underloaded fab very rapidly eats up profit. Over the last 10 years, the industry has become very cautious not to overbuild capacity. We have now arrived at the opposite end of the long term (~10 year) cycle and we have accumulated a serious underinvestment in capacity.

Why isn't it possible to do this industry at less than razor edge?

It takes >$10B and >2 years to build a fab which will be effectively obsolete ~2 years after it opens. If it doesn't open on schedule or is underloaded, the ROI goes negative almost immediately. (I somewhat oversimplified this of course but it's to make the point.)

Re: TSMC head says drive to onshore chip supply chain is 'unrealistic'

#110

Post by potta_coffee »

dahdum wrote: post #59
dragontamer wrote: post #27

Earlier quoted context omitted.

That's because China can launch anti-ship missiles from any Chinese highway to threaten US Carriers. In contrast, the weapon-platforms of Taiwan / US Navy are simply more constrained. Sure, US Destroyers / Cruisers are good missile platforms and US Aircraft Carriers / F35 fighters are also good delivery mechanisms for anti-ship missiles... But China has the advantage of land-based missiles, land-based air force, AND…

> There's a mild expectation that if a Chinese / Taiwan fight were to occur, US Marines might be forced to make landings in the Chinese mainland to destroy Chinese land-based missile forces and even the odds. That sounds remarkably unlikely and irrational. If China touched the US mainland it would mean immediate full-scale war, the opposite should be assumed.

We've had two world wars that in retrospect seem remarkably unlikely and irrational, insane even.
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