US, Europe 'unrealistic' in fab expansion drive, says TSMC chair • Hacker News Board

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

#41

Post by dylan604 » Thu, Apr 01, 2021, 5:11 PM UTC

lainga wrote: post #8

Is Liu misunderstanding the Western plans or am I? I was under the impression that the US and Europe intended to get some onshore fab capacity as a second-source and backup in case Taiwan is blockaded or worse. If the plan was to replace TSMC entirely, well, I'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't think that's the case…

If you went to the trouble of building this capability to produce chips, why in the world you not make that your primary source?

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

#42

Post by tehjoker » Thu, Apr 01, 2021, 5:14 PM UTC

ffggvv wrote: post #36

blueblisters wrote: post #34

Earlier quoted context omitted.

Won't this lead to innovation grinding to a halt? Right now TSMC has a decent profit margin to re-invest into newer technologies. If the margins become thinner, the industry will find it difficult to set aside R&D dollars for the newest technologies. Of course, you can always have a newcomer who can disrupt the market but most Moore's law advancements appear to happen in government funded research labs and large semi…

IMO its just smart in case china tries to annex taiwan or initiates military moves and then we're cut off from semiconductors.

This is correct, but imo it is far more likely for the US (the largest military power in the world) to start something. No need to be hyper nationalistic about this.

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

#43

Post by jandrese » Thu, Apr 01, 2021, 5:14 PM UTC

blueblisters wrote: post #34

tehjoker wrote: post #30

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

Won't this lead to innovation grinding to a halt? Right now TSMC has a decent profit margin to re-invest into newer technologies. If the margins become thinner, the industry will find it difficult to set aside R&D dollars for the newest technologies. Of course, you can always have a newcomer who can disrupt the market but most Moore's law advancements appear to happen in government funded research labs and large semi…

Companies can still invest in R&D even if they aren't a monopoly.

Note that this announcement comes right on the heels of TSMC announcing that they aren't reducing their prices this year.

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

#44

Post by mensetmanusman » Thu, Apr 01, 2021, 5:14 PM UTC

tehjoker wrote: post #38

blueblisters wrote: post #34

Earlier quoted context omitted.

Won't this lead to innovation grinding to a halt? Right now TSMC has a decent profit margin to re-invest into newer technologies. If the margins become thinner, the industry will find it difficult to set aside R&D dollars for the newest technologies. Of course, you can always have a newcomer who can disrupt the market but most Moore's law advancements appear to happen in government funded research labs and large semi…

Not necessarily. Most innovation is state funded in general. Real innovation requires either monopoly profits or state funding because otherwise research must necessarily be directed towards short term payoffs. Investors will not tolerate time lines of 10+ years and hundreds of millions to billions of dollars sunk.

Most ‘expensive basic’ innovation is state funded.

Most short-term <10 year innovation is industry funded.

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

#45

Post by 533474 » Thu, Apr 01, 2021, 5:16 PM UTC

tehjoker wrote: post #38

blueblisters wrote: post #34

Earlier quoted context omitted.

Won't this lead to innovation grinding to a halt? Right now TSMC has a decent profit margin to re-invest into newer technologies. If the margins become thinner, the industry will find it difficult to set aside R&D dollars for the newest technologies. Of course, you can always have a newcomer who can disrupt the market but most Moore's law advancements appear to happen in government funded research labs and large semi…

Not necessarily. Most innovation is state funded in general. Real innovation requires either monopoly profits or state funding because otherwise research must necessarily be directed towards short term payoffs. Investors will not tolerate time lines of 10+ years and hundreds of millions to billions of dollars sunk.

Do you mean healthy profit margins?...because I'd rather prefer a combination of big profits, state subsidies and healthy competition than a monopolised/oligopolised market

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

#46

Post by badloginagain » Thu, Apr 01, 2021, 5:16 PM UTC

tehjoker wrote: post #30

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

If governments are looking at Chinese-Taiwan relations, and gaming the result of an occupied Taiwan, those supply chains become profitable pretty damn quickly.

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

#47

Post by tehjoker » Thu, Apr 01, 2021, 5:18 PM UTC

mensetmanusman wrote: post #44

tehjoker wrote: post #38

Earlier quoted context omitted.

Not necessarily. Most innovation is state funded in general. Real innovation requires either monopoly profits or state funding because otherwise research must necessarily be directed towards short term payoffs. Investors will not tolerate time lines of 10+ years and hundreds of millions to billions of dollars sunk.

Most ‘expensive basic’ innovation is state funded. Most short-term <10 year innovation is industry funded.

True, that's because the system is designed to subsidize expensive research and let industry exploit cheap research. It makes no sense to think that state funding, having already done the heavy lifting, can't do the last mile.

Industry mainly provides access to the scalable means of production for tinkering, which can be owned by anyone, not just industrialists.

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

#48

Post by tehjoker » Thu, Apr 01, 2021, 5:20 PM UTC

533474 wrote: post #45

tehjoker wrote: post #38

Earlier quoted context omitted.

Not necessarily. Most innovation is state funded in general. Real innovation requires either monopoly profits or state funding because otherwise research must necessarily be directed towards short term payoffs. Investors will not tolerate time lines of 10+ years and hundreds of millions to billions of dollars sunk.

Do you mean healthy profit margins?...because I'd rather prefer a combination of big profits, state subsidies and healthy competition than a monopolised/oligopolised market

Unfortunately, I did mean monopoly profits. In a non-monopoly situation, competition exists which forces market participants to constantly reduce costs and compete on quality or price. Eventually, a single or few participants will be left standing as the others fail and the the remaining ones engage in a process of buying their supplies and workers at discount prices. This is not an environment that supports long term thinking.

There might be an exception here and there, but there will be some structural reason why long term planning is possible (such as competition not being able to step on each others toes). It's not true in the general case.

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

#49

Post by MomoXenosaga » Thu, Apr 01, 2021, 5:23 PM UTC

atty wrote: post #9

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…

Ah yes interesting point. Obviously TSMC and the Taiwanese government want to maintain their quasi monopoly for economic reasons. But there is also a military component: is Taiwan still worth fighting over?

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

#50

Post by tehjoker » Thu, Apr 01, 2021, 5:27 PM UTC

badloginagain wrote: post #46

tehjoker wrote: post #30

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

If governments are looking at Chinese-Taiwan relations, and gaming the result of an occupied Taiwan, those supply chains become profitable pretty damn quickly.

If China took Taiwan, they would be selling to the rest of the world most likely. However, perhaps they are planning for a case where the US bombed the crown jewels to maintain supremacy. That would create profits for a domestic sector.

The USG is perfectly happy to spend taxpayer money and foreigners' money to make their corporate constituency happy even if the financial equation is overall negative.