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What's in TSMC's best interest is the long-term independence and stability of Taiwan. Taking away a strong source of motivation for an administration that's alr

by kick 6y ago

What's in TSMC's best interest is the long-term independence and stability of Taiwan. Taking away a strong source of motivation for an administration that's already shown itself to lean toward "stay out of other countries; America First!" as its official foreign policy stance to keep it independent and stable is so short-sighted that it's practically insane.

remarkEon 6y ago
Respectfully, I think you're reading this wrong. Long-term independence and stability of Taiwan is a political goal, not necessarily a corporate one. The political-corporate relationship in Taiwan is definitely different (or of a different flavor) than that in the USA right now, which makes this harder to parse for specific corporate objectives. In the aggregate, this could signal a willingness of the government in Taiwan to make bets (assuming they have to approve of things like this, I'm not 100% sure if that's true) that the long term goal (political independence) is best served by further entangling itself with the US. That's probably where the debate should exist.
- kick 6y ago
  I appreciate the good-natured disagreement! Long-term independence and stability of Taiwan is necessary for TSMC to keep existing. It's in its best interest to keep existing. I'm pretty sure the government doesn't need to approve of this sort of thing; VIA got away with it. Further entangling itself with the US would be keeping itself for the most part in Taiwan. "We have drastically better tech than you, and your military, intelligence agencies & universities really desperately need these!" is a fantastic incentive. "Here's a factory that allows the US to be pretty much self-sufficient and no longer dependent on us for the next few years while you haphazardly try and get on top of the world again" is not nearly as good of an incentive. Taiwan gets invaded yesterday, suddenly the US is in a sticky situation. Taiwan gets invaded when this factory is finished? 5nm vs 2-3nm isn't a huge difference.
  - remarkEon 6y ago
    Good point, on the last part. But I think the likelihood of an actual invasion of Taiwan is extraordinarily low. There's terrain and weather reasons for why any land invasion would be telegraphed well ahead of time and would be a complete bloodbath for any invading force. What is quite possible imo is an air bombardment as an attempt to force the Taiwanese government into capitulation. This would obviously precipitate a response from the US, and potentially other countries (not going to mention NATO here because I'm not really sure how useful that designation is in 2020 and beyond). So, maybe the bet is that US air/drone power is still a decade or so ahead of China's such that we'd still be able to repel any PRC attacks. And because of that, this is a gesture that signals a) they think that kind of attack is likely and b) because of (a) want to make sure they're on good terms with the American government and people. The history of US relations with Taiwan is a lot more cloudy than people really grok today, so that's my theory on why they're doing this. I suppose that doesn't really address your broader point though, which is a good one, that Taiwan does/did have leverage in this relationship with their higher-tech fabs being located within Taiwan exclusively. R&D will still be in Taipei, I imagine. Very quickly this becomes, in my mind, a human capital question.
    - magicsmoke 6y ago
      Agreed on the point that an amphibious invasion of Taiwan could quickly become more chaotic than the PRC wants. I think the PRC's strategy is probably to build up for a naval battle with the US Navy and use a victory to threaten a multi year blockade of Taiwan like the US did with Cuba. If China can secure naval dominance within the second island chain and a corridor across the Indian ocean to the Middle East and Africa they have all the time in the world to leave Taiwan in a pressure cooker.
      - remarkEon 6y ago
        Yes, this is a strategy I'd consider. "Invasion of Taiwan" is the wrong way to think about this. Blockade and isolation would be the objective, and then use that as a tax on US military resources to further sap an already overextended country. >If China can secure naval dominance within the second island chain Skeptical that they'll be able to do this though, unless it represents a significant change in naval operations and they achieve this via drone or other submarine operations. PLA has had a difficult time getting the aircraft carrier concept to work, even after buying several Soviet era carrier vessels (if my memory serves). It might be a false signal, but that they haven't gotten the aircraft carrier concept to work (which would of course be required for an air bombardment of Taiwan) might mean they're working on other naval hardware that exploits US weaknesses, and thus crippling any US Navy activity via submarine or missile warfare in the Taiwan Straight is the ultimate objective for the above mentioned reasons.
neetdeth 6y ago
Counterpoint: If the PRC takes over now, they own the process technology NVIDIA and AMD depend on. They can tell the Americans to go pound sand, good luck on your next supercomputer project, and dedicate all production to Chinese origin designs - with a helping of industrial espionage for a kick start. That’s a pretty powerful incentive for aggression that would be reduced if TSMC’s operations were more distributed. So it’s somewhat balanced out. I think the bigger problem is the assumption that Americans can properly safeguard Taiwanese IP. Anything you send over here you might as well cc: Beijing on the email.
- sudosysgen 6y ago
  China doesn't need that technology very badly, if they can just stay making CPUs they'll be able to figure a GPU architecture eventually. Don't forget that Chinese Kirin CPUs have and will outcompete Qualcomm and Samsung.
  - neetdeth 6y ago
    I don’t doubt it. There will be a slowing convergence and eventually one curve will overtake the other and one day a Chinese design is the fastest GPU. What I’m talking about is the capability of instantly kneecapping the US tech industry. A sudden differential advantage created by denying capabilities to your adversary. That’s what makes the current semiconductor situation a geopolitical tinder box.
- kick 6y ago
  Counterpoint: If the PRC takes over now, they own the process technology NVIDIA and AMD depend on. They can tell the Americans to go pound sand, good luck on your next supercomputer project, and dedicate all production to Chinese origin designs - with a helping of industrial espionage for a kick start. This should terrify the US, which is the ideal. The US needs to go to bat for Taiwan, which won't happen when they have less incentive to. China is willing to take independent countries for lesser and pettier reasons than semiconductors. Look what they've done to Hong Kong. Taiwan's been a thorn in its side for years. Distribute it around, China will still want to take Taiwan, the US has less of a reason to go to bat for it.
yaantc 6y ago
This new fab capacity will only be a small fraction of TSMC total capacity, and nowhere near enough to serve the US domestic needs. So it won't really change the economic dependency on Taiwan fabs. It will provide some local US support for sensitive military chips however. And it lets TSMC gains goodwill from the US, which they can try to use to continue serving Chinese customers (Huawei is a big client). So overall, not necessarily a bad move for TSMC and Taiwan. Nice balancing of conflicting demands.

by kick 6y ago

remarkEon 6y ago

Respectfully, I think you're reading this wrong. Long-term independence and stability of Taiwan is a political goal, not necessarily a corporate one. The political-corporate relationship in Taiwan is definitely different (or of a different flavor) than that in the USA right now, which makes this harder to parse for specific corporate objectives. In the aggregate, this could signal a willingness of the government in Taiwan to make bets (assuming they have to approve of things like this, I'm not 100% sure if that's true) that the long term goal (political independence) is best served by further entangling itself with the US. That's probably where the debate should exist.

kick 6y ago
I appreciate the good-natured disagreement! Long-term independence and stability of Taiwan is necessary for TSMC to keep existing. It's in its best interest to keep existing. I'm pretty sure the government doesn't need to approve of this sort of thing; VIA got away with it. Further entangling itself with the US would be keeping itself for the most part in Taiwan. "We have drastically better tech than you, and your military, intelligence agencies & universities really desperately need these!" is a fantastic incentive. "Here's a factory that allows the US to be pretty much self-sufficient and no longer dependent on us for the next few years while you haphazardly try and get on top of the world again" is not nearly as good of an incentive. Taiwan gets invaded yesterday, suddenly the US is in a sticky situation. Taiwan gets invaded when this factory is finished? 5nm vs 2-3nm isn't a huge difference.
- remarkEon 6y ago
  Good point, on the last part. But I think the likelihood of an actual invasion of Taiwan is extraordinarily low. There's terrain and weather reasons for why any land invasion would be telegraphed well ahead of time and would be a complete bloodbath for any invading force. What is quite possible imo is an air bombardment as an attempt to force the Taiwanese government into capitulation. This would obviously precipitate a response from the US, and potentially other countries (not going to mention NATO here because I'm not really sure how useful that designation is in 2020 and beyond). So, maybe the bet is that US air/drone power is still a decade or so ahead of China's such that we'd still be able to repel any PRC attacks. And because of that, this is a gesture that signals a) they think that kind of attack is likely and b) because of (a) want to make sure they're on good terms with the American government and people. The history of US relations with Taiwan is a lot more cloudy than people really grok today, so that's my theory on why they're doing this. I suppose that doesn't really address your broader point though, which is a good one, that Taiwan does/did have leverage in this relationship with their higher-tech fabs being located within Taiwan exclusively. R&D will still be in Taipei, I imagine. Very quickly this becomes, in my mind, a human capital question.
  - magicsmoke 6y ago
    Agreed on the point that an amphibious invasion of Taiwan could quickly become more chaotic than the PRC wants. I think the PRC's strategy is probably to build up for a naval battle with the US Navy and use a victory to threaten a multi year blockade of Taiwan like the US did with Cuba. If China can secure naval dominance within the second island chain and a corridor across the Indian ocean to the Middle East and Africa they have all the time in the world to leave Taiwan in a pressure cooker.
    - remarkEon 6y ago
      Yes, this is a strategy I'd consider. "Invasion of Taiwan" is the wrong way to think about this. Blockade and isolation would be the objective, and then use that as a tax on US military resources to further sap an already overextended country. >If China can secure naval dominance within the second island chain Skeptical that they'll be able to do this though, unless it represents a significant change in naval operations and they achieve this via drone or other submarine operations. PLA has had a difficult time getting the aircraft carrier concept to work, even after buying several Soviet era carrier vessels (if my memory serves). It might be a false signal, but that they haven't gotten the aircraft carrier concept to work (which would of course be required for an air bombardment of Taiwan) might mean they're working on other naval hardware that exploits US weaknesses, and thus crippling any US Navy activity via submarine or missile warfare in the Taiwan Straight is the ultimate objective for the above mentioned reasons.

neetdeth 6y ago

Counterpoint: If the PRC takes over now, they own the process technology NVIDIA and AMD depend on. They can tell the Americans to go pound sand, good luck on your next supercomputer project, and dedicate all production to Chinese origin designs - with a helping of industrial espionage for a kick start. That’s a pretty powerful incentive for aggression that would be reduced if TSMC’s operations were more distributed. So it’s somewhat balanced out. I think the bigger problem is the assumption that Americans can properly safeguard Taiwanese IP. Anything you send over here you might as well cc: Beijing on the email.

sudosysgen 6y ago
China doesn't need that technology very badly, if they can just stay making CPUs they'll be able to figure a GPU architecture eventually. Don't forget that Chinese Kirin CPUs have and will outcompete Qualcomm and Samsung.
- neetdeth 6y ago
  I don’t doubt it. There will be a slowing convergence and eventually one curve will overtake the other and one day a Chinese design is the fastest GPU. What I’m talking about is the capability of instantly kneecapping the US tech industry. A sudden differential advantage created by denying capabilities to your adversary. That’s what makes the current semiconductor situation a geopolitical tinder box.
kick 6y ago
Counterpoint: If the PRC takes over now, they own the process technology NVIDIA and AMD depend on. They can tell the Americans to go pound sand, good luck on your next supercomputer project, and dedicate all production to Chinese origin designs - with a helping of industrial espionage for a kick start. This should terrify the US, which is the ideal. The US needs to go to bat for Taiwan, which won't happen when they have less incentive to. China is willing to take independent countries for lesser and pettier reasons than semiconductors. Look what they've done to Hong Kong. Taiwan's been a thorn in its side for years. Distribute it around, China will still want to take Taiwan, the US has less of a reason to go to bat for it.

yaantc 6y ago

This new fab capacity will only be a small fraction of TSMC total capacity, and nowhere near enough to serve the US domestic needs. So it won't really change the economic dependency on Taiwan fabs. It will provide some local US support for sensitive military chips however. And it lets TSMC gains goodwill from the US, which they can try to use to continue serving Chinese customers (Huawei is a big client). So overall, not necessarily a bad move for TSMC and Taiwan. Nice balancing of conflicting demands.