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It's interesting how all the actions the author thinks China will take involves military coercion of Taiwan in some form. When all you know how to use is a hamm

It's interesting how all the actions the author thinks China will take involves military coercion of Taiwan in some form. When all you know how to use is a hammer, every problem looks like a nail. The idea that China could build an alternative to TSMC instead of trying to take it apparently doesn't compute.

dathinab 6y ago
The author did mention that China is trying to do so since a while but is not quite there yet.
Teever 6y ago
> When all you know how to use is a hammer, every problem looks like a nail. you're implying that the author has violent predispositions?
- joshuaissac 6y ago
  I think the commenter is suggesting that the author's understanding of China's military/retaliatory capability against Taiwan is his "hammer", so his predictions of Chinese actions may be biased accordingly.
blackrock 6y ago
Exactly. Taiwan is really useless in regards to CPU manufacturing for China. Why? Assuming people thinks that China will invade Taiwan just to take over TSMC, then what? 1) TSMC doesn’t build the tools that builds the microchips. In fact, they probably don’t even know how to build it, or even know the optical science to research and develop it. That dubious honor goes to ASML, and some other Japanese companies. But ASML, the euro company is currently in the lead for 5nm. TSMC just knows how to use their machine, and to get better at it. And to be clear, ASML doesn’t know how to manufacture the chips like TSMC can, so both companies need each other, in a symbiotic type of relationship. 2) In the event of war, then the losing side can just bomb TSMC factories. Then everyone is screwed. No more advanced microchips for anyone. 3) If China succeeds in invading Taiwan, then the USA will just force ASML to stop selling their equipment to China, like they already do now. So, China is back at square one. They might have the current technology, but no ability to advance to newer technologies. The only viable solution for China, is to build their own chip making tools, and fabrication factories. Thus removing ASML and TSMC from the equation completely. Also, they will gain independent Intellectual Property rights and patents to their own indigenous R&D. The American government is apparently thinking that China doesn’t have the skills to do this.
- jbay808 6y ago
  Can the US actually prevent ASML from selling equipment to China? ASML is not American. Also, given how obscenely expensive a war would be, couldn't China save money by just hiring the entirety of TSMC's and ASML's technical staff at 10x the market rate for ten years? Paying a premium to headhunt technical experts is a tried-and-true method of catching up to a front-runner. In fact, both Taiwan and South Korea did this, poaching underpaid Japanese talent.
  - davrosthedalek 6y ago
    The US not directly, but certainly EU can. And if China actually starts a war, it is likely that the EU would be rather opposed to helping China.
  - joshuaissac 6y ago
    >Can the US actually prevent ASML from selling equipment to China? ASML is not American. Yes. ASML is integrated into the dollar-based global financial system, so it will have to respect American financial sanctions. This is the same way that such sanctions against Iran and North Korea work.
    - hectormalot 6y ago
      ASML can sell if they want, but indeed the US has a lot of ways to make that unattractive. Case in point, the US has recently started pressuring the Dutch Government to prevent sales by ASML to China. I think the current stance is that they (Gov + ASML) are still considering how to proceed. An interesting aspect though: I think the technological superiority of ASML is a big asset in these discussions. e.g. If the US would follow up on a threat of sanctions against ASML (e.g. banning US companies from working with ASML) it would hit the US semiconductor industry quite hard (particularly Intel), while non-US players (e.g. TSMC) could continue producing with euv. In effect, they would have to go much further to keep some similarity of a level playing field: e.g banning all products containing chips produced on ASML machines. That would hit a lot more companies, many of them US based too. Creating even more reasons for the US Gov to not to take such drastic steps. Therefore I expect that it is much more likely they'll use pressure on the EU / NL government systems to force the behaviour they want, compared to economic sanctions vs ASML. > ASML is integrated into the dollar-based global financial system, so it will have to respect American financial sanctions I'm no expert, but if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The dollar is convenient, not a requirement.
catalogia 6y ago
Is a TSMC fab such an easy thing to even take? I expect it could be sabotaged easily by the US or Taiwan if there were an imminent threat of it being captured by PRC forces.
- microcolonel 6y ago
  I've been told that they have a contingency for this, that much of the design collateral is literally rigged for destruction. And I'm inclined to believe it: TSMC guaranteeing that PRC would fail to capitalize on their assets if they invaded Taiwan is a primary national security concern for the Republic of China.
  - catalogia 6y ago
    It seems believable to me. I've heard some other countries (South Korea, and Switzerland maybe?) have/had bridges rigged to blow up or mountain passes rigged to be blocked by massive concrete structures above them.
    - welterde 6y ago
      In Germany certain bridges were also rigged with explosives during the cold war. But they have since been removed.
    - skissane 6y ago
      North of Sydney, Australia, there is a 1.69km (just over 1 mile) long railway tunnel on the main northern railway line called the Woy Woy Tunnel. During WW2, a short additional tunnel was dug above the tunnel entrance, to be filled with explosives in order to blow it up. This was so that if Japan invaded, the Japanese military would not be able to use the railway line to help them invade Sydney. The feared Japanese land invasion never came, the explosives were never detonated, but the tunnel dug for the explosives is still there today: https://en.wikipedia.org/wiki/File:Interior_of_World_War_2_demolition_tunnel_above_the_northern_portal_of_the_Woy_Woy_railway_tunnel.JPG https://en.wikipedia.org/wiki/File:Interior_of_World_War_2_d... https://en.wikipedia.org/wiki/File:Interior_of_World_War_2_demolition_tunnel_above_the_northern_portal_of_the_Woy_Woy_railway_tunnel.JPG https://en.wikipedia.org/wiki/File:Interior_of_World_War_2_d...
sbmthakur 6y ago
> The idea that China could build an alternative to TSMC instead of trying to take it apparently doesn't compute. The author does point out that it will take years for any new replacement to reach TMSC's capacity.
- rbecker 6y ago
  Time flies, and China has proven it's willing to stand behind investments for 'years'.
T-A 6y ago
https://technode.com/2020/05/22/smic-to-the-rescue-huawei-shouldnt-hold-its-breath-experts/ https://technode.com/2020/05/22/smic-to-the-rescue-huawei-sh... https://www.cnbc.com/2019/08/06/smic-chinas-biggest-chipmaker-is-still-years-behind-its-rivals.html https://www.cnbc.com/2019/08/06/smic-chinas-biggest-chipmake...
monocasa 6y ago
That's what in fact what they're doing. SMIC is in 14nm risk production, and aggressively working on EUV.
- AnthonyMouse 6y ago
  We're also rapidly hurtling towards the end of transistor scaling, full stop. When "start of the art" stops being a moving target, how long before everybody has it? We're still several years from that, but probably not several decades from it.
  - monocasa 6y ago
    I'm actually pretty curious to see what happens then, and don't have a great answer. Where I'm at currently is that I imagine anyone who wants a leading edge fab for geopolitical reasons will have one, but not much beyond that except the legacy cases like Samsung and TSMC. It'll still be in the ~$20B to create a fab, and for what at the end of the day? Slightly better (probably single digit) margins for what has essentially become a commodity anyways? Beyond militaries that can foot the massive bill to be assured that they're getting the chips they certified, nearly everyone else will have better options to invest in to differentiate themselves. For instance a great question is if the EU thinks a fab is worth the effort? Probably not in today's climate, and would most likely be a sign of the end of US geopolitical domination if they do feel the need.
    - SomaticPirate 6y ago
      Bryan Cantrill has a great talk on this and the end of scaling https://youtu.be/TM9h89Vo_Qo https://youtu.be/TM9h89Vo_Qo It really seems like we are going to see new architecture paradigms emerge and start seeing more powerful compute in smaller places.
    - ChuckNorris89 6y ago
      >For instance a great question is if the EU thinks a fab is worth the effort? Most EU countries have fabs, even small countries like Switzerland and Austria although they're not as cutting edge as TSMC.
rezeroed 6y ago
Perhaps the thought is, controlling TSMC controls supply to other countries.

dathinab 6y ago

The author did mention that China is trying to do so since a while but is not quite there yet.

Teever 6y ago

> When all you know how to use is a hammer, every problem looks like a nail. you're implying that the author has violent predispositions?

joshuaissac 6y ago
I think the commenter is suggesting that the author's understanding of China's military/retaliatory capability against Taiwan is his "hammer", so his predictions of Chinese actions may be biased accordingly.

blackrock 6y ago

Exactly. Taiwan is really useless in regards to CPU manufacturing for China. Why? Assuming people thinks that China will invade Taiwan just to take over TSMC, then what? 1) TSMC doesn’t build the tools that builds the microchips. In fact, they probably don’t even know how to build it, or even know the optical science to research and develop it. That dubious honor goes to ASML, and some other Japanese companies. But ASML, the euro company is currently in the lead for 5nm. TSMC just knows how to use their machine, and to get better at it. And to be clear, ASML doesn’t know how to manufacture the chips like TSMC can, so both companies need each other, in a symbiotic type of relationship. 2) In the event of war, then the losing side can just bomb TSMC factories. Then everyone is screwed. No more advanced microchips for anyone. 3) If China succeeds in invading Taiwan, then the USA will just force ASML to stop selling their equipment to China, like they already do now. So, China is back at square one. They might have the current technology, but no ability to advance to newer technologies. The only viable solution for China, is to build their own chip making tools, and fabrication factories. Thus removing ASML and TSMC from the equation completely. Also, they will gain independent Intellectual Property rights and patents to their own indigenous R&D. The American government is apparently thinking that China doesn’t have the skills to do this.

jbay808 6y ago
Can the US actually prevent ASML from selling equipment to China? ASML is not American. Also, given how obscenely expensive a war would be, couldn't China save money by just hiring the entirety of TSMC's and ASML's technical staff at 10x the market rate for ten years? Paying a premium to headhunt technical experts is a tried-and-true method of catching up to a front-runner. In fact, both Taiwan and South Korea did this, poaching underpaid Japanese talent.
- davrosthedalek 6y ago
  The US not directly, but certainly EU can. And if China actually starts a war, it is likely that the EU would be rather opposed to helping China.
- joshuaissac 6y ago
  >Can the US actually prevent ASML from selling equipment to China? ASML is not American. Yes. ASML is integrated into the dollar-based global financial system, so it will have to respect American financial sanctions. This is the same way that such sanctions against Iran and North Korea work.
  - hectormalot 6y ago
    ASML can sell if they want, but indeed the US has a lot of ways to make that unattractive. Case in point, the US has recently started pressuring the Dutch Government to prevent sales by ASML to China. I think the current stance is that they (Gov + ASML) are still considering how to proceed. An interesting aspect though: I think the technological superiority of ASML is a big asset in these discussions. e.g. If the US would follow up on a threat of sanctions against ASML (e.g. banning US companies from working with ASML) it would hit the US semiconductor industry quite hard (particularly Intel), while non-US players (e.g. TSMC) could continue producing with euv. In effect, they would have to go much further to keep some similarity of a level playing field: e.g banning all products containing chips produced on ASML machines. That would hit a lot more companies, many of them US based too. Creating even more reasons for the US Gov to not to take such drastic steps. Therefore I expect that it is much more likely they'll use pressure on the EU / NL government systems to force the behaviour they want, compared to economic sanctions vs ASML. > ASML is integrated into the dollar-based global financial system, so it will have to respect American financial sanctions I'm no expert, but if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The dollar is convenient, not a requirement.

catalogia 6y ago

Is a TSMC fab such an easy thing to even take? I expect it could be sabotaged easily by the US or Taiwan if there were an imminent threat of it being captured by PRC forces.

microcolonel 6y ago
I've been told that they have a contingency for this, that much of the design collateral is literally rigged for destruction. And I'm inclined to believe it: TSMC guaranteeing that PRC would fail to capitalize on their assets if they invaded Taiwan is a primary national security concern for the Republic of China.
- catalogia 6y ago
  It seems believable to me. I've heard some other countries (South Korea, and Switzerland maybe?) have/had bridges rigged to blow up or mountain passes rigged to be blocked by massive concrete structures above them.
  - welterde 6y ago
    In Germany certain bridges were also rigged with explosives during the cold war. But they have since been removed.
  - skissane 6y ago
    North of Sydney, Australia, there is a 1.69km (just over 1 mile) long railway tunnel on the main northern railway line called the Woy Woy Tunnel. During WW2, a short additional tunnel was dug above the tunnel entrance, to be filled with explosives in order to blow it up. This was so that if Japan invaded, the Japanese military would not be able to use the railway line to help them invade Sydney. The feared Japanese land invasion never came, the explosives were never detonated, but the tunnel dug for the explosives is still there today: https://en.wikipedia.org/wiki/File:Interior_of_World_War_2_demolition_tunnel_above_the_northern_portal_of_the_Woy_Woy_railway_tunnel.JPG https://en.wikipedia.org/wiki/File:Interior_of_World_War_2_d... https://en.wikipedia.org/wiki/File:Interior_of_World_War_2_demolition_tunnel_above_the_northern_portal_of_the_Woy_Woy_railway_tunnel.JPG https://en.wikipedia.org/wiki/File:Interior_of_World_War_2_d...

sbmthakur 6y ago

> The idea that China could build an alternative to TSMC instead of trying to take it apparently doesn't compute. The author does point out that it will take years for any new replacement to reach TMSC's capacity.

rbecker 6y ago
Time flies, and China has proven it's willing to stand behind investments for 'years'.

T-A 6y ago

https://technode.com/2020/05/22/smic-to-the-rescue-huawei-shouldnt-hold-its-breath-experts/ https://technode.com/2020/05/22/smic-to-the-rescue-huawei-sh... https://www.cnbc.com/2019/08/06/smic-chinas-biggest-chipmaker-is-still-years-behind-its-rivals.html https://www.cnbc.com/2019/08/06/smic-chinas-biggest-chipmake...

monocasa 6y ago

That's what in fact what they're doing. SMIC is in 14nm risk production, and aggressively working on EUV.

AnthonyMouse 6y ago
We're also rapidly hurtling towards the end of transistor scaling, full stop. When "start of the art" stops being a moving target, how long before everybody has it? We're still several years from that, but probably not several decades from it.
- monocasa 6y ago
  I'm actually pretty curious to see what happens then, and don't have a great answer. Where I'm at currently is that I imagine anyone who wants a leading edge fab for geopolitical reasons will have one, but not much beyond that except the legacy cases like Samsung and TSMC. It'll still be in the ~$20B to create a fab, and for what at the end of the day? Slightly better (probably single digit) margins for what has essentially become a commodity anyways? Beyond militaries that can foot the massive bill to be assured that they're getting the chips they certified, nearly everyone else will have better options to invest in to differentiate themselves. For instance a great question is if the EU thinks a fab is worth the effort? Probably not in today's climate, and would most likely be a sign of the end of US geopolitical domination if they do feel the need.
  - SomaticPirate 6y ago
    Bryan Cantrill has a great talk on this and the end of scaling https://youtu.be/TM9h89Vo_Qo https://youtu.be/TM9h89Vo_Qo It really seems like we are going to see new architecture paradigms emerge and start seeing more powerful compute in smaller places.
  - ChuckNorris89 6y ago
    >For instance a great question is if the EU thinks a fab is worth the effort? Most EU countries have fabs, even small countries like Switzerland and Austria although they're not as cutting edge as TSMC.

rezeroed 6y ago

Perhaps the thought is, controlling TSMC controls supply to other countries.