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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,

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.
    - selimthegrim 6y ago
      Dutch intelligence is skilled and highly respected by Five Eyes countries - I don’t think the US is going to steamroll them
    - _jal 6y ago
      > if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The implication is not about accepting payment. The western banking system can and has blackballed firms that took money from people the US didn't like.
- chongli 6y ago
  just hiring the entirety of TSMC's and ASML's technical staff at 10x the market rate for ten years That's assuming those folks would want to move to China and work there. If strategic tensions are increasing to the point where war is feared and China uses this as an alternative, who would want to move there and risk becoming a hostage?
  - tartoran 6y ago
    Yes and also what stops the other side from making a better counteroffer?
    - vkou 6y ago
      The fact that for a small field of employment, a sovereign can dramatically outbid the free market, if it so chooses.
      - WanderPanda 6y ago
        But on average its bad to outbid the free market, so countries systematically doing it don‘t last long
  - iorrus 6y ago
    You can hire them in Europe, Huawei has R&D sites in Europe.
    - pinkfoot 6y ago
      SMIC also has a fab in Italy.
  - z2 6y ago
    Not saying the trend will continue, but brain drain isn't a new phenomenon to Taiwan specifically, with a reported one-tenth of Taiwan's semiconductor engineers not just working mainland companies but living there too. Despite risks, the pay, no language barrier, and a purposefully generous immigration policy (full residency rights to all Taiwanese) help. https://asia.nikkei.com/Business/China-tech/Taiwan-loses-3-000-chip-engineers-to-Made-in-China-2025 https://asia.nikkei.com/Business/China-tech/Taiwan-loses-3-0...
- deepnotderp 6y ago
  Much of ASML's EUV expertise comes from Cymer. Although ASML owns them, they're still mostly geographically in the US O believe.
  - sveme 6y ago
    All the optics come from Zeiss, the laser from Trumpf.
- dirtyid 6y ago
  >Can the US actually prevent ASML from selling equipment to China? ASML is not American. Netherlands / ASML is subject to Wassenaar Arrangement which US can ultimately trigger to ban dual use tech sales.
  - xxpor 6y ago
    Technically the Wassenaar Arrangement isn't a treaty, so it has no legal force. Probably doesn't make much of a difference though.
    - dirtyid 6y ago
      No, but it's a "legitimate" political instrument in the US toolbox. So far this administration has expended soft-power - diplomatic pressure. Unless Netherlands / ASML concedes forever, Wassennar is probably next before ridiculous hardpower drama like sanctioning ASML from US tech or weaponizing dollar trading against ASML. I suppose with recent TSMC US plants and Brazil 5G subsidy developments, dumping cash to bribe ASML.
- puranjay 6y ago
  China has already been doing that at scale. Look up the Thousand Talents Program [0] 0:https://en.wikipedia.org/wiki/Thousand_Talents_Plan https://en.wikipedia.org/wiki/Thousand_Talents_Plan
- alliao 6y ago
  US already did I thought? Around Jan 2020 I saw news about US lobbied hard for ASML to stop selling high end units to China. And they complied. China is in a tough place right now with regards to chips.
- rplst8 6y ago
  You think that people would sell out their countrymen so easily? Maybe one or two, but a whole industry's worth.
toohotatopic 6y ago
>They might have the current technology, but no ability to advance to newer technologies. How much needed are further advancements? Aren't we reaching the limits of shrinkage and clock speed? Computers can be used for years because there are no more huge increases. It may cost some more energy, but the current technology should be good enough for 10 to 15 years until China has its own knowledge.
- andy_ppp 6y ago
  In 10-15 years AI will probably be doing a lot more stuff... you cannot imagine the impact being 10 years behind the top AI chips then, not can anyone really.
baybal2 6y ago
> 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. TSMC has investnents in many tool makers, and has own tooling RnD.
petra 6y ago
What about reverse-engineering, is it a real possibility for creating fab equipment ? or are those too complex and opaque ?
- blackrock 6y ago
  No, this is too fundamental of a science. Reverse engineering is just working backwards, until you get to parity. Certainly, this will get you far, but you’ll always be a step behind the leader. But what you really need, is to advance and take the lead. In order to achieve that, you need the scientific process here to understand the fundamental basics. Then you can build on that and expand. But, what we know is that the Dutch company, ASML, has a tool that can achieve 5nm. To China, this means that the engineering is possible. They just have to throw more time, money, and people at it. They don’t even need to follow the same techniques as ASML, they just have to get at the same end result, the 5nm. Solve the basic science, and it will allow you to achieve the engineering. Then, they can expand, and target 3nm, or whatever the next technology is. Carbon nanotubes based CPUs?

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.
  - selimthegrim 6y ago
    Dutch intelligence is skilled and highly respected by Five Eyes countries - I don’t think the US is going to steamroll them
  - _jal 6y ago
    > if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The implication is not about accepting payment. The western banking system can and has blackballed firms that took money from people the US didn't like.
chongli 6y ago
just hiring the entirety of TSMC's and ASML's technical staff at 10x the market rate for ten years That's assuming those folks would want to move to China and work there. If strategic tensions are increasing to the point where war is feared and China uses this as an alternative, who would want to move there and risk becoming a hostage?
- tartoran 6y ago
  Yes and also what stops the other side from making a better counteroffer?
  - vkou 6y ago
    The fact that for a small field of employment, a sovereign can dramatically outbid the free market, if it so chooses.
    - WanderPanda 6y ago
      But on average its bad to outbid the free market, so countries systematically doing it don‘t last long
- iorrus 6y ago
  You can hire them in Europe, Huawei has R&D sites in Europe.
  - pinkfoot 6y ago
    SMIC also has a fab in Italy.
- z2 6y ago
  Not saying the trend will continue, but brain drain isn't a new phenomenon to Taiwan specifically, with a reported one-tenth of Taiwan's semiconductor engineers not just working mainland companies but living there too. Despite risks, the pay, no language barrier, and a purposefully generous immigration policy (full residency rights to all Taiwanese) help. https://asia.nikkei.com/Business/China-tech/Taiwan-loses-3-000-chip-engineers-to-Made-in-China-2025 https://asia.nikkei.com/Business/China-tech/Taiwan-loses-3-0...
deepnotderp 6y ago
Much of ASML's EUV expertise comes from Cymer. Although ASML owns them, they're still mostly geographically in the US O believe.
- sveme 6y ago
  All the optics come from Zeiss, the laser from Trumpf.
dirtyid 6y ago
>Can the US actually prevent ASML from selling equipment to China? ASML is not American. Netherlands / ASML is subject to Wassenaar Arrangement which US can ultimately trigger to ban dual use tech sales.
- xxpor 6y ago
  Technically the Wassenaar Arrangement isn't a treaty, so it has no legal force. Probably doesn't make much of a difference though.
  - dirtyid 6y ago
    No, but it's a "legitimate" political instrument in the US toolbox. So far this administration has expended soft-power - diplomatic pressure. Unless Netherlands / ASML concedes forever, Wassennar is probably next before ridiculous hardpower drama like sanctioning ASML from US tech or weaponizing dollar trading against ASML. I suppose with recent TSMC US plants and Brazil 5G subsidy developments, dumping cash to bribe ASML.
puranjay 6y ago
China has already been doing that at scale. Look up the Thousand Talents Program [0] 0:https://en.wikipedia.org/wiki/Thousand_Talents_Plan https://en.wikipedia.org/wiki/Thousand_Talents_Plan
alliao 6y ago
US already did I thought? Around Jan 2020 I saw news about US lobbied hard for ASML to stop selling high end units to China. And they complied. China is in a tough place right now with regards to chips.
rplst8 6y ago
You think that people would sell out their countrymen so easily? Maybe one or two, but a whole industry's worth.

toohotatopic 6y ago

>They might have the current technology, but no ability to advance to newer technologies. How much needed are further advancements? Aren't we reaching the limits of shrinkage and clock speed? Computers can be used for years because there are no more huge increases. It may cost some more energy, but the current technology should be good enough for 10 to 15 years until China has its own knowledge.

andy_ppp 6y ago
In 10-15 years AI will probably be doing a lot more stuff... you cannot imagine the impact being 10 years behind the top AI chips then, not can anyone really.

baybal2 6y ago

> 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. TSMC has investnents in many tool makers, and has own tooling RnD.

petra 6y ago

What about reverse-engineering, is it a real possibility for creating fab equipment ? or are those too complex and opaque ?

blackrock 6y ago
No, this is too fundamental of a science. Reverse engineering is just working backwards, until you get to parity. Certainly, this will get you far, but you’ll always be a step behind the leader. But what you really need, is to advance and take the lead. In order to achieve that, you need the scientific process here to understand the fundamental basics. Then you can build on that and expand. But, what we know is that the Dutch company, ASML, has a tool that can achieve 5nm. To China, this means that the engineering is possible. They just have to throw more time, money, and people at it. They don’t even need to follow the same techniques as ASML, they just have to get at the same end result, the 5nm. Solve the basic science, and it will allow you to achieve the engineering. Then, they can expand, and target 3nm, or whatever the next technology is. Carbon nanotubes based CPUs?