TSMC does not build the actual tool that builds the processors, which is the photolithography device. That technology is owned by ASML, the Dutch company, whic

TSMC does not build the actual tool that builds the processors, which is the photolithography device. That technology is owned by ASML, the Dutch company, which obeys any commands given to it by their masters, the Americans. As an analogy, TSMC is like a really good artist, that can use someone else’s tools, but they can’t make the actual tool itself. It’s like a graphic artist that can make very creative drawings using Photoshop, but he’d have no idea how Adobe created Photoshop, since he’s just a user of the product. And on the flip side, the programmer who created Photoshop, created a very good tool, but he has no artistic skills in his training, to create such magnificent pictures. In this case, it’s that way for ASML. They can create the machines, but they need TSMC to achieve the 5nm production. What TSMC and others have said, is that the secret to their success, is in the yield. Or how many wafers they can produce, with the minimum amount of defects. This is where TSMC needs a lot of cheaper engineers, in order to make perfect their production process. This might be the key reason why Intel, and any other western semiconductor manufacturers cannot currently compete against TSMC or Samsung. The cost of a western engineer is likely 5x more expensive, than a Taiwanese TSMC engineer. This is quite possibly a numbers game. You just need a lot of engineers, in order to hit your yield, in order to achieve profitability. What China needs to do is: (1) create an ASML competitor to build the photolithography device and get their independent intellectual property rights, and (2) employ the massive amounts of semiconductor engineers, like TSMC, in order to achieve the yield. If they fail to achieve #1, then the United States can easily block their success, by preventing ASML from selling them any photolithography devices. However, the key difference here, between China and the rest of the world, is that this is now considered an existential crisis. They must now achieve photolithography mastery and dominance, or else, they will die. They must create an ASML competitor. This means that, China will financially support and backstop whatever domestic Chinese organization, in order to achieve this political goal. And they are not starting from step 1, so they at least have some understanding of the science behind it. So when they do achieve mastery of the photolithography devices, then TSMC, Samsung, Intel, and ASML, will have some very interesting competition on their hands. At the very least, they will likely lose all future business in China. And they have the American government to thank for that.