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It's geopolitical. Taiwan is ultimately reliant on the US for defense from China. The DoD wants to maintain close to leading edge chip production on US soil w

It's geopolitical. Taiwan is ultimately reliant on the US for defense from China. The DoD wants to maintain close to leading edge chip production on US soil where they feel like they can control the physical chain of security of the chips they use. TSMC builds a fab on US soil, and Taiwan and it's sovereignty wrt to China is better embedded in the power structure of the US defense strategy. The DoD footing most of the bill makes it an easy win.

herodoturtle 6y ago
This was a really insightful comment, thanks for taking the time to explain.
ksec 6y ago
Now that Intel has opened up their Fab, I have been wondering if TSMC will still be going ahead with their Plan. It never made any sense in the first place. It is not leading edge and Intel seems to be a better position from DoD's perspective. And I wil not be suspired if future POWER and Z are all Intel Fabbed.
- onepointsixC 6y ago
  How can they not? 60% of their customers are American and fab capacity has become a hot bipartisan topic as well as a NatSec issue. The only way they can guarantee that they don't lose access to their customers is by building American fabs.
  - ksec 6y ago
    1. Fab Capacity has nothing to do with it. No one has committed to Fab Orders apart from Apple. It is politics and MSM Media decide to make an issue out of nothing. 2. Those Fabs are not leading edge and not target for the general consumer brands. The current target of 5nm in ~2024, a time when TSMC should be on 2nm GAAFET in their main Fab in Taiwan. 3. The only real reason is National Security, which is now being handled by Intel. These chip were used used and Fabbed by IBM and GF before GF's exit on leading edge. 4. 60% of TSMC's customers are US companies, but these US companies 's customer aren't 60% Americans. And not all Americans chips needs to be Fabbed locally.
    - monocasa 6y ago
      > which is now being handled by Intel. I don't think the DoD is willing to put all of it's eggs in that one basket that hasn't been performing lately. Particularly when the DoD sees massive amounts of edge inference being a key weapons component going forward and they need newer nodes than 14nm+++++++. Hard to blame them.
      - ksec 6y ago
        AFAIK DoD has always had contract with Intel, IBM, GF for certain things Fab within US. And they rarely ( If ever ) use anything that is leading edge anyway. Their requirement are critically different to mainstream consumer usage where reliability of node is paramount. Samsung is also building a Fab in Austin which has an upgrade path from IBM ( now GF ) node. I dont see what TSMC has to offer in both National Security and Fab Production Business prospective. That is of course, as you said unless both Intel and Samsung seriously messed up their plan.
tallanvor 6y ago
There's talk that China might invade Taiwan in the near future (well, invasion or regaining control, depending on which side you're on, of course). How the US and the rest of the world would respond is unclear, but obviously there would be a lot of disruption.
- nindalf 6y ago
  Anyone outside the top echelons of the PLA/CCP who claims to predict when the invasion of Taiwan will happen is a soothsayer. That it will happen is a certainty, which means there's always a ready market of people willing to say it'll happen in the near future. But one thing is certain - it's a question of when, not if. Taking control of Taiwan is too important to the founding myth of the CCP. Every reminder that Taiwan exists is a challenge to their power. Their desire for Taiwan has never wavered in the last 72 years, nor do I think it will ever. Meanwhile Taiwan's main defender (America) has no permanent allies, only permanent interests. Once the semiconductor supply chain is replicated successfully in the US, they might find that they're no longer willing to sacrifice American lives to protect the sovereignty of Taiwan. At some point in the next 10-40 years, Taiwan will be a bargaining chip America will trade away for something else they value more.
  - paganel 6y ago
    > That it will happen is a certainty, Not saying that you're wrong, because you seem much more informed and involved on/in this subject than I am, but from half the world away I can say that around 10 years or so ago that "certainty" wasn't that "certain", so to speak, at least not from what I could gather by reading the "local" press (mostly the Financial Times and The Economist). Do you happen to have any resources available that further comment on that certainty? Again, not because I'm thinking that you're wrong, but because I'm really curious about this subject (there was a similar Taiwan-related post on the front-page of this website a few days ago but it dropped off pretty quickly).
    - ekianjo 6y ago
      You are looking for sources that will predict the future with accuracy? Taiwan is definitively on the next because it is way too close in distance to China for its own good.
konschubert 6y ago
But isn't it risky for Taiwan when the US has a semiconductor supply chain on its own soil?
- volkl48 6y ago
  The US looks like it's inclined to going to throw money at someone to build up that capacity if necessary. It's certainly less risky for Taiwan for TSMC to be the one building and running the most high profile element of it than if it was someone else.
- kube-system 6y ago
  If Taiwan is less important strategically, they are more at risk. But it isn’t TSMCs job to play geopolitics, they just sell chips. One factory doesn’t make a global semiconductor market, though.
rasz 6y ago
> TSMC builds a fab on US soil, and Taiwan and it's sovereignty wrt to China is fucked, because we already have a foundry on US soil suckers. The whole point of TSMC being an ace card towards guaranteeing US defense coverage goes away the second you give it up. Ukraine is a perfect real life example https://en.wikipedia.org/wiki/Budapest_Memorandum_on_Security_Assurances https://en.wikipedia.org/wiki/Budapest_Memorandum_on_Securit...
vslira 6y ago
Wait, I'm not sure if I follow. TSMC builds a fab in US soil, guaranteeing American autonomy on chip production. Supposedly the DoD would also require training for American technicians and more critical parts of the supply chain there. This makes Taiwan LESS strategic, not more, for US security, because now the US can build its own chips and isn't vulnerable to a Chinese invasion on Taiwan.
- dmos62 6y ago
  This got me wondering as well. Maybe it's a quid pro quo type of arrangement.
- TheOtherHobbes 6y ago
  It makes Taiwan less strategic in time. It makes Taiwan more strategic now, because the US is still dependent on TSMC. If China has hostile intent it also increases the risk of Chinese action, because - dependent on stockpiles and security - Taiwan is a resource choke point which could potentially decapitate the entire US military machine. This is a terrible situation for the US to be in. As the US replaces that capability on its home turf Taiwan's strategic value wanes, which paradoxically makes an attack less likely because China can get what it wants from Taiwan by conventional economic and political means. The question is... how lucky/aggressive does China feel? And how just-in-time is the US military supply chain?
  - selimthegrim 6y ago
    I doubt all the defense critical military electronics are fabbed over there on 10 nm
    - monocasa 6y ago
      They're increasingly into ML inference at the edge, which benefits from (and sometime requires) smaller nodes.
      - gowld 6y ago
Shivetya 6y ago
Pretty sure China isn't just worrying manufacturers in Taiwan but other parts of the region. Hong Kong is getting worse by the day with China basically replacing any idea of a democratic government there. India is making strides but has internal issues and both China and Pakistan as border issues. South Korea has been under threat from the North for far too long. It just makes financial sense to spread out to more stable regions of the world and to take the money offered when it shows up. I figure we are still a decade or two out before Africa comes online and South and Central America will need to calm down to get good investment to spread about. I am surprised Canada is not trying to get more of the action.

herodoturtle 6y ago

This was a really insightful comment, thanks for taking the time to explain.

ksec 6y ago

Now that Intel has opened up their Fab, I have been wondering if TSMC will still be going ahead with their Plan. It never made any sense in the first place. It is not leading edge and Intel seems to be a better position from DoD's perspective. And I wil not be suspired if future POWER and Z are all Intel Fabbed.

onepointsixC 6y ago
How can they not? 60% of their customers are American and fab capacity has become a hot bipartisan topic as well as a NatSec issue. The only way they can guarantee that they don't lose access to their customers is by building American fabs.
- ksec 6y ago
  1. Fab Capacity has nothing to do with it. No one has committed to Fab Orders apart from Apple. It is politics and MSM Media decide to make an issue out of nothing. 2. Those Fabs are not leading edge and not target for the general consumer brands. The current target of 5nm in ~2024, a time when TSMC should be on 2nm GAAFET in their main Fab in Taiwan. 3. The only real reason is National Security, which is now being handled by Intel. These chip were used used and Fabbed by IBM and GF before GF's exit on leading edge. 4. 60% of TSMC's customers are US companies, but these US companies 's customer aren't 60% Americans. And not all Americans chips needs to be Fabbed locally.
  - monocasa 6y ago
    > which is now being handled by Intel. I don't think the DoD is willing to put all of it's eggs in that one basket that hasn't been performing lately. Particularly when the DoD sees massive amounts of edge inference being a key weapons component going forward and they need newer nodes than 14nm+++++++. Hard to blame them.
    - ksec 6y ago
      AFAIK DoD has always had contract with Intel, IBM, GF for certain things Fab within US. And they rarely ( If ever ) use anything that is leading edge anyway. Their requirement are critically different to mainstream consumer usage where reliability of node is paramount. Samsung is also building a Fab in Austin which has an upgrade path from IBM ( now GF ) node. I dont see what TSMC has to offer in both National Security and Fab Production Business prospective. That is of course, as you said unless both Intel and Samsung seriously messed up their plan.

tallanvor 6y ago

There's talk that China might invade Taiwan in the near future (well, invasion or regaining control, depending on which side you're on, of course). How the US and the rest of the world would respond is unclear, but obviously there would be a lot of disruption.

nindalf 6y ago
Anyone outside the top echelons of the PLA/CCP who claims to predict when the invasion of Taiwan will happen is a soothsayer. That it will happen is a certainty, which means there's always a ready market of people willing to say it'll happen in the near future. But one thing is certain - it's a question of when, not if. Taking control of Taiwan is too important to the founding myth of the CCP. Every reminder that Taiwan exists is a challenge to their power. Their desire for Taiwan has never wavered in the last 72 years, nor do I think it will ever. Meanwhile Taiwan's main defender (America) has no permanent allies, only permanent interests. Once the semiconductor supply chain is replicated successfully in the US, they might find that they're no longer willing to sacrifice American lives to protect the sovereignty of Taiwan. At some point in the next 10-40 years, Taiwan will be a bargaining chip America will trade away for something else they value more.
- paganel 6y ago
  > That it will happen is a certainty, Not saying that you're wrong, because you seem much more informed and involved on/in this subject than I am, but from half the world away I can say that around 10 years or so ago that "certainty" wasn't that "certain", so to speak, at least not from what I could gather by reading the "local" press (mostly the Financial Times and The Economist). Do you happen to have any resources available that further comment on that certainty? Again, not because I'm thinking that you're wrong, but because I'm really curious about this subject (there was a similar Taiwan-related post on the front-page of this website a few days ago but it dropped off pretty quickly).
  - ekianjo 6y ago
    You are looking for sources that will predict the future with accuracy? Taiwan is definitively on the next because it is way too close in distance to China for its own good.

konschubert 6y ago

But isn't it risky for Taiwan when the US has a semiconductor supply chain on its own soil?

volkl48 6y ago
The US looks like it's inclined to going to throw money at someone to build up that capacity if necessary. It's certainly less risky for Taiwan for TSMC to be the one building and running the most high profile element of it than if it was someone else.
kube-system 6y ago
If Taiwan is less important strategically, they are more at risk. But it isn’t TSMCs job to play geopolitics, they just sell chips. One factory doesn’t make a global semiconductor market, though.

rasz 6y ago

> TSMC builds a fab on US soil, and Taiwan and it's sovereignty wrt to China is fucked, because we already have a foundry on US soil suckers. The whole point of TSMC being an ace card towards guaranteeing US defense coverage goes away the second you give it up. Ukraine is a perfect real life example https://en.wikipedia.org/wiki/Budapest_Memorandum_on_Security_Assurances https://en.wikipedia.org/wiki/Budapest_Memorandum_on_Securit...

vslira 6y ago

Wait, I'm not sure if I follow. TSMC builds a fab in US soil, guaranteeing American autonomy on chip production. Supposedly the DoD would also require training for American technicians and more critical parts of the supply chain there. This makes Taiwan LESS strategic, not more, for US security, because now the US can build its own chips and isn't vulnerable to a Chinese invasion on Taiwan.

dmos62 6y ago
This got me wondering as well. Maybe it's a quid pro quo type of arrangement.
TheOtherHobbes 6y ago
It makes Taiwan less strategic in time. It makes Taiwan more strategic now, because the US is still dependent on TSMC. If China has hostile intent it also increases the risk of Chinese action, because - dependent on stockpiles and security - Taiwan is a resource choke point which could potentially decapitate the entire US military machine. This is a terrible situation for the US to be in. As the US replaces that capability on its home turf Taiwan's strategic value wanes, which paradoxically makes an attack less likely because China can get what it wants from Taiwan by conventional economic and political means. The question is... how lucky/aggressive does China feel? And how just-in-time is the US military supply chain?
- selimthegrim 6y ago
  I doubt all the defense critical military electronics are fabbed over there on 10 nm
  - monocasa 6y ago
    They're increasingly into ML inference at the edge, which benefits from (and sometime requires) smaller nodes.
    - gowld 6y ago

Shivetya 6y ago

Pretty sure China isn't just worrying manufacturers in Taiwan but other parts of the region. Hong Kong is getting worse by the day with China basically replacing any idea of a democratic government there. India is making strides but has internal issues and both China and Pakistan as border issues. South Korea has been under threat from the North for far too long. It just makes financial sense to spread out to more stable regions of the world and to take the money offered when it shows up. I figure we are still a decade or two out before Africa comes online and South and Central America will need to calm down to get good investment to spread about. I am surprised Canada is not trying to get more of the action.