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Why a Chinese invasion of Taiwan would be a catastrophe for China and the world
- coldtea 5y ago>Thus the semiconductor market in 2021 is a fully baked cake. You can’t just swap some ingredients out in response to a one-off military invasion, and then keep trucking along. No, we’ll have to bake a whole new cake if TSMC goes bye-bye. And that will be painful for everyone, everywhere. Well, tell that to the economists that praised "competitive advantage" out-sourcing of everything: "Smith outlines the basic theory behind comparative advantage; that it makes more sense to manufacture a good which you have the necessary expertise and materials to produce than to inefficiently allocate your resources to the production of a good that some other country can produce for less overall cost." Yeah, until that other country becomes an enemy, or a monopoly, or has you by the balls - or another country snaps it or cozies up with it... But, yeah, who would have though that would ever happen in the "end of history" era.
- MikeUt 5y agoComparative advantage theory also ignores that efficiency increases as you invest in an industry, and the acquired expertise helps related industries. It especially ignores how another country can also buy/"partner" with your companies, and export their expertise to help their own companies, and harm yours. A simplistic model that ignores a wide variety of behavior economic and political actors can and do engage in, yet that didn't stop economists from swearing up and down that there's nothing to worry about.
- mytailorisrich 5y agoThis is all hypothesis. Everyone can draw any scenario imaginable. Here the author claims that TSMC and Taiwanese fabs will become "unavailable" in case of an invasion by the mainland. He also makes the claim that Taiwanese would 'disable' those fabs themselves in order "to protect customer IP". The former is of course a possibility, the latter is rather more strange. Neither are explained. It seems to me that the mainland would have an interest in protecting those fabs and in resuming "business as usual" as soon as possible, so I would imagine them drawing plans to make that happen in case of a military invasion. Fabs may also be very useful in order to keep any sanctions towards China at a minimum: Would the US want to push for, say, a trade embargo if that meant cutting off semi supply? Maybe but that would make these sanctions very painful for the West and their allies. On the Taiwanese side, there might be a temptation to sabotage the fabs but IMHO that would be a shot in the foot: If the fabs are gone and the mainland does take control of the island then they would never allow such concentration in Taiwan to happen again so Taiwan would fade forever. And if the invasion fails then there would probably be a massive push to rebuild outside of Taiwan. All in all the destruction of the fabs would probably be used as a bluff/threat to push the US to protect Taiwan as much as possible (although the US would likely never directly attack Chinese forces, and reciprocally).
- mastry 5y agoNear the end of the article, Steve Blanks is quoted... Alternatively, Beijing may seek to negotiate with or coerce Taipei (or both) in order to allow China sole access to TSMC and block chip exports to the United States, thereby securing China’s own supply while crippling American industry. But earlier in the article it's mentioned that the US effectively has a "kill switch" on TSMC (by cutting off key supplies needed to fabricate semiconductors). If this is true, then the scenario presented by Blanks seems unlikely -- or am I missing some detail?
- kposehn 5y agoYou aren’t missing any detail from what I understand. A core focus of US national security this decade is securing chip fabrication capability that is not endangered by global supply chain disruptions - or making the cost of the disruption unreasonably high to the disruptor.
- taurath 5y agoMutually assured unproductivity seems like the setup for the next bond plot.
- Shorel 5y agoI think China strategy will be to slowly copy TSMC, starting from funding the universities around Shanghai, luring Taiwan nationals with higher salaries, and also try to copy the supply chain, however long that process will take. Only after they have their own microprocessor industry, can they risk publicly invading Taiwan, and dealing with the retaliatory crippling of TSMC by supplying the rest of the supply chain. It is a long and risky strategy. Who knows... We will know in about 15-20 years.
- akomtu 5y agoThe Taiwan saga will be another example of the 5 stages of acceptance. Right now the western world seems to be in denial. Once China does a small incursion into Taiwan, we'll advance to the next stage - anger. Inability to stop China will take us to bargaining. When China ignores the west, we'll get into the depression stage. When CCP's troops start patrolling Taiwan streets, and I think it'll happen in just ten years, we'll reach acceptance. By that time, the US will better have fully functional foundries in Arizona.
- api 5y agoI heard it put this way once: the US can’t stop a Chinese invasion of Taiwan any more than China could stop a hypothetical US invasion of Cuba. In both cases it’s a battle right off the coast of a superpower with pretty massive home court advantage to the closer nation. Right off shore means no supply lines and the ability to just fire shit from shore at enemy ships and planes. The entire industrial output of the closer nation is right there. Note that I am leaving thermonuclear escalation off the table. Nobody really wins that one. I’m imagining a scoped conventional conflict in the form of an intervention.
- Retric 5y agoGiven some warning the US could actually stop a Chinese invasion of Taiwan. The US Navy has the second most powerful air force in the world just behind the US Air Force. That’s the rather insane scale we’ve invested into the current military. Cruse missiles are a different story, China could trivially destroy TSMC’s factories. That said, the US is hardly the only nation likely to react to such an invasion.
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- mytailorisrich 5y agoI think that the US would not want to directly attack China, and China would not want to directly attack the US. The US would provide weapons, intelligence, etc. but would not fire on the Chinese because that would be an unlimited and uncontrolled escalation, in effect a declaration of war on a country actually larger than them, a nuclear power which government could not afford to be seen as weak and defeated. That's partly why the US have always refrained from entering into any formal obligation to intervene militarily. Likewise, I don't think it would be in China's interest to destroy TSMC's fabs. Quite the opposite, I think they would probably want to keep them intact if they can help it and resume business as usual as soon as possible.
- tester756 5y agoBut why actually cutting-edge semiconductors are *this* important? Isn't endgame war tech solved problem for like N decades? What's the usecase? better AI? computer vision? research? aren't computational resources for those provided by super computers?
- bsd44 5y agoPerhaps when the US and its allies withdraw troops from the Middle East, they can move them to Taiwan to protect it from China.
- pcrh 5y agoWhile semiconductors are a very important part of industry, it's naive to think that a loss of Taiwanese output would be as disastrous as this article suggests. Consider the effects of the coronavirus pandemic, they are much larger than any such loss would have, yet this pandemic didn't have any acute large-scale effect on geopolitics (though it will like have a longer-term, and some what unpredictable effect). A much larger long-term effect of China's ambitions towards Taiwan would likely be seen in China's growing economic might resulting in a shifting of alliances/allegiances of East Asian countries between the US and China.
- tooltalk 5y agoConsidering TSMC's share of chip fabrication business, it would be fairly disruptive. TSMC does have the dominant position in the sub-7nm cutting-edge processing nodes, used primarily by companies like Apple, Qualcomm and nVidia, but at least some of them, Qualcomm and nVidia, have been diversifying their sources (primarily to Samsung) while Apple seems to have everything in one basket. But then, who cares about Apple?
- canadianfella 5y ago> But then, who cares about Apple? What do you mean?
- jollybean 5y agoThe Coronavirus has a huge effect, it's just been papered over by massive Central Bank Financing. Make no mistake, we are in 'Willy Wonka' land with respect to currency. The reason it hasn't lead to geopolitical fallout is because 'everyone is in the same boat'. If 'just Canada' did this ... even with a pandemic, Canada would be getting trashed on the markets, major downgrades, the fallout would peter into a lot of things and there's no question at least the government would probably fall. If if were acutely a China-Taiwan issue then all of a sudden the world's eyes would be on that as the source of the issue an it would cause a pretty big realignment. This would be 10x more amplified were there a military component. It's one thing for there to be a flummox over a virus, but China 'invading' countries would basically be such a strong signal ... it would be the demarcation point for literally a New World Order. Future historians would count the end of WW2 up until then as maybe a single era, with that event starting a new one. All the chess pieces would be moved or adjusted.
- wodenokoto 5y agoGiven how smoothly chinas invasion of Hong Kong went, I wondered how far back one had to go to find similar articles about how China couldn’t invade Hong Kong. But searching for the headline with Hong Kong instead of Taiwan only returns results regarding China and Taiwan.
- bloniac 5y agoThe world would have much bigger problems than semiconductors if a full blown war happened in Taiwan. It won’t happen anyway. China is just Sabre rattling and beating its chest for political gain. If they were going to do it then it should have been on Trumps watch, when there was no certainty at all the USA would back its allies in a conflict. Not that there’s much certainty now.
- ipaddr 5y agoChina was afraid of Trump going to war not so much with Biden so this makes perfect sense. We will see Iran, Russia and North Korea threaten more while European countries offering more support.
- eyelovewe 5y agoI thought the standard argument was that demopublicans (ya know that publican thing ain’t nothing to brag about lol) aka bipartisans all agreed that the foreign war gig was good . Trumpian inconsistency ensures that a well timed Sabre rattle is perceived as indigestion. I doubt that emperor Xi was concerned. They know a thing or two about the futility of walls unlike our homegrown lot who still believe in King Santa Grinch
- jollybean 5y agoIf you were to have said Russia could grab Crimea and other parts of Ukraine without much of a peep 20 years ago ... nobody would have believed you. And then it happened. China is on a path to grabbing Taiwan and they'll have enough power that they can just 'do it' - with sufficient political cover, it's possible. March 21s, 2031: CPP drives internal foment in Taiwan through years of placing and supporting agents, and use more radical pro-China antagonists of the 'New Taiwanese Patriotic Party' to divide the country, they challenge the results of an election (which was by all accounts fair) after a few riots (instigated), Taiwan could wake up to find 'little green men in unmarked uniforms' all over the country - the naval bases surrounded, Chinese jets completely swarming the skies displaying imminent air superiority, 5000 of these 'little green men' facilitate the pro-China Taiwanese political leader to capture the Premier and force him to concede. They ask the Taiwanese Army to stand down - some do, some don't. Some units are surrounded, unable to fight, some units stand down, a few firefights erupt but the unprepared units are quickly disposed of by the 'little green men' and their supporting forces. Tanks of the 'New Taiwanese Patriotic Party Army' roll through the streets, some protests erupt like in Hong Kong. The 'New Premier' formally asks China for help to 'restore civility' and China lends thousands of police to help quash the uprisings. Thousands of people dissapear never to be seen again. Some business leaders, paid off and sympathetic to China, call for calm and peace, trying to maintain some degree of civil order so that business can continue ... 10% of the population takes sides with the 'Patriotic Taiwanese Force' and their calls for Unification with China and act as informants, enforcers in the name of peace and stability. The world protests and enacts some sanctions, but are unwilling to challenge China's position on the UN Security Council and so the reaction amounts to a few empty words. The world opts to keep the 'integrity' of the UN rather than dissolve over the Taiwan issue. CCP publicly proclaims they are committed to the Sovereignty of Taiwan within a 'United China' and support the new revolutionary Premier and his 'transitional government'. A couple of years later, a new constitution is enacted which formalizes Taiwanese 'Unification' with China. I don't understand why people think that something like this won't happen. Stalin had full control over the Communist Party in Germany during the 1920's Weimar Republic, and he was constantly formenting dissent, used thugs in the streets, and ironically with the collaboration of the 'far right' (i.e. Hitler himself, who the Communists though were useful idiots) tried to overthrow the ruling Social Democrats. They were unable to do that, but we know who eventually did. If the world wants to ensure the sovereignty of Taiwan it'll probably take some extra love and vigilance on that issue, with intelligence support for the government there, military aid, and maybe an unofficial Navy 'base' established by some semi-permanent presence. And possibly some other commitments by the world to raise the cost of invasion for China. China has literally stated that this is their objective, they are pretty good at moving towards their commitments, and the world is an unstable place - a little bit of well place calamity is all it takes for some dominoes to fall.
- HerbsMan 5y agoWell, the "ripple effect" wouldn't be the thing to worry about if western world wouldn't screw it at the first point. We push shit load of money to China continiously making them stronger, in the same time weakening ourselves badly as dependent on their "area" production.
- beaunative 5y agoI know we do not differentiate China and Chinese most of the time, but in this case, it is problematic since Taiwan is >95% Chinese. Maybe Beijing's invasion of Taipei would be better?
- narrator 5y ago"The CCP's invasion of Taiwan..." would be a much better headline.
- LatteLazy 5y agoPeople keep saying it won't happen but Xi has managed to get away with: * starting a ground war with India * crushing democracy (what little there was) in HK * Genocide * Bullying basically all their neighbours * Launching a global pandemic and lying about it Is an invasion of a "renegade province" really off the table? Really? When Xi ran on nationalism and has delivered on it and is guaranteed Premiership for life? When the rest of the world has never been more reliant on China and less united? It's an unpleasant thought, but now would be the optimal time.
- PhantomGremlin 5y agoLaunching a global pandemic and lying about it I generally agree with your other points, but don't like the word "launching". That word implies a deliberate act. It's much more likely this was just poor lab procedures that let the virus infect researchers at the virology lab. Those researchers then infected the world.
- LatteLazy 5y agoLab or not, deliberate or not it's the second time recently (SARS). So they're either deliberate or so negligent it might as well be deliberate. That's my take at least but I am a bit of a hawk on China. Thanks for replying at least. Most people just don't want to hear it.
- elisbce 5y agoPeople who think this won't happen or unlikely to happen need to look at where HK is at right now and what happened to HK over the course of last few years. Taiwan is a much bigger fish and has things like TSMC that China really wants/needs. Sooner rather than later, it is actually very LIKELY to happen, esp. if Xi wants to see it happen in his days.
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- jjk166 5y agoChina is on the precipice of a major demographic issue - it's military age population is collapsing at the same time that a major cohort is reaching the end of its productive years. China is making major moves right now to eliminate potential sources of unrest because in a short period of time it will not be able to. HK is part of China's continental territory, no foreign power, especially the waning British, could possibly hope to stop Chinese military action there. Similarly with the Uyghurs in Xinjiang, and the border regions of Tibet, China wants to stamp out local identity which could lead to sepratist movements or worse revolutionary action in a few years when it's economic growth inevitably slows down and people start questioning the utility of the CCP at the same time that its power reaches a low. Taiwan though is different. China is not a strong naval power, its strength traditionally relying on its overwhelmingly immense land army. Amphibious invasions are among the most difficult operations in warfare, and Taiwan's geography limits potential invasions to only a few easily defendable points. China is building up its naval capabilities, but getting to the point that seizing Taiwan is even feasible will still take years - years that they don't have. This is to say nothing of the inevitable coalition that would join Taiwan in resisting such an invasion. Without experience in such invasions, China would be likely to suffer tremendous losses for trivial gains, at least at first. This would make the CCP appear incompetent and further reduce their military capabilities at exactly the same time that they would be most at risk of internal strife, which no doubt foreign powers would be throwing their full weight behind. No, it makes more sense that China's current posturing is saber rattling meant to stir nationalist sentiment in its own population. It's the same reason for its recent clashing with India and its remarkable recent diplomatic hostility. The last thing it wants or needs is new territory full of independence minded dissidents, but creating external enemies is a classic and often effective play for regimes on rocky ground. While it's always possible that some hawkish firebrand comes to power or there is some major miscommunication that leads to hostility, the CCP and Xi especially have a long track record of pursuing stability above all else, which has honestly been the Chinese goto play for thousands of years. An invasion of Taiwan would be in direct opposition to that goal, and could only end very badly for the CCP and Xi. Perhaps if China survives its demographic crisis it will emerge as a premiere power that can seriously consider such military expeditions, but it'll be dealing with that problem for a generation.
- amai 5y ago"Taiwan notebook Original Design Manufacturers (ODMs) account for more than 90% of global notebook production" https://www.digitimes.com/topic/taiwan_notebook_odms/a00176.html https://www.digitimes.com/topic/taiwan_notebook_odms/a00176....