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> There is also the danger of overcapacity destroying any profitability in the fab business altogether - guess who will get bailed out by the US government if t

by zsmi 5y ago

> There is also the danger of overcapacity destroying any profitability in the fab business altogether - guess who will get bailed out by the US government if that happens; hint: not TSMC. The boom/bust cycle is nothing new in semiconductors. It's a fairly regular thing. Also, keep in mind that consolidating and repositioning during downturns is how TSMC became TSMC. https://www.youtube.com/watch?v=Z7QkIECEkVc https://www.youtube.com/watch?v=Z7QkIECEkVc

worrycue 5y ago
I don’t mean temporary overcapacity. Overcapacity could be near permanent / long lasting as governments step in to prevent their local fabs from failing as they want to maintain local production capability no matter what. In general, if semiconductors become a national security issue, I think there will be a fundamental change in the nature of the business. It will not be business as usual for TSMC.
- zsmi 5y ago
  > In general, if semiconductors become a national security issue, I think there will be a fundamental change in the nature of the business. Maybe, who knows what the future will bring. But I've heard this before [1] and once recessions hit, and budgets get cut, that kind of thing quickly becomes less tenable. And then someone realizes that it takes a constant stream of incoming parts to keep the equipment inside any factory running for any meaningful amount of time, and that supply is not protected, and neither are their suppliers... But I agree, things will not stay as they are. The only thing usual about this business is change. [1] The US semiconductor manufacturing sector was under serious assault by the Japanese in the 80s. That was my first "trade war" in this industry... https://www.washingtonpost.com/archive/business/1985/09/22/semiconductor-industry-toughens-stance-against-japan/5efc802b-196c-4224-a869-3af09b3d82ab/ https://www.washingtonpost.com/archive/business/1985/09/22/s...
  - worrycue 5y ago
    That was before it was seen as a potential national security issue. Semiconductors could end up like the US defense industry, which the US feeds with a continuous amount of money (recession or not) and is not outsourced for obvious reasons - but its products are sold to others; other countries outsource to the US. The US buys military tech on occasion but rarely ever directly buy the hardware in significant numbers - they will manufacture it in-house. It's great if it turns a profit but that's not the point. Every country has their own defense industry if they can afford it.
    - zsmi 5y ago
      It was the cold war and Reagan was president. Believe me, plenty of people were using the national security angle.
      - worrycue 5y ago
        That was just talk. With the current shortage there is plenty of evidence. Things are a lot different now too given how widely use semiconductors are. That said, it remains to be seen how seriously the US government is about this. The $50 billion USD bill hasn’t passed through Congress yet. But if the US government does decide to make huge moves, things might change in a big way. TSMC is no doubt pretty worried hence their setting up of fabs in the US now in an attempt to hopefully ward off US government action.

by zsmi 5y ago

worrycue 5y ago

I don’t mean temporary overcapacity. Overcapacity could be near permanent / long lasting as governments step in to prevent their local fabs from failing as they want to maintain local production capability no matter what. In general, if semiconductors become a national security issue, I think there will be a fundamental change in the nature of the business. It will not be business as usual for TSMC.

zsmi 5y ago
> In general, if semiconductors become a national security issue, I think there will be a fundamental change in the nature of the business. Maybe, who knows what the future will bring. But I've heard this before [1] and once recessions hit, and budgets get cut, that kind of thing quickly becomes less tenable. And then someone realizes that it takes a constant stream of incoming parts to keep the equipment inside any factory running for any meaningful amount of time, and that supply is not protected, and neither are their suppliers... But I agree, things will not stay as they are. The only thing usual about this business is change. [1] The US semiconductor manufacturing sector was under serious assault by the Japanese in the 80s. That was my first "trade war" in this industry... https://www.washingtonpost.com/archive/business/1985/09/22/semiconductor-industry-toughens-stance-against-japan/5efc802b-196c-4224-a869-3af09b3d82ab/ https://www.washingtonpost.com/archive/business/1985/09/22/s...
- worrycue 5y ago
  That was before it was seen as a potential national security issue. Semiconductors could end up like the US defense industry, which the US feeds with a continuous amount of money (recession or not) and is not outsourced for obvious reasons - but its products are sold to others; other countries outsource to the US. The US buys military tech on occasion but rarely ever directly buy the hardware in significant numbers - they will manufacture it in-house. It's great if it turns a profit but that's not the point. Every country has their own defense industry if they can afford it.
  - zsmi 5y ago
    It was the cold war and Reagan was president. Believe me, plenty of people were using the national security angle.
    - worrycue 5y ago
      That was just talk. With the current shortage there is plenty of evidence. Things are a lot different now too given how widely use semiconductors are. That said, it remains to be seen how seriously the US government is about this. The $50 billion USD bill hasn’t passed through Congress yet. But if the US government does decide to make huge moves, things might change in a big way. TSMC is no doubt pretty worried hence their setting up of fabs in the US now in an attempt to hopefully ward off US government action.