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You have to take his words with a grain of salt. Without going into politics, it’s impossible to talk about TSMC without geopolitical context. It’s essential t

You have to take his words with a grain of salt. Without going into politics, it’s impossible to talk about TSMC without geopolitical context. It’s essential to TSMC survival for their production to physically stay focused in Asia.

nathanm412 5y ago
It's essential to Taiwan's survival for production to physically stay focused in Taiwan. I don't know if the US would be as willing to defend Taiwan if our own recovery wasn't affected by the chip shortage.
- ineedasername 5y ago
  Yep. to use a quote I've heard about another resource: "No one would care as much about stability in the Middle East if they produced toothpaste instead of Oil". Unfortunately at the same time for Taiwan, once the West's reliance on that area of the world for production becomes less of an issue, China's timeline gets accelerated much faster to the "No but really you're part of the PRC" point. Similar to how the PRC ratcheted up control over Hong Kong in 2020 when the rest of the world was basically "Sorry HK we got COVID issues k'bye"
  - bytelines 5y ago
    > Similar to how the PRC ratcheted up control over Hong Kong in 2020 when the rest of the world was basically "Sorry HK we got COVID issues k'bye" Little more complicated than that - with HK there wasn't much the west could really do, or any obligation to do anything at all. There were no treaty obligations, as far as I'm aware of. Obligations to Taiwan have been covered since 1979, and there's the whole matter of the PRC needing to do am amphibious invasion against a prepared foe. I'd argue they are not similar at all, really. Similar only in PRC's ambitions.
ksec 5y ago
Morris Chang has been exceptionally clear on this issues when he was still CEO of TSMC, even before the whole politics and TSMC becoming leading edge. It is impossible with respect to current cost structure, without substantial government money, while getting the same margin. Of course it is entirely possible to throw money at the problem and succeed. Which is what Intel is trying to do right now with the help of US government.
- m0zg 5y ago
  > Morris Chang has been exceptionally clear He can be "exceptionally clear" and still biased in favor of TMSC. > It is impossible with respect to current cost structure Well, we'll have to pay a few cents (or dollars) more per chip then. It is infeasible for us to continue to depend on TMSC in the long term - it will be taken over by our largest geopolitical adversary by 2030 at the latest. We do not have a choice but to either on-shore, or shift production to countries with far less geopolitical risk.
  - ksec 5y ago
    >He can be "exceptionally clear" and still biased in favor of TMSC. Probably. But It wasn't that TSMC doesn't want to move, he made it clear the maths doesn't work out. Giga Fabs operate at scale and efficiency is precisely why you could make a $30 M1 Die. >Well, we'll have to pay a few cents (or dollars) more per chip then. That is easier for mature node. But most of the time we are not talking about mature node but leading edge. If the maths were a few cents or even a few dollar things would have been done already. In US, for TSMC having the same margin would probably put M1 close to $50, while having higher initial R&D cost, meaning more volume to amortise the cost, or higher final retail price depending on sector. So Morris's question to TSMC's client, are you willing to pay 50% to double for US made silicon. As far as all major US players, that is Qualcomm, Nvidia, AMD and Apple. The answer has been a simple no. They want it cheaper! ( Looking at Nvidia's constantly moaning ) Of course there is another path, forcing TSMC to operate in US while lowering their Net Profit margin. Which is likely what is happening here. The only good thing is that US is finally understanding the risk of its supply chain. For some people like me who has been crying about it for nearly a decade.
drawkbox 5y ago
Once the chip shortage happened, partially due to geopolitical reasons, that changed everything. The West/US will never fully rely on a single point of failure again no matter how hard the HBS MBAs and Chicago thinking push it to trim and be "efficient". Some industries are too important for other industries and leverage on that over those areas is too risky and costly now. I'd pay double right now for GPUs directly from the source, not from some sketchy third party. Right now our EV/auto, space and even AR/XR industries as well as gaming and everything that requires chips, we are at the mercy of an external market that has a slant against the West. It will take some years to get out but we'll never not expect that in the future again. If costs go up costs go up, but availability should never be allowed to be used as leverage again, that is too risky and too costly long term. Availability that is reliable is always more important than efficiency or cost, because right now lack of availability is costing lots of extra time that has the potential to lose entire industries, that is not acceptable in any way. Very little margin and too much optimization/efficiency is bad for resilience. Couple that with private equity backed near entire market leverage monopolies/duopolies/oligopolies that control necessary supply and you have trouble. HBS is even realizing too much optimization/efficiency is a bad thing. The slack/margin is squeezed out and with that, an ability to change vectors quickly. It is the large company/startup agility difference with the added weight of physical/expensive manufacturing. The High Price of Efficiency, Our Obsession with Efficiency Is Destroying Our Resilience [1] > Superefficient businesses create the potential for social disorder. > A superefficient dominant model elevates the risk of catastrophic failure. > *If a system is highly efficient, odds are that efficient players will game it.* Hopefully that same mistake is not made in the future. It will take time to build up diversification of market leverage in terms of chips for availability. Hopefully we have learned our lesson about too much concentration, with that comes leverage and sometimes a "gaming" of the market. This chip shortage, and all the supply chain problems during the pandemic as well, will hopefully introduce more wisdom and knowledge into business institutions that just because things are ok while being overly super efficient, that is almost a bigger risk than higher prices/costs. Competition is a leverage reducer. Margin is a softer ride even if the profit margins aren't as big. [1] https://hbr.org/2019/01/the-high-price-of-efficiency https://hbr.org/2019/01/the-high-price-of-efficiency

nathanm412 5y ago

It's essential to Taiwan's survival for production to physically stay focused in Taiwan. I don't know if the US would be as willing to defend Taiwan if our own recovery wasn't affected by the chip shortage.

ineedasername 5y ago
Yep. to use a quote I've heard about another resource: "No one would care as much about stability in the Middle East if they produced toothpaste instead of Oil". Unfortunately at the same time for Taiwan, once the West's reliance on that area of the world for production becomes less of an issue, China's timeline gets accelerated much faster to the "No but really you're part of the PRC" point. Similar to how the PRC ratcheted up control over Hong Kong in 2020 when the rest of the world was basically "Sorry HK we got COVID issues k'bye"
- bytelines 5y ago
  > Similar to how the PRC ratcheted up control over Hong Kong in 2020 when the rest of the world was basically "Sorry HK we got COVID issues k'bye" Little more complicated than that - with HK there wasn't much the west could really do, or any obligation to do anything at all. There were no treaty obligations, as far as I'm aware of. Obligations to Taiwan have been covered since 1979, and there's the whole matter of the PRC needing to do am amphibious invasion against a prepared foe. I'd argue they are not similar at all, really. Similar only in PRC's ambitions.

ksec 5y ago

Morris Chang has been exceptionally clear on this issues when he was still CEO of TSMC, even before the whole politics and TSMC becoming leading edge. It is impossible with respect to current cost structure, without substantial government money, while getting the same margin. Of course it is entirely possible to throw money at the problem and succeed. Which is what Intel is trying to do right now with the help of US government.

m0zg 5y ago
> Morris Chang has been exceptionally clear He can be "exceptionally clear" and still biased in favor of TMSC. > It is impossible with respect to current cost structure Well, we'll have to pay a few cents (or dollars) more per chip then. It is infeasible for us to continue to depend on TMSC in the long term - it will be taken over by our largest geopolitical adversary by 2030 at the latest. We do not have a choice but to either on-shore, or shift production to countries with far less geopolitical risk.
- ksec 5y ago
  >He can be "exceptionally clear" and still biased in favor of TMSC. Probably. But It wasn't that TSMC doesn't want to move, he made it clear the maths doesn't work out. Giga Fabs operate at scale and efficiency is precisely why you could make a $30 M1 Die. >Well, we'll have to pay a few cents (or dollars) more per chip then. That is easier for mature node. But most of the time we are not talking about mature node but leading edge. If the maths were a few cents or even a few dollar things would have been done already. In US, for TSMC having the same margin would probably put M1 close to $50, while having higher initial R&D cost, meaning more volume to amortise the cost, or higher final retail price depending on sector. So Morris's question to TSMC's client, are you willing to pay 50% to double for US made silicon. As far as all major US players, that is Qualcomm, Nvidia, AMD and Apple. The answer has been a simple no. They want it cheaper! ( Looking at Nvidia's constantly moaning ) Of course there is another path, forcing TSMC to operate in US while lowering their Net Profit margin. Which is likely what is happening here. The only good thing is that US is finally understanding the risk of its supply chain. For some people like me who has been crying about it for nearly a decade.

drawkbox 5y ago

Once the chip shortage happened, partially due to geopolitical reasons, that changed everything. The West/US will never fully rely on a single point of failure again no matter how hard the HBS MBAs and Chicago thinking push it to trim and be "efficient". Some industries are too important for other industries and leverage on that over those areas is too risky and costly now. I'd pay double right now for GPUs directly from the source, not from some sketchy third party. Right now our EV/auto, space and even AR/XR industries as well as gaming and everything that requires chips, we are at the mercy of an external market that has a slant against the West. It will take some years to get out but we'll never not expect that in the future again. If costs go up costs go up, but availability should never be allowed to be used as leverage again, that is too risky and too costly long term. Availability that is reliable is always more important than efficiency or cost, because right now lack of availability is costing lots of extra time that has the potential to lose entire industries, that is not acceptable in any way. Very little margin and too much optimization/efficiency is bad for resilience. Couple that with private equity backed near entire market leverage monopolies/duopolies/oligopolies that control necessary supply and you have trouble. HBS is even realizing too much optimization/efficiency is a bad thing. The slack/margin is squeezed out and with that, an ability to change vectors quickly. It is the large company/startup agility difference with the added weight of physical/expensive manufacturing. The High Price of Efficiency, Our Obsession with Efficiency Is Destroying Our Resilience [1] > Superefficient businesses create the potential for social disorder. > A superefficient dominant model elevates the risk of catastrophic failure. > *If a system is highly efficient, odds are that efficient players will game it.* Hopefully that same mistake is not made in the future. It will take time to build up diversification of market leverage in terms of chips for availability. Hopefully we have learned our lesson about too much concentration, with that comes leverage and sometimes a "gaming" of the market. This chip shortage, and all the supply chain problems during the pandemic as well, will hopefully introduce more wisdom and knowledge into business institutions that just because things are ok while being overly super efficient, that is almost a bigger risk than higher prices/costs. Competition is a leverage reducer. Margin is a softer ride even if the profit margins aren't as big. [1] https://hbr.org/2019/01/the-high-price-of-efficiency https://hbr.org/2019/01/the-high-price-of-efficiency