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Ask HN: What happens if TSMC is destroyed?

41 points by throw10920 5y ago

With the Russian invasion of Ukraine, a lot of people are thinking about supply chains, especially when those chains are rooted in a hostile foreign country. What happens (to the US, EU, or whatever else you might have insight on) if TSMC is destroyed, say during a Chinese invasion of Taiwan? Are we facing a "1-year supply shortage while companies retool to US/EU fabs", or "nobody gets new electronics/cars for 5 years while whole chips are designed and fabbed, and their containing systems completely reworked"? My current working hypothesis: the former case sounds inconvenient - the latter sounds like it would cause riots in at least some countries (most notably the US with our electronics addiction and high silicon-per-capita ratio). However, I have very little experience with electronics design or semiconductor logistics. I know that there are a few silicon wizards floating around - any projections on the above?

jleyank 5y ago
If you're positing an invasion of Taiwan, chips are the last of the world's problems. Where are all of the devices made with those chips going to be made or shipped from? What could, for example, Apple even sell vs. a China embargo? Autarky isn't always the best solution, nor the cheapest solution, but sometimes it's a good solution. Or at least a safe one. Just do it peacefully...
baybal2 5y ago
I will weight in as somebody who had aspirations for a career in semiconductors more than a decade ago. Taiwan, and Asian semi ecosystem at large is unique, and irreplaceable, and not only TSMC as such. The fall of Taiwan will be: 1. Loss of unique, black box knowhow which people never put into any patents 2. Loss of single source consumables - a lot of chemical industry, metallurgy, plastic, machinery all exclusively used only by semi industry 3. Loss of 80% of world's semi workforce, both brains, and hands 4. Loss of services companies, and big part of the ecosystem supporting the fabs, like semiconductor logistics 5. Loss of unique semi equipment makers, not on the level of losing the crown jewel (steppers,) but nevertheless making it instantly impossible to build any new fab line until a replacement is redeveloped from scratch. People who say that Taiwan is not big in semi tool making don't have an idea. So if you completely erase this part of the world, the maximum the world can hope for within 5 years is just to restore functioning of a single pre-existing fab per country. All its outputs will be no doubt be only used for defence electronics. In other words Facebook, Amazon, Google, and all tech industry all bye bye. Modern "disposable electronics" barely lasts 2-3 years. South Korea, or Japan will be there first, and they will demand The King's Ransom for fab access. The first new fabs built from scratch will only be possible to make in 7-9 years term, using eighties era technology, and that is if the war will end quickly.
- goldname 5y ago
  Doubt it. China will def preserve TSMC. Taiwanese engineers would just work for the mainland.
  - randomhodler84 5y ago
    China won’t have the chance. The fabs will be destroyed before the first PLA foot hits the ground. All parties know this. It will set the world back decades.
    - dirtyid 5y ago
      No parties know this. Entire TW will blow up its own fabs started off as meme that people have ran with. The only serious analysis about deliberately blowing up TW fabs was by US Army War College on the poor premise that it would deter PRC invasion when destroying fabs work in PRC favor by resetting everyone back decades... closing the gap. It's more likely US & PRC will coordinate to save TW fabs with TW leadership cooperation because US controls inputs via supply chain and save trillions in US advanced industies. TW leadership will cooperate because not wiping out advanced western industry is the one golden ticket they have of comfortable retirement in the west. PRC gains leverage and access by hosting fabs. 100,000s of TW semi engineers has a comfortable future working status quo. It's basically the only arrangement that works out for everyone versus semiconductor mutually assured destruction. Reality is US has leverage via tech sanctions during peacetime, PRC has leverage during wartime by threatening to destroy all east asia semi supply chain which will kick world back to 80s instead of 00s. It's in everyone's interest not to normalize disrupting semi production.
      - baybal2 5y ago
      - dirtyid 5y ago
        @baybal2 Your comment is dead. It's US publication, they're not blackmailing themself unless drive for strategic clarity. But not compelling deterrence. Response in TW media to report was leave TSMC alone. Nothing official I've read suggest blowing up fabs for US protection since US protection is for those fabs. Like I don't doubt TW will play blackmail card if viable, but US can't slap enough free missile defense to make TW semi supply chain defendable. On point two, perhaps. In the meantime, I assume it will take decades to reshore supply chains independent of TW making for some uneasy peace. I'll be stocking up on hardware. E: Shame, a lot of your comments are dead actually.
als0 5y ago
Chip designers will use fabs at Samsung or Intel.
- dyingkneepad 5y ago
  Except they will be full.
  - als0 5y ago
    TSMC today is already full. What is your point?
simonblack 5y ago
That would pretty much mean that most countries would be starting off from a level playing field in producing their own chips. With South Korea being top dog for a while. Within 5 years or so, China would become the biggest producer as it has the money available for the greatest investment. The US would continue its decline from being the top dog in the 1980s to becoming pretty much irrelevant in chip production, though they would still be amongst the top designers for a while longer.
- goldname 5y ago
  That doesn't make any sense. Intel is also a huge producer of high end chips.
  - simonblack 5y ago
    Intel doesn't have a lot of advanced fabs in the US. Hence the steady decline in its production figures. Intel still has good designers, but not the fabs to produce those designs. Cost-wise, Intel production in the US is not competitive.
    - tarlinian 5y ago
      That’s just not true? They have significant amounts of production in Arizona, some in Oregon (along with TD) and then the rest in Ireland and Israel (which probably aren’t much lower cost than Arizona)
- seanmcdirmid 5y ago
  China still lacks the ability to produce modern process sizes with decent yields, and I don't think the west is going to sell them the equipment needed to do that anytime soon. So maybe 15 or 25 years to catch up?
goldname 5y ago
TSMC should be the least on your mind if China goes to war with the USA
axiosgunnar 5y ago
Immediately deck yourself with all the electronics you might need over the next decade, and then some. It would get really nasty.
bick_nyers 5y ago
It would go far beyond the scope of just the semiconductor supply chain. We would likely enter a modern dark ages.
seanmcdirmid 5y ago
A lot of the fab equipment, along with the technical secrets needed to produce such equipment, is locked down in the USA and western Europe. So it really isn't that hard to set up high yield/modern process FABs outside of Taiwan. The bigger loss would be the more affordable talented Taiwanese engineers that the west doesn't really have. If they somehow got out of Taiwan before the fabs are destroyed, their work could be recovered relatively quickly.
- Gollapalli 5y ago
  >more affordable talented Taiwanese engineers I could accept it if the Taiwanese were just better at this sort of thing than Americans were, but do we really need to be offshoring strategic resources because it's too expensive to pay engineers middle-class wages?
  - b3lvedere 5y ago
    If cheaper options are available, all other alternatives are considered expensive.
  - seanmcdirmid 5y ago
    A lot of it is due to investments made by Taiwan when semiconductors were in their infancy, with support from the USA, that created momentum. The USA, in contrast, still imports much of the talent in this area. Our kids weren’t even very interested in computer science until recently, and software has sucked away talent from EE and other hardware disciplines.
    - Dracophoenix 5y ago
      Why not move into Japan or South Korea? Sony and Samsung engineers aren't any less able.
      - seanmcdirmid 5y ago
        They aren't, situations similar to Taiwan in talent and inter-dependence with the west. But in the case that China invaded Taiwan, neither Japan nor South Korea would be in particularly good stable spots for awhile.
randomhodler84 5y ago
This would mean no more stuff for decade, and likely set the world back decades. We are already facing the specter of famine due to loss of crop yield from loss of fertilizer from the oil industry with regards to the Russia-Ukraine war. A PRC vs ROC war would starve the world of general tech. No cars no phones no laptops no servers. Back to the Stone Age.
farseer 5y ago
I think TSMC has built a sold production line/process to make high end chips but all the equipment still comes from EU, Japan, America. Samsung in theory can makeup the shortfall over a few years. We would be in more trouble if ASML drowns in a Tsunami.

baybal2 5y ago

> A lot of the fab equipment, along with the technical secrets needed to produce such equipment, is locked down in the USA and western Europe. It may look so from the West. Big name equipment like steppers, and deposition tools come from the West, but a lion share of everything else is a product of the local supply chain. Without that, setting up new fabs elsewhere is not possible. Because some globally single source consumable are too locally produced, you cannot talk of even resuming production at existing fabs. Fellows funded by some suspicious foundations in the West arguing for "we will coax TSMC to build a fab in America, and then we can betray them" are pushing an exact line as Beijing. First, they are not engineers, and have no idea how the industry functions. Fabs will stall within weeks after running out of consumables from Taiwan. Second, America cannot "weather the storm." There will be absolutely no arrangement possible how the US can regain access to semi once this is over in any way.

seanmcdirmid 5y ago
America already has a huge semiconductor industry (45% of the market by revenue), it’s not like all the fabs shipped off to Taiwan and Korea. “Regain access” isn’t a problem, but ramping up capacity would take a couple of years.
- baybal2 5y ago
  > has a huge semiconductor industry (45% of the market by revenue), What matters is not revenue, but physical manufacturing, and where it is. The global industry today is paralysed by lack of nothing more than few cent microcontrollers. As I said above, restoring working of existing fabs will require rebuilding the entire Asian supply chain for chemicals, spare parts, consumables, and services. LAM, KLA, Advanced Materials, ASML — their tools are 50%+ foreign parts, and materials.
  - seanmcdirmid 5y ago
    > As I said above, restoring working of existing fabs will require rebuilding the entire Asian supply chain for chemicals, spare parts, consumables, and services. As I said, we produce a lot of high-end semiconductors in the USA: the supply chains are already there, they are simply more expensive. If consumer semiconductor production had to move back to the states, we would have to repurpose those supply chains, they probably would never be as cheap, but we are talking 10 or 20%, not something horribly crippling to the economy.
    - baybal2 5y ago
      Yes, US produces something, but there are things US simply doesn't produce, and never produced. This is where the price doesn't matter. Non-fluoropolymer high temperature super low outgassing plastics, and plastic parts used in semi equipment for example. That's an expertise that simply never existed in the West, and will have to be built from scratch, taking precious years.