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> The biggest reason is geopolitics: If escalated confrontation happens with China If escalated confrontation happens with China, and that is massive IF that i

> The biggest reason is geopolitics: If escalated confrontation happens with China If escalated confrontation happens with China, and that is massive IF that is dependent on insanely belligerent action from the West like giving nukes to Taiwan, then new semiconductor manufacturing will be the least of our worries. A Chinese blockade on Chinese and East Asian exports to US would result in total economic collapse in USA over a relatively short period. $100,000,000,000s in real demand for goods no longer being met over the span of weeks. The possibility of direct conflict with China is the domain of armchair strategists that consume too many Reddit headlines, Peter Zeihan, Economist, etc., and individuals directly downstream of the defense budget, where Threat Inflation is good business. It's really not something that serious, intelligent people are anticipating on the horizon (again, outside of the wildcard of an insane new administration in Washington). Even the insane combo of Matt Pottinger, Mike Pompeo, John Bolton didn't get close to manifesting it (allegedly, some of their attempts were undermined by backchannel diplomacy from Gen. Milley and the JSOC). So what's the real risk?

015a 2y ago
There are a thousand different ways that "escalated confrontation" with China can fall short of "direct conflict" while still negatively impacting TSMC's ability to allocate production to the west. That's why I said "escalated confrontation". If the only ways you can think of it happening is what Zeihan says, then that's simply a failure of your own creativity. One moderately realistic one: Taiwan experiences something similar to what happened in Hong Kong, during a time when US leadership is not motivated to aid in its defense. This isn't a situation where China and the US are at war; we're still trading with China; and broadly speaking the economies of both countries are fine. But, Taiwan isn't, and whether it surfaces as key TSMC talent/tech leaving the country, military action, or just PRC subtly shifting TSMC's allocation priorities toward the homeland: western chip manufacturers could benefit. This isn't seemingly likely to happen in the next four years given the stated priorities of both sides of the political isle; but the right is shifting more-and-more isolationist every year, and no one arguing in good faith would speak with such certainty as you have on what happens 2028 and onward.
mrighele 2y ago
> that is dependent on insanely belligerent action from the West like giving nukes to Taiwan The USA administration has stated several times that they would defend Taiwan if China invaded (see for example [1]). Would you consider that an "insanely belligerent action from the West"? You can argue that China is not going to invade any time soon, but I wouldn't consider the probability negligible. [1] https://thediplomat.com/2024/06/what-to-make-of-bidens-latest-promise-to-defend-taiwan/ https://thediplomat.com/2024/06/what-to-make-of-bidens-lates...
TheAlchemist 2y ago
While I agree that a full blown confrontation with China is unlikely (although I do think the probability of it is nowhere near 0), I think your thinking is kind of flawed too. Why would there be a total economic collapse ? What are the strategically important things imported from China that US couldn't live without, and that couldn't switch to importing from eslewhere or manufacturing at home, in times of war ? My understanding is that US would is importing a lot of non critical things, whereas China is much more dependent on importing critical commodities (food, oil).
rl3 2y ago
>(allegedly, some of their attempts were undermined by backchannel diplomacy from Gen. Milley and the JSOC) Did you mean JCS (Joint Chiefs of Staff)?
- pphysch 2y ago
  Yes

015a 2y ago

There are a thousand different ways that "escalated confrontation" with China can fall short of "direct conflict" while still negatively impacting TSMC's ability to allocate production to the west. That's why I said "escalated confrontation". If the only ways you can think of it happening is what Zeihan says, then that's simply a failure of your own creativity. One moderately realistic one: Taiwan experiences something similar to what happened in Hong Kong, during a time when US leadership is not motivated to aid in its defense. This isn't a situation where China and the US are at war; we're still trading with China; and broadly speaking the economies of both countries are fine. But, Taiwan isn't, and whether it surfaces as key TSMC talent/tech leaving the country, military action, or just PRC subtly shifting TSMC's allocation priorities toward the homeland: western chip manufacturers could benefit. This isn't seemingly likely to happen in the next four years given the stated priorities of both sides of the political isle; but the right is shifting more-and-more isolationist every year, and no one arguing in good faith would speak with such certainty as you have on what happens 2028 and onward.

mrighele 2y ago

> that is dependent on insanely belligerent action from the West like giving nukes to Taiwan The USA administration has stated several times that they would defend Taiwan if China invaded (see for example [1]). Would you consider that an "insanely belligerent action from the West"? You can argue that China is not going to invade any time soon, but I wouldn't consider the probability negligible. [1] https://thediplomat.com/2024/06/what-to-make-of-bidens-latest-promise-to-defend-taiwan/ https://thediplomat.com/2024/06/what-to-make-of-bidens-lates...

TheAlchemist 2y ago

While I agree that a full blown confrontation with China is unlikely (although I do think the probability of it is nowhere near 0), I think your thinking is kind of flawed too. Why would there be a total economic collapse ? What are the strategically important things imported from China that US couldn't live without, and that couldn't switch to importing from eslewhere or manufacturing at home, in times of war ? My understanding is that US would is importing a lot of non critical things, whereas China is much more dependent on importing critical commodities (food, oil).

rl3 2y ago

>(allegedly, some of their attempts were undermined by backchannel diplomacy from Gen. Milley and the JSOC) Did you mean JCS (Joint Chiefs of Staff)?

pphysch 2y ago
Yes