TSMC’s dominance poses risks to the global economy(wsj.com)
wsj.com
TSMC’s dominance poses risks to the global economy
https://www.wsj.com/articles/the-world-relies-on-one-chip-maker-in-taiwan-leaving-everyone-vulnerable-11624075400
8 comments
It's interesting to think about what the solutions to this problem are. The advantages of buying from TSMC are presumably they have a lead in both technology and cost that will make your product better and cheaper. The disadvantages are that in natural disaster or war/military event the chips won't be available and you'll have difficulty shipping your products.
It's very hard for a company to take the latter seriously (like the supply chain issues that arose due to covid) when it is a very rare event that will likely have other large effects on your market and your competitors also.
Governments stepping in to subsidise/force use of other companies will likely reduce the short term profitability or commercial appeal of your product.
It's very hard for a company to take the latter seriously (like the supply chain issues that arose due to covid) when it is a very rare event that will likely have other large effects on your market and your competitors also.
Governments stepping in to subsidise/force use of other companies will likely reduce the short term profitability or commercial appeal of your product.
The investments needed to improve processes have been going up every year. There can only be so many companies that can pour billions of dollars into R&D each year.
If you want to sustain a local cutting-edge manufacturer even when its capacities are redundant or too small to be economical then the pot of subsidies would have to increase yearly and not be spent wastefully. Is there a precedent for that?
If you want to sustain a local cutting-edge manufacturer even when its capacities are redundant or too small to be economical then the pot of subsidies would have to increase yearly and not be spent wastefully. Is there a precedent for that?
The solution is to collectively, clearly, and politely tell the Communist Party of China to get fked. A lot of companies will lose money and a lot of things will get expensive, but it’s either rip the bandaid off now or amputate a limb later. Does the world have the courage to do it?
Looking at the Sudetenland crisis of 1938, it doesn't.
It took several iterations of territorial expansion for Germany to be considered an actual fightable foe. Austria, Memel, Sudetenland, the rest of the Czech lands, Poland. Even after the invasion of Poland, when war was declared, it was a Phony War in the beginning. The fighting in the West only really started in 1940.
It took several iterations of territorial expansion for Germany to be considered an actual fightable foe. Austria, Memel, Sudetenland, the rest of the Czech lands, Poland. Even after the invasion of Poland, when war was declared, it was a Phony War in the beginning. The fighting in the West only really started in 1940.
The world didn't tell Russia to get fked when they occupied Crimea and started a shadow war with Ukraine.
There is a very simple way of telling a country to revert course: deem their passports no longer valid. Fundamentally, the right to move between countries is provided by the International Covenant on Civil and Political Rights Article 12 which says "Everyone shall be free to leave any country, including his own" but then continues "The above-mentioned rights shall not be subject to any restrictions except those which are provided by law, are necessary to protect national security, public order (ordre public), public health or morals or the rights and freedoms of others, and are consistent with the other rights recognized in the present Covenant".
For China, it'd be even easier since they signed but didn't ratify this treaty despite it has been signed in 1966 and in force since 1976.
There is a very simple way of telling a country to revert course: deem their passports no longer valid. Fundamentally, the right to move between countries is provided by the International Covenant on Civil and Political Rights Article 12 which says "Everyone shall be free to leave any country, including his own" but then continues "The above-mentioned rights shall not be subject to any restrictions except those which are provided by law, are necessary to protect national security, public order (ordre public), public health or morals or the rights and freedoms of others, and are consistent with the other rights recognized in the present Covenant".
For China, it'd be even easier since they signed but didn't ratify this treaty despite it has been signed in 1966 and in force since 1976.
I doubt it would have been the same if Crimea(or Ukraine in general) had the world leading chip manufacturer
on their territory. Unfortunately other powerful countries had little reason to care about it, outside of some sense of duty or agreements which were signed decades ago and no one really felt like enforcing.
Here is another headline, The world relies on two chip marker in South Korea for NAND and DRAM, leaving Everyone Vulnerable.
Although arguably NAND and DRAM are commodities, and US already has a back up strategy ( Micron ).
Although arguably NAND and DRAM are commodities, and US already has a back up strategy ( Micron ).
Here is another one. World relies on only one relatively obscure dutch company for its EUV lithography equipment. For DUV the market is divided between 3 players two in japan and the aforementioned one. Apps market for semiconductors is also cornered by two companies. This whole space has consolidated in last decade or so. Everyone wants to have full control over their supply chain, so everyone is trying to buy their entire supply chain.
There's also a surprisingly tiny market for stepper makers, which I didn't even know where a complex thing until a few months ago.
Any competitors to ASML?
No real competitors. They own the EUV market because they own the only company making EUV sources (Cymer). They also work very closely with Zeiss and co own some of the important patents I think (but don't quote me on this). A Japanese company Gigaphoton made a EUV source, but I am not aware of any orders from any major fab to them. I think since 2018 they are just trying to be second source for source parts (guessing from the fact that they have stopped publishing HVM numbers and are more focused on proving they can make reliable parts). Its become so sad that they don't even mention their EUV source on their website, but then again these type of companies rarely pay attention to their web presence.
Cymer is not the only company producing EUV sources. There are some Japanese companies that do produce them too, (e.g. Ushio). And ASML itself uses Trumpf's (Germany) lasers instead of Cymer.
https://www.laserfocusworld.com/blogs/article/14039015/how-d...
https://www.laserfocusworld.com/blogs/article/14039015/how-d...
Trumpf doesn't make the EUV source it makes the CO2 laser which produces the plasma in Cymer's EUV source. Ushio does make a EUV source but thats not for manufacturing, its for inspection. The power difference itself should tell you that its a different ball game entirely.
The Netherlands are not located just next to a hostile military power, though.
East Asian IC supply chains in general, PRC/TW/JP/SKR accounts for ~75% of global IC capacity. Losing TSMC in war over TW will set the world back 1-2 nodes and ~10 years. Having expansive regional war (i.e. US trying to defend TW from JP/SKR bases) that knocks out the regions semi will set world back decades of capex. It's almost like MAD for semiconductors until enough gets reshored away from east asia.
Reminds me of Asimov's "Foundation" (https://en.wikipedia.org/wiki/Foundation_series).
The (first) Foundation was set up on a small, insignificant planet, surrounded by belligerent powers. Its continued existence was made possible only by playing those powers off against one another.
And the Foundation itself: highly advanced technology that those very powers came to rely on...
The (first) Foundation was set up on a small, insignificant planet, surrounded by belligerent powers. Its continued existence was made possible only by playing those powers off against one another.
And the Foundation itself: highly advanced technology that those very powers came to rely on...
I believe this is some political campaign to get financial support for certain endeavors.
Why is news like this not driving the stock price up?
I mean to me this sounds as if TSMC could easily raise prices and increase profits and their customers will still buy the exact same amount... Because they have to.
I mean to me this sounds as if TSMC could easily raise prices and increase profits and their customers will still buy the exact same amount... Because they have to.
The risk TSMC faces is that competitors will bring up new capacity and deal with improved performance, the stock projects the value of profit "forever" not just for the next couple years.
(Inaccurately projects)
Nothing is “priced in” and prices really highly on historical volatility
One way to tell is to look at how nearer term options are priced than LEAPS are. LEAP pricing is telling you nobody knows a damn thing and they are consistently undervalued.
Nothing is “priced in” and prices really highly on historical volatility
One way to tell is to look at how nearer term options are priced than LEAPS are. LEAP pricing is telling you nobody knows a damn thing and they are consistently undervalued.
I wonder if China will invade. If the last few years have told us anything, it's that China can do whatever it likes. The rest of the international community is fractured like never before. There may never be a better time, if and only if China can get it done quickly and reliably. Xi (Winne the Pooh) is in a strong place to do it politically.
I suspect China is overestimating the strength of their hand. Their economy is dependent on foreign corporations voluntarily choosing to manufacture there. If they start acting like a third-world kleptostate, they'll be branded as unreliable business partners and have to go back to sorting trash.
China has the 2nd largest (and according to some sources, probably the largest) consumer market on Earth, and is currently, by a large margin, the largest market for Cars, Smartphones, PCs, Fashion, and a host of other product categories. In 2020, China was the only major country where global corporations didn't see a significant decline in sales growth.
China is also, again by far, the largest e-commerce market and the largest mobile payments market on Earth.
I apologize for sounding like an infomercial, but these are basic economic facts that one would expect a reasonably well-read individual to be aware of. I would advise that in future you get better informed before coming here to advertise your ignorance.
China is also, again by far, the largest e-commerce market and the largest mobile payments market on Earth.
I apologize for sounding like an infomercial, but these are basic economic facts that one would expect a reasonably well-read individual to be aware of. I would advise that in future you get better informed before coming here to advertise your ignorance.
>corporations voluntarily choosing to manufacture there
I'm not sure how true that is anymore. Companies trying to manufacture elsewhere have to cope with 101 issues that increase costs. Everything from JIT logistics not working to lack or workers to uncooperative governments. China is getting more expensive and some low skill work is going elsewhere. But for most companies, setting up elsewhere means prices much higher than the market will tolerate.
I'm not sure how true that is anymore. Companies trying to manufacture elsewhere have to cope with 101 issues that increase costs. Everything from JIT logistics not working to lack or workers to uncooperative governments. China is getting more expensive and some low skill work is going elsewhere. But for most companies, setting up elsewhere means prices much higher than the market will tolerate.