I see it another way for more chip manufacturing capacity.Rather, the only thing that will truly motivate TSMC to take on more risk is competition.If big tech wants TSMC to increase capacity drastically without TSMC having to take all the risk of CapEx, then they can pre-pay for wafers from TSMC.
They can each give TSMC $10b now in cash and guarantee themselves wafers in 2-3 years that it takes to bring a new fab online.
TSMC is rightfully conservative. If they commit to spending an extra $30b on a fab now that won't make a single wafer until 2029, without any guarantees from big tech, they're stupid. Who knows if the demand will still be there (my guess is yes, but who knows?).
In my opinion, I think it's getting close to this. Nvidia will surpass Apple as TSMC's biggest customer this year. This will start a war for TSMC wafers in 2026 in my opinion. When you have that much demand, customers will be forced to pay well in advance.
There is already a war for memory, silver, copper, energy. No reason why chip production won't be next.
This is exactly what TSMC does and they have taken money customers placed in escrow. NVIDIA's investment in Intel is a hedge against TSMC. The hyper-scalers are free to invest in a second source if they want.
I do wish Intel an Samsung would cooperate on open source EDA (etc) software to make switching to other fabs less risky and capital intensive.
Isn't that what Apple did originally with TSMC? Payed for capacity rollout?
I think most customers nowadays pre-pay for fab capacity. TSMC is running at 100% capacity for their N5, N3, and N2 nodes. Apple certainly makes extra commitments to be the first to use a new TSMC advanced node. They will be the first to ship an N2 chip by a few months when they release the iPhone 18 Pro.
However, I'm talking about booking wafers from a fab that hasn't started and won't make a single wafer 3 years from now. The scale is different. Imagine Nvidia, Apple, Google, AMD, Microsoft, Meta, Amazon telling Wall Street in their earnings report that they sent TSMC $5 billion each this quarter and won't receive a single wafer for another 3 years from the investment. I fully expect this to happen soon. I'm almost certain that you'll hear in the upcoming earnings reports that big tech sent Samsung, Micron, and SK Hynix billions in advance payment to secure memory supply years from now. I think this is likely the same for chip fab capacity soon.
> I'm almost certain that you'll hear in the upcoming earnings reports that big tech sent ..billions in advance payment to secure memory supply years from now.
And this would be no different than investing billions in R&D (Ex. Meta and AR) for future payouts.
Or, Apple buying 10000 advance CNC machines for their manufacturer. In this case timeline for future payout is perhaps much shorter but the pertinent point will be Apple invested in Capex upfront.
The more complex the process becomes, the harder it is to have equivalent competition so you're bound to have issues where a single company's investment decisions have widespread impacts.
My perspective on the China risk differs some, though. China wouldn't benefit much from attacking TSMC. This is the first time I've heard anyone suggest that they might. At best they'd like to have it in-tact if they do take Taiwan, but there have been talks about machines being rigged to explode to deny them from China, or the US striking them in that scenario.
If neither we nor China get to work with TSMC, then we're still ahead in relative terms. If China did attack TSMC, they set the norm that the fabs (including their own) are now a fair target which would be a larger disadvantage for them than it would be for us since China's physical power projection remains pretty regional outside of Chinese nationals abroad engaging in sabotage.
That is one of their biggest weaknesses. Yes they have a lot of manufacturing capacity and a large population with many talented people, but in a way we have lent them the power to scale up to see what they'll do. We are already putting some pressure on that scale now that they've shown who they are, but if it came to war it would be very doable to start reversing their scale and their capacity to do the same to us would degrade as ours increases.
Even if all the AI in the world was destroyed, that's how it would play out. The problem is that Taiwan remains in close proximity to China so similar to Ukraine it would likely come down to how long they're willing to throw everything at it.
If Russia and China wanted to be powerful, it's just idiocy to show the existing superpower that you cannot be trusted with the power you have. If they fancy a merit based society, they forgot that merit isn't omnipotence and you still need the right ideas to be at the top to accompany the merit. For China maybe they need AI for that alone, but western societies at least have ways for the right ideas to make it to the top without the strict need of AI.
I do not know if China could find a better window to take Taiwan,
Big tech manufacturers are treating consumers like crap by selling chips and memory to over-invested start-up companies that will go bankrupt, as these products will not be profitable due to the high costs (the technology that would make them profitable does not exist and has not even been conceived), in addition to the low long-term quality of what they offer.
The thing is, right now, billions of consumers around the world see how those big tech manufacturers are not serving them the pieces they need, and that such techs will not do in the near future with fair prices (prices abuse escalation, the consumers lost their strength).
Right now, if China takes Taiwan, 2026-2027, even if they lose the fabs, the billions of consumers in this planet will see this as a real f** you big techs, f** you overinvested startups hoarding, go go China, as we realize that we are third category citizens in this "first the riches" spiral, and will be no much difference of what is going on now.
If China takes his media news cards right, and makes know the consumers this is a revolution, and combine it with one of the numerous Taiwan's corruption scandals, I bet they will not find the opposition from citizens around the world that they would find in a different period of time.
By "consumers" you mean by people buying top tier gaming PCs (and either without one already or unwilling to wait). That's far less than billions if not even millions than more like thousands.
Besides, if you want to optimize for pure consumerism, you can just look at how roman slavery worked out for roman freemen in the late republic.
> By "consumers" you mean by people buying top tier gaming PCs (and either without one already or unwilling to wait).
Good try. We are talking about a window of X years were the average normal consumer, average people, will not be able to buy tech, and should not buy tech, due the prices will put, has already put, average low-end technology at prices of extra mega top tier technology, anything with a memory or disk or CPU ( too expensive, this is an abuse, it is better to wait given the current terms).
This pause were the tech supply is not destined to the average consumer (who is being abused due this) is the perfect window for China to take Taiwan if they plan the strategy well.
And it is not needed even to predict, Chinese government just need to follow/observe the prices and discomfort, and if the pattern follows, it is the moment. The average consumer, the people, even will aim them.
Seems like China is entering every industry. This week they just launched their attempt to take over the ice cream market in the US. Its amazing to see how much overinflated every product in the US has become, everything from cars, to computers to now even freakin coffee or ice cream.
[0]: https://www.youtube.com/watch?v=Kcae6aiV1vs
Imagine if China has a foothold in every industry. Sure the US can tariff itself but the rest of the world is not really competing in most of those industries and so consumers will be able to see that they dont have to settle for overpriced junk anymore. What will American/European or even other sian companies do? In America most companies have financialized so much that the underlying product that made the company famous have rotten in quality.
I recently was blown away Laifen's P3 Pro electric razor. I always thought I would be a loyal Panasonic customer for life (since I had family work for the company) but here comes this Chinese company from nowhere and they produce such an amazing device at an amazing price. I never thought having a CNC milled pocket razor using some sort of tiny linear motor would be something I would want but now I can't see life without it.
They are doing it to every industry. I always accepted things like 3D printers were gone thanks to Bambu but I now have to consider every industry at risk.
In my humble opinion, China taking Taiwan, if done under Trump, will be the market buying event of the century.
It will tank the markets because people will assume a depression-level event and WW3. But Trump isn't like other presidents. He'll make a deal with China. And finally, the China/Taiwan cloud over the markets will go away for good and countries can start trading freely with China again. Markets will severely over react initially.
I can see TSMC benefiting hugely from this long term, as long as the reunification is peaceful no damage to any TSMC fabs or people. The reason is because TSMC will most likely be forced to open up to both Chinese and US customers. Right now, they can't serve the world's second largest market. Nearly half of their customers can't use them.
I'm making these assumptions:
1. China won't use force (or very very little) to take Taiwan.
2. There won't be WW3 that will come out of this. You'd have to be an idiot to think that Americans will die defending Taiwan or that Europe will send troops when China is quickly becoming their biggest trading partners and US has shown they're susceptible to annexing Greenland.
3. China will operate 1 country 2 system long term with Taiwan.
1. I generally agree that China has a better chance with hybrid tactics that escalate in ways that meter western response, but Taiwan can force escalation too once it reaches a threshold and it would be within its right to.
2. If Russia, North Korea, South Korea and Japan join in there is a lot of potential for it to scale up. Whether it would become an all out horrific war like a World War or stay a little bottled up, it does risk becoming a huge conflict. Many Americans love South Korea and Japan, though they're less informed about Taiwanese. If South Koreans and Japanese are dying, we will be involved in one way or another.
3. No it won't. Look at what happened with Hong Kong, it broke its promise, just like the CCP breaks many of its promises. Not sure how bad they are compared to Russia in that regard, but it's pretty bad. Besides, if China wants to expand the way it seems like they want to, they need to take Taiwan so I doubt they would slow roll it.
2. Americans don't love South Korea and Japan enough to go die for them. You'd have to be insane to believe that.
3. Hong Kong is still a different system last I visited (2024).
American foreign policy has never been to "die for x country" other than existential conflicts like WW2. It doesn't matter how much americans love one country or the other, as much as the strategic reasons behind the war. This is what we have seen in the previous decades of conflicts that the US has been involved in.
Yea but you have someone else in this exact thread saying the opposite.
Well, South Korea and Japan being involved would just be one factor that makes justification even easier. The real reason would be national and global security. It's in the interest of preservation of freedom. You don't wait until the enemy is at your doorstep, because that means you allowed them to snowball an avalanche at you. You meet them at their doorstep before they've gained full momentum.
Do people still believe it’s about freedom?
Absolutely, because it is. Sometimes it's about X, because X is also related to freedom.
Let's set X = oil. Oil is a critical resource that is huge for transportation. If you are the one that controls it and people need it from you, that gives you leverage to encourage them to do what you want. An authoritarian country that engages in mass killings and torture of its own people could get away with a lot and even abuse other countries if it has enough oil.
You can apply this to nukes and many other things. Like maybe you defend an ally. Why defend an ally? Having them makes you stronger. Why do you need to be stronger? To defend the way of life you believe in.
You think the US is still morally superior?
Could you please consider making your points without "you'd have to be insane/an idiot to believe X"?
Fair enough.
The US has shown that it can't handle any level of discomfort. The reason Trump is back in the white house is because grocery prices went up a little bit. Can you imagine the failure of the tech companies that are propping up the entire economy? That would happen under a Taiwan invasion scenario. China has a much high pain tolerance than US citizens at least. I'd argue they would outlast the US. Would they outlast the US military? I don't know. But it may not matter as given enough pain the US population will make itself heard.
I think you're conflating different contexts and scenarios. People aren't used to war being brought to the US itself. Look at Pearl Harbor and 9/11, both rallying the country pretty well. Attacking the US mainland is a losing strategy.
If people generally understand that we're intervening in a China/Taiwan conflict for the right reasons, and China attacks us at home it would only accelerate the west. If you look at Vietnam, the logic around that war fell apart and it no longer made sense to continue it. The people were right to push back. Iraq and Afghanistan went on for a long time without much fuss.
Some kind of conflict in South East Asia would likely largely be a naval and resource war, with many casualties being naval rather than mainland. Most losses on both sides will probably be drones, AI or not.
If it came down to attrition, it would maybe be AI machine attrition or drone/missile attrition which is in a way a resource war which the US could win even without TSMC, but from where we're standing today it would take more ramping up which is a process that has already started.
If OpenAI, Google, Microsoft, Amazon, etc were attacked by China in a more critical way, it would have to be for some major short term advantage that is capitalized on immediately, because long-term it would be a losing strategy by itself. China has systems to disrupt as well, so if they let loose on cyber then the US has options too.
Either way, don't conflate general economic preference around an election for whether people would tolerate being unable to access Gmail or order from Amazon like they would all rush to riot in the streets. I think that misreads the situation.
Pearl Harbor and 9/11 are not great examples as they happened in the context a wildly different America. 9/11 was almost a quarter century ago. In both cases the country was more unified and had less income inequality then it does now. Enough people were disgusted by Biden not moving the needle for them personally they ignored the first four years of Trump and voted in him again just so they could benefit themselves.
>If it came down to attrition, it would maybe be AI machine attrition or drone/missile attrition which is in a way a resource war which the US could win even without TSMC, but from where we're standing today it would take more ramping up which is a process that has already started.
I'd argue China adding 1/3 of the entire US electricity capacity in a single year and increasing along with their extreme battery overcapacity makes AI and drone production something that China will win. Like I said it remains to be seen how will the US military will hold up because they do have the Arizona TSMC facility running and that could be a buffer to help the US hold on but people will still feel the pain in massive inflation in all areas and thats where peoples selfishness will rear its ugly head. Why care about Taiwan when the population could just elect someone that will negotiate a short term win for the US (at the expense of a long term loss).
>If OpenAI, Google, Microsoft, Amazon, etc were attacked by China in a more critical way, it would have to be for some major short term advantage that is capitalized on immediately, because long-term it would be a losing strategy by itself. China has systems to disrupt as well, so if they let loose on cyber then the US has options too.
So I have been in meetings for things like Franklin Project (https://defconfranklin.com/) which are among many great initiatives the people are doing to help the US prepare for an initial attack where China disrupts all the little mom and pop orgs scattered across the US in a first strike to disorient the homeland. Is it enough? I dont know, we will have to wait and see. I dont know what China is doing to prepare for a response. It seems like their AI initiatives are a pragmatic move (use low cost Ai implemented at various layers across the stack) I do worry that in the last few years its been revealed how little so many Americans take education and critical thinking seriously and that will directly translate into sloppy IT infrastructure around the country.
>Either way, don't conflate general economic preference around an election for whether people would tolerate being unable to access Gmail or order from Amazon like they would all rush to riot in the streets. I think that misreads the situation.
I think you misread my point: Americans would make themselves heard by electing someone who will deliver a quick relief for them at the cost of long term loss.
Off topic, but the reason Vietnam played out the way it did was because of China's implicit guarantee that they'd intervene in force if American troops came anywhere close to their borders like during the Korean War.
Fresh off WW2, with a titanic arsenal and industrial base, America and all of its allies couldn't end the war on their terms after China intervened.
That's why the US only did search-and-destroy missions, targeting Vietcong cells in the south and bombing supply lines in Laos. Which didn't matter much.
Once the Americans left, the North marched down a proper army and wrapped it up.
I assume that in the failing of the tech industry brings discomfort like you mentioned will have an impact on society such as strikes, riots, protests. The US will surely hope this gets mirrored to the Chinese society, although i would like the mention that there is a difference between self sabotage and external sabotage, Chinese people are pretty understanding and patient not all are against their government. Most respect and are grateful for what their government has done for the country in the last 30 years,, i would say roughly 80% of them feel this way. This sentiment is beneficial, because it only speeds up recovery from economical disruptions such as this example, housing market is another story.
Another note most of the world understands US's strategy for this type of disruptions used as a weapon, if they can cause civil unrest, the US can use this against the government and it will into the advantage of the US. I would like to note this is not a country of easy convincing, The majority of the seating members of the CCP are deeply interested in their society's interests, then globally second. You have 1.4b people this is not an easy management to handle.
In my eyes best to not compete and work together. There are hard obstacles ahead that are going to need all of our efforts collectively, in Hines-sight this is childish and a waste of time, literally. We made it this far, all of the great achievements and innovations that with out a doubt all have collectively contributed as humans. Climate changes, Populations management, Biological threats, viral threats, pandemic management, genome advancements etc...
Some of the moves that leaders make are simply moving us back in time and when one does something unfavorable to the other it sets the tone for how future engagements and decisions are made, whether silly or not. Indeed no leader is innocent in their decisions, but my point still stands.
The battle against communism has been going on for a long time and it was an important factor in most of the major wars of the 1900s when it openly stated it needed to establish global dominance. In the grand scheme of things, this is more of that, but now China is the center of gravity for communism rather than Russia. The Arctic opening up and taking Taiwan are both elements that increase potential for power projection, which is a serious threat given that CCP leadership has shown to be very bullish on Marxism-Leninism.
If they could not be insane and trade, that would be great. Unfortunately that's not the world we live in and the US has to push back against it or the world can fall into ruin. So we're cleaning up Venezuela. Maybe Cuba and Iran.
>China has a much high pain tolerance than US citizens at least
Can you give some examples of why you think this? I really can't imagine how this would be true.
Best examples would be in last 25 years when they've had mass affluence.
China was able to sustain some pretty strict zero-COVID policies much longer - all the way to late 2022.
Pain tolerance might be the wrong term. Pain tolerance implies speaks to something intrinsic about a population, while really what we're looking at is how much discomfort a population can endure before it really agitates for policy/political change, and so it's much about how a population feels, as the tools available to the government to control, manage, deflect and address the pain/discomfort.
Thanks for the response, agreed on the definition of "pain tolerance."
I do think that the US population is able to bear incredible levels of pain if it's packaged a certain way. Examples:
-20 year Global War on Terror which cost $6T+
-Healthcare costs which far outstrip other western nations, mostly paid for out of pocket, and which increase every year
-Opioid Crisis which killed more people than all our 20th century wars combined
-Lack of workplace protections, time off, etc which our peer nations enjoy
The Chinese have not dealt with any of these things, so yeah, they have more available capacity to manage new social disruptions. That said, Americans love war, so we could probably add another war without disrupting things too badly.
Chinese employees get less time off and many of them got less workplace protection.
The availability to good healthcare for many conditions in China is quite subpar compared to the US. They don't have many physicians. Their healthcare outcomes in most things are worse than those for Americans. Good example is their lung cancer morality rates.
Of course both these things are expected for a much poorer country.
"20 year Global War on Terror which cost $6T+"
This was enabled by the US population not even feeling any of the effects of the war: https://www.cbsnews.com/news/were-at-war-americas-at-the-mal...
"Healthcare costs which far outstrip other western nations, mostly paid for out of pocket, and which increase every year"
This is a reason Trump was elected. I already mentioned this in costs. Imagine what will happen if China takes Taiwan, inflation WILL creep into this with increased medicine costs (many pmade in China) and throughout the stack.
"Opioid Crisis which killed more people than all our 20th century wars combined"
Regional pain does not equal national pain. Ask West/East coasters and they dont know this problem as deeply as the deindustrialized Trump voting rustbelt.
"Lack of workplace protections, time off, etc which our peer nations enjoy"
Why do you think AI is being pushed so hard. This is a coming pain that I hope will finally push the US into a true leftist position.
"The Chinese have not dealt with any of these things, so yeah, they have more available capacity to manage new social disruptions. That said, Americans love war, so we could probably add another war without disrupting things too badly."
Do you have any evidence to support this assertion? Do you live in the US?
> Lack of workplace protections, time off, etc which our peer nations enjoy
Do you really think the Chinese have not dealt with bad workplace conditions? The US population may be jealous of some of their neighbors but they have significantly better working conditions than most Chinese.
From 996 from Alibaba to the swaths of cheap, manual labor used for outsourcing by, among others, the US.
Yeah, I agree there is some manipulation of the narrative in the use of pain tolerance to describe China's citizenry. It is in the CCP's interest to convince their population that pain tolerance is a virtue, rather than allow an alternative narrative that China's citizens must suffer the decisions of the autocrats because they have no ability to influence change.
No need for historical stuff, look at China today like right now.
The high population with oversupply of STEP means everything is more cutthroat there. They have 25% youth unemployment. 996 produces lots of problems but also higher pain threshold. When a new idea comes along they move at lightning speed.
Oversupply of companies in every industry. For example: China mandated companies start producing EVs. Next thing you know there are 100+ car companies in China. All creating jobs that local areas depends on. Now the EV incentives are gone and it has led to extreme price war and everyone fighting for survival in the jungle. What do you think those surviving companies will be like once the weak have been killed off? Imagine them coming after American companies who are fat and bloated and may not know whats coming for them (the employees certainly don't).
This ability to push harder than anyone else is already paying dividends. In 2024, China added 429 GW of new power capacity, more than one-third of the entire US grid. Thats many more factories producing weapons, data centers crunching AI, and lower energy costs enabling more new opportunities.
Now take these people and put them on a war footing? They will out manufacture, out speed and with the amount of STEM they have possibly out wit the US.
Unpopular opinion: We don't really NEED these bleeding edge chips. What does humanity need? Clean air, clean water, healthy food, health care, compassion, education.
Lot of people seem to be happy to live without the last two unfortunately.
> Anthropic Chief Executive Officer Dario Amodei said selling advanced artificial intelligence chips to China is a blunder with “incredible national security implications” [...] “I think this is crazy. It’s a bit like selling nuclear weapons to North Korea.”
This is all a smoke screen. He knows very well that China can and will develop their own hardware to train AI models (and in fact, they are successfully doing just that; e.g. the recently released GLM-Image was trained on their own silicon). His only objective here is to slow them down enough so that they don't eat Anthropic/Claude's lunch releasing open-weight models that are increasingly competitive. But he can't just openly say "hey, we don't like that they release open weight models for free", so he's engaging in the AI version of the "think of the children" argument.
Anthropic's whole modus operandi was always pretty much "we should control this technology, no one else". It's not a coincidence they're the only major lab which has not released any open weight models, they don't publish any useful research (for training models) and they actively lobby the lawmakers to restrict people's access to open weight models. It's incredibly ironic that Dario is worried about (I quote) "1984 scenarios" while that's exactly what his company is aiming towards (e.g. giving Palantir access to those models is not "unsafe", but an average Joe having unrestricted local access is an immediate 1984-style dystopia).
Yes. Dario Amodei is just using "china bad" to stave off competition. I highly doubt he cares one bit about anything else except his own wallet and power.
This is likely. His concern is first and foremost the company. Geopolitics is primarily a potential tool in that capacity.
I really don't understand why companies are ignoring intel's foundry services... for the first time since probably the 2000's, intel's 18A nodes are significantly ahead of what TSMC is offering. Apparently they have capacity and are demonstrating wafer production with their own chips.
It seems wholly illogical that Apple would get refused wafer volume by TSMC and still refuse to give volume to intel foundry services. When you layer on geopolitical factors and national security implications + the fact that Apple is a US company - what reason could they possibly have to turn the shoulder to intel's foundries?
If Taiwan ends up imploding in any of the numerous ways we are aware of today - and which this article adds to - I think there are exactly zero reasons to feel like this couldn't have been avoided.
Some of us are old enough to remember the last time Intel was definitely, 100%, for-sure committed to offering foundry services, and then changed their mind and canceled the whole thing (it was in 2018) and want to see (a) someone else have success with 18A first and (b) intel show an actual long-term commitment to using their foundry for outside customers before we risk our companies' future on them.
There are risks with TSMC, but "TSMC just decides it's not interested in making chips for other people, and cancels the whole business" isn't one of them. The same cannot be said for Intel.
If Intel decides they're not going to continue foundry services after 14A - you can just shift back to TSMC like everyone did between Samsung and TSMC?
"Just shift back" is really underestimating how much effort it takes to port a design to a different foundry. Sure, you can target a new stdcell library and recompile your RTL (and re-floorplan, and re-do a bunch of other stuff) but you also have to swap out all your memories and interfaces, not all of which may have exact equivalents... it can easily take 1+ years of work for a competent team, and if you have to shift back all that time and effort was wasted.
Seems most major players are not only fabless but also fab-agnostic - as I noted they switch from one supplier to another even for the same product line. I'm sure it is work but it doesn't seem to be an existential crisis for a huge provider to send some volume to a new fab - certainly if it's derisking supply capacity, tariffs or other geopolitical risks.
And just hope they have any capacity to deliver? That's what I'd worry about, especially right now.
This is why: https://arstechnica.com/gadgets/2026/01/core-ultra-series-3-...
Intel doesn't have any spare capacity.
>intel's 18A nodes are significantly ahead of what TSMC is offering
A nice comparison table linked below. The best comparison imho is transistor density which is 313MTr/mm2 for TSMC's latest in-production process vs 238 for intel (higher is better).
https://en.wikipedia.org/wiki/2_nm_process
Also make sure to read the drama around https://en.wikipedia.org/wiki/Arrow_Lake_(microprocessor). Intel literally gave up making their own CPU on their own 20A process and instead utilised TSMCs fab.
Intel doesn't seem to be properly resourcing and supporting Intel foundry. A lot of it is cultural/political, intels fabs are used to working only for Intel and not having to worry about propriety details of fab processes leaking externally, so there's a distrust when working with the foundry team and external customers.
Citation needed. From density charts, Intel's 18A is roughly equal to TSMC's N4P, released in 2022.intel's 18A nodes are significantly ahead of what TSMC is offering.Further more, Intel's 18A yields are not where Intel needs them to be to be competitive.
Shewie, given all the replies to this, and my personal living memory/experiences with these kinds of things as they relate to said replies, sounds like buying intel stock is probably a pretty good idea.
"AI has a physical dependency in Taiwan that can be easily destroyed by Chinese missiles, even without an invasion" ?
Arguably false. Why do you think the US has encouraged TSMC foundries, now inside Arizona ? It's obviously to protect against the scenario that China takes Taiwan. In that case, give it 6 months or less for US TSMC foundries to produce the finest. China taking Taiwan will likely not result in the CCP getting any technology, certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded.
That's over-optimistic.
> Why do you think the US has encouraged TSMC foundries, now inside Arizona ? It's obviously to protect against the scenario that China takes Taiwan. In that case, give it 6 months or less for US TSMC foundries to produce the finest.
American business culture works pretty strongly against "give it 6 months or less for US TSMC foundries to produce the finest."
I think it's most likely those fabs will stagnate and the American MBAs running them will just milk them for short-term profits. Why invest in technology when you can buy back shares? After all, your only goal is number-go-up.
> China taking Taiwan will likely not result in the CCP getting any technology, certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded.
Not necessarily. Technology isn't so much the machines, it's the know-how. TMSC employees will still need jobs, post invasion, and I'm sure China will pay them very well. Some fraction will go to work for Chinese fabs, and teach them TMSC's tricks and knowledge.
>American business culture works pretty strongly against "give it 6 months or less for US TSMC foundries to produce the finest."
>I think it's most likely those fabs will stagnate and the American MBAs running them will just milk them for short-term profits. Why invest in technology when you can buy back shares? After all, your only goal is number-go-up.
The same American business culture that produced Apple/Amazon/Alphabet/Microsoft/Meta/Tesla/etc? They seem to invest quite a bit in "technology".
> The same American business culture that produced Apple/Amazon/Alphabet/Microsoft/Meta/Tesla/etc? They seem to invest quite a bit in "technology".
Yeah. There can be sparks of innovation, but the overall trend seems to be squandering advantages for short term financial gains. And honestly, some of your examples aren't great: Telsa's probably going to lose to the likes of BYD (but for unusual leadership reasons); Microsoft seems to be losing former capability, which is reflected in many of its products (https://www.windowscentral.com/microsoft/windows-11/windows-...); and I don't think Meta has done much besides sell ads.
IIRC, Chinese companies, on the other hand, tend not actually make very much money for their investors.
The sentiment I was countering was that American businesses do not invest in technology, nor do American business leaders think about the long term, and the examples surely show that. Successful or not, and selling something detrimental or not, they do spend many, many billions of dollars on bets that may not pay out.
You can even look to pharmaceutical companies for American business that have development timelines measured in the decades and investments measured in the billions. These aren't plays that executives profit from in 6 months, or maybe even 60 months. Real estate development is another business where investment timelines are in the decades.
I don't know enough about Chinese businesses, but I assume I cannot compare the motivations of Chinese business leaders to American business leaders, as Chinese business leaders seem less free than American businesses to capture profits for their investors.
No, the same idiot MBAs that almost destroyed Intel and Boeing and General Electric.
There certainly are idiot MBAs (and non MBAs), and perhaps the ratio is too high in the USA, but based on the pre-eminent businesses in the USA, I wouldn't say it's "the" culture.
One of the reasons Intel failed and TSMC succeeded is because Intel was unwilling to pay what the other big tech companies were paying (and part of that pay is with RSUs which stock buybacks help offset). However, for workers in Taiwan, TSMC was the best option, so TSMC could pay less.
Intel failed because the idiot MBAs refused to invest in keeping their lithography process the best in the world. Instead they spent $100 billion on stock buy backs.
TSMC's Arizona fabs (edit: need to qualify this with "today" and in the near future) are wholly inadequate to shift wafer volume out of Tawian if that were to ever happen. TSMC themselves have been candid about this - both the fact there is insufficient skilled labor and insufficient economics (materials supply chain, construction costs/process, subsidies, OPEX). If TSMC was serious about this they'd have invested heavily both in staff pipeline (university programs and hiring onramps), domestic executive function and supply chain - aside from taking subsidies and building tiny fabs that trail their Taiwan process nodes considerably, they've done little to diversify their fabs.
90% of TSMC's capacity is still in Taiwan. A substantial amount of global high end chip capacity is also in South Korea and Japan, which would likely get pulled in.
A war would not wipe out chip production, but the squeeze would be immense for many years.
> A war would not wipe out chip production
It probably wouldn't but it definitely could.
In 6 months TMSC US foundries would grind to a halt without consumables from TW who still has many sole source suppliers. The reason for CONUS TSMC fabs is because that's all US industrial policy can really manage, CHIPS never pretended to be able to reshore the entire semi supply chain (unlike PRC) and until US does, or at least reshores everything sole source off TW, will remain exquisitely vulnerable.
Also TW politicians have objected to notion they'd vaporize their fabs / golden goose. That meme started by US Army War College + Colby who said US should blow up the fabs, as in it shouldn't be a TW decision. Which TW have rebuked said they will defend against US attacks. Also other shenanigans like when US suggest they would paperclip TW semi engineers, and TW basically said there's no way they'd send semi engineers to safety before children. AKA TW not retarded, they know not to toast their golden goose, because golden goose for PRC still gives TW leverage even if TW forced to capitulate. They'd still rather be wealthy semi producers than pine apple farmers under PRC.
>In that case, give it 6 months or less for US TSMC foundries to produce the finest.
It's really a blind belief in american exceptionalism that makes you think this is even possible.
No, the chip factory that has had dozens of years of experience and local talent scaling up to make the most complicated products in human existence doesn't magically get up to par in 6 months. At best in 6 months they've figured out how to be less sensitive to vibrations and reach a low yield. The US doesn't have the trained workforce for this job, nor the infrastructures _around_ the fab (specialized hardware, electronics and engineering schools, various bits and bobs).
US TSMC doesn't get properly running in less than 5 years, and even that would be a miracle. You're also assuming that US TSMC has the current N2P or even N3E processes, and that agent orange doesn't burn bridges with europe hard enough that ASML stops selling to anyone related to the US.
I don't even know what it means. "even without an invasion"? The author think China will destroy TSMC just because? To slow down AI progress?
> if we got to a situation where only the U.S. had the sort of AI that would give us an unassailable advantage militarily, then the optimal strategy for China would change to taking TSMC off of the board.
Lmao it's not. The author doesn't know what they're talking about at all. Let's be realistic: the current TSMC technology will be accessible to China, likely via espionage. The question is just how soon. It has already happened before. China's 7nm process was developed with the help from one of the highest level ex-TSMC researcher[0].
If cutting edge were a hard requirement then given the lead times involved I think the author would be correct. However I think there's a fundamental error in failing to account for the fact that you don't need cutting edge chips to do AI. Sure it makes it cheaper and faster but it's absolutely not a requirement. You could train a state of the art model on cluster of 12+ year old boxes (ie Intel's 22 nm and DDR3) but if you want to get the job done in a similar timeframe you're going to pay out the ass for electricity. Your research pipeline would necessarily be narrower due to physical and monetary limitations but that's not the end of the world.
That’s like saying you could train a state of the art model by hand, and it’ll only cost you a lot of man-hours.
Realistically, to train a frontier model you’d need quite a lot of compute. GPT4, which is old news, was supposedly trained on 25,000 A100s.
There’s just no reasonable way of catching modern hardware with old hardware+time/electricity.
Training methods and architectures keep getting more efficient by leaps and bounds and scaling up was well into the realm of diminishing returns last I checked. The necessity of exceeding 100B seems questionable. Just because you can get some benefits by piling ever more data on doesn't necessarily mean you have to.
Also keep in mind we aren't talking about a small company wanting to do competitive R&D on a frontier model. We're talking about a world superpower that operates nuclear reactors and built something the size of the three gorges dam deciding that a thing is strategically necessary. If they were willing to spend the money I am absolutely certain that they could pull it off.
I suspect the bottleneck on 12+ year old hardware wouldn't be power but the interconnects. SOTA training is bound by gradient synchronization latency. Without NVLink you hit a hard wall where the compute spends most of its time waiting on PCIe or ethernet.
Fair point. Though if this were actually attempted I imagine it would start with making changes to the model architecture, the physical hardware, or both.
My hypothetical is probably somewhat over the top given that isn't China somewhere in the vicinity of 7 nm at present?
Mainland China has no interest in destroying the fabs in Taiwan, quite the opposite.
Taiwan might go scorched Earth and destroy them but that sounds more like a threat to foster US' support.
For the US the threat is either destruction of the fabs or China leverage against them if they get to control the fabs.
Hiring people isn't espionage. Key talent leaving a dominant manufacturer for a paycheck at a struggling competitor and bringing their knowledge is just about the basis of capitalism.
Context is important here. China is the ENEMY of Taiwan state(as the last Enclave of communist resistance of old white China).
The USA has an act for it: Trading with the enemy etc etc
For different reasons you can't also just hire Iranian citizens straight into Los Alamos or wherever you are making plutonium nowadays.
National security > profits
The Arizona fab's not supposed, per wiki, to start producing 3nm until 2028. Are you suggesting that the only reason it can't be done by summer is a lack of motivation and resources?
2028 is in less than two years. It's honestly quite amazing that it's on the roadmap that they'd start producing 3nm in such a short timeframe.
2028 is not in six months, but GP is not an order of magnitude off either.
>China taking Taiwan will likely not result in the CCP getting any technology, certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded.
He didn't suggest anything like that, did he?
The overwhelming bulk of production, in a massively oversubscribed industry, is in Taiwan. If Taiwan's production went offline, there would be enormous turmoil.
"certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded"
Given the way things are going, a rationalist would surmise that Taiwan is likely in talks with China for a peaceful reunification, Hong Kong style. The old way is very much over, the US is a worthless if not negative-value ally, and it's pretty clear to every living human with a functioning brain that this is going to be China's century.
Indeed, the article casually says "Taiwan is claimed by China, which has not and will not take reunification-by-force off of the table", which is technically true it isn't contextually informative. For those not fully up to date on the history of this conflict, for decades Taiwan claimed all of China (and most Western countries treated Taiwan as the singular government of all of China), and held out for reunification-by-force. This isn't as simple and straightforward like Trump's "we have a military ergo we get to steal better countries because they make us look bad".
> “I would ban the sale of semiconductor manufacturing equipment to Chinese fabs”.
Ahem, ASML, who makes the manufacturing equipment for TSMC is a Dutch company, not a US one.
The UV light source that ASML uses for its lithography machine is technology that was acquired in the 2013 acquisition of San Diego-based Cymber. The tech stack for the advanced light source dates back to the "EUV LLC Initiative," led by DARPA in the mid-1990s.
US origins of the key technology here give the US a veto here regardless of ASML's Dutch headquarters.
> US origins of the key technology here give the US a veto here regardless of ASML's Dutch headquarters.
Is this an actual thing? Genuinely asking. Not that rules and laws seem to matter anymore to the current US administration anyway
Yes, the mechanism is effectively EAR/FDPR and you can check (https://en.wikipedia.org/wiki/Extreme_ultraviolet_lithograph...) for more detailed history, but the EUV technology ASML further developed and commercialized (no small feat) was licensed from a US Govt created consortium by which the government maintains their IP rights.
Not sure why IP law would be respected if the king actually pulls the trigger on taking Greenland.
That’s not guaranteed at this point, but it’s also not off the table since all the old rules are being shredded as fast as possible.
First sale doctrine called, reminded about itself.
> Rather, the only thing that will truly motivate TSMC to take on more risk is competition.
Maybe I missed something, but if Google, Microsoft, Apple, OpenAI, etc want more capex on fabs, they can front that money themselves?
Yes. I think the article missed it. In fact, I expect it to happen this year when Nvidia overtakes Apple as TSMC's biggest customer.
It's going to start a wafer war in my opinion. Best way to secure wafer supply is to pre-pay.
Perhaps there is an unpleasant but more expedient geopolitical, temporary solution: Taiwan needs its own nukes. Strength seems to be all that PRC respects.
From a NatSec perspective, TSMC isn't really a bottleneck - most weapon systems use SoCs and microcontrollers that can be fabbed on "legacy nodes" (ie. 28/40/60/90nm) or 14/20/22nm nodes, and compound semiconductors.
The ability to mass produce a Pascal or Volta comparable GPU or Apple A11 comparable SoC is all you need for more cutting edge systems.
Power Electronics and Compound Semiconductors (GaN, SiC) have historically been the biggest bottleneck.
The bigger risk for the TSMC-China aspect is TSMC's planned exit of GaN foundry production by 2027. Most Chinese manufacturers still depend on TSMC-produced GaNs wafers instead of domestically produced GaN vendors due to reliability concerns. China will probably end up matching TSMC's specs for compound semiconductors in 4-7 years, but that implies that the Sullivan Doctrine still holds and is a loss for China.
Every other country with compound semiconductor production capabilities at scale (US, Germany, France, South Korea, Japan, Israel, Russia, India) either limits their exports or cannot export them to China without facing sanctions from other buyers (primarily Russia as India does not allowing commingling of SKUs for defense vendors who sell to Pakistan/China as well, and Russian vendors are members of India's EW and DEW program).
If a US-China War was to arise, worst case we would probably see a mass reversion back to 2018-22 level technology, which isn't the end of the world.
Additonally, the China-Taiwan situation is orthogonal to semiconductor dependency.
>most weapon systems use SoCs and microcontrollers that can be fabbed on "legacy nodes"
The argument is that existing weapons systems are essentially old tech, left over from previous wars in previous decades. Many of them are less useful in the modern battlefield, e.g. defense systems built to shoot down missiles are easily overwhelmed by drones.
If there's a real war, it will be fought with next-gen weapon systems - probably autonomous drones that will require high-end AI chips.
>If a US-China War was to arise, worst case we would probably see a mass reversion back to 2018-22 level technology, which isn't the end of the world.
It wouldn't be the end of the world if those 2018 chips came at 2018 prices and only impacted commodity stuff like phones, datacenters and laptops, but they'll be at 10x the 2018 price and impact critical stuff like automotive, the cars and trucks that gets your food delivered to the supermarket, and if those become impossible to buy or fix anymore, then your groceries will also get more expensive, triggering an end-of-the-world riot from taxpayers who can't afford food anymore.
People need to view this issue as not just being stuck with 2018 laptops and phones which isn't that bad, but has much wider societal implications.
> impact critical stuff like automotive, the cars and trucks
Most capacity for legacy nodes is already ExTaiwan and ExChina. TSMC leapfrogged American and Korean fabs in the late 2010s/early 2020s with sub-14nm process nodes, but Samsung and Intel have caught up for 5nm and 7nm capacity. And Taiwanese firms have largely diversified OSAT and ATMP away from Taiwan and China to ASEAN, US, and India.
This is something everyone adjacent to this space has been thinking about and acting on since 2017.
> only impacted commodity stuff like phones, datacenters and laptops
Data Center and enterprise applications are prioritized in most ExTaiwan sub-7nm fabs such as Intel 18A.
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A US-China War over Taiwan would be devastating, but not getting an M1 Macbook will be the least of your worries.
>A US-China War over Taiwan would be devastating, but not getting an M1 Macbook will be the least of your worries.
Isn't this what I said?
Not exactly, because such a regression would not lead to the style of issue you are talking about.
That's what I said.
There are some near ready foundries in the US and in EU, not to mention South Korea. It would take a few years to catch up of course.
What I worry more about is the full lock-in of TSMC production capacity by nvidia/apple/amd/etc for their chips on their latest and greatest silicon process (aka the best in the world). There is 'no space' for performant large RISC-V implementations or other alternative (and it will require several iterations and mistakes will be made)
Interesting point, although it's clearly not in TSMC's interest to land themselves in a monopsony situation by allowing Apple (e.g.) to squeeze all their competitors out of the market.
Tenstorrent managed to secure TSMC manufacturing capacity, I doubt many other RISC-centric fabless companies would have any issues aside from aggressive competition.
I wonder when we will see RISC-V (rva23+) large implementations, for instance for performance "desktop" at 5GHz+ on latest silicon process...
I know I can already replace my rpi3 with a linux supported out of the box RISC-V SOC board (aka, the enabling of assembly written software = no planned obsolescence from computer languages anymore, near 0-SDK).
Im the EU there is Intel Ireland at least.
I remember Elon saying in an interview recently that the only piece of the vertical stack he doesn't own is chips.
I strongly suspect some sort of fab built by Elon associated companies will be announced soon. Almost all supply can be bought by Tesla and xAI.
It makes sense, IF he can get the tech to work at the bleeding edge. But he seems to be quite good at this.
Fab costs follow Rock's Law which is that the cost of building a fab doubles every 4 years.I strongly suspect some sort of fab built by Elon associated companies will be announced soon. Almost all supply can be bought by Tesla and xAI.Right now, it costs TSMC roughly $25-$40b for each N2 fab. It's going to cost $50b - $80b for an A14 fab 4 years from now. And then $100b - $160b again.
You need many customers in order to justify the cost. Tesla and xAI themselves won't be enough.
He hasn't offered any production services to third parties whatsoever (seems to end at patents/standards gifting) - I wouldn't expect a fab open to third parties at all - if anything it'll be reserved for tesla/space-x/x.ai usage and candidly I don't think there's enough demand there to justify the capex involved in a fab.
Standing up a modern-node EUVL fab is harder than rocket science. Tesla and xAI don't have the capex to do it, and the silicon they manufacture would be competing against much more experienced fabs like Samsung and Intel.
Frankly it is hopeless, I would be dumbfounded if Elon ever walked through the doors of ASML.
Im always surprised people forget that Intel exists and still has high performance nodes (just release panther lake on their newest node). They even have a plant in Ireland.
It's not that people forget that Intel exists, it's that they are effectively irrelevant to the foundry business.
> Becoming a meaningful customer of Samsung or Intel is very risky: it takes years to get a chip working on a new process, which hardly seems worth it if that process might not be as good, and if the company offering the process definitely isn’t as customer service-centric as TSMC.
TSMC is a reliable supplier and there are no doubts about conflicts of interest. The same cannot be said for Intel and Samsung. If Intel's AI chip business faces chip shortages (like what may already be happening), can their foundry be depended on to ship your chips?
No one wants to be the idiot who staked their future on Intel and then gets wiped out when Intel doesn't deliver.
No one forgets that. Intel will get some customers. It's inevitable because according to the article, TSMC had severely underestimated AI demand in 2023 and 2024 by not drastically increasing capex in those years.
> AI has a physical dependency in Taiwan that can be easily destroyed by Chinese missiles, even without an invasion
Taiwan has missiles with the range and warheads to strike the three gorges dam.
An attack by China would end very poorly for everybody. There are millions of people living in the inundation zone.
TW doesn't have any munitions that can remotely breach gravity dam like three gorges, i.e. bunker buster, which even if they did, they wouldn't have survivable platform to deliver it (strategic bombers, too heavy for TEL). US MOP tier 30000kg penetrator munitions isn't designed to crack three gorges, TW missile inventory are like 1500kg, at most they'll inflict scabbing or break exposed components like power infra, lock gates, which is not nothing, but not remotely compromise structural integrity of dam. This not to mention TW missile trajectory is geographically constrained and overflies the densest IADS environments on earth, assuming their TELs are survivable in the first place. They're much better off trying to threaten PRC coastal nuclear, but either way gets them the Gaza treatment.
A conventional missile or even missiles is not going to destroy a huge gravity dam like that. They are incredibly tough structures and missile warheads aren’t big. We’re talking concrete hundreds of feet thick.
To add some background. During WWII the allies successfully used massive specialized depth charges but those were much smaller dams. [0] During the Korean war the US struggled to merely destroy the sluice gates of a dam using aerial torpedos. [1] Eventually the Geneva Conventions were amended to forbid attacking dams if it would kill a large number of civilians (which was pretty obviously implied to begin with for what it's worth).
So unless Taiwan has a method to deliver something the size of a bunker buster to the underwater base of the upstream side of the dam I don't think it's going to happen. And if they did manage to pull it off they'd presumably be condemned as war criminals more or less universally.
Could the chinese construct a sufficient anti-missle defence?
Obviously the actual number of missiles Taiwan has is not public, but I suspect they have enough that reliably intercepting a full barrage is not something even the us could pull off.
The general calculus is that an interceptor costs as much as the missile it intercepts, so defenses are only effective against an adversary with much less resources. Hence Israel can defend against Hamas/Hezbollah, and the US can defend against North Korea, but Israel struggles against Iran and the US doesn't even try to defend against China/Russia.
China obviously has a lot more resources than Taiwan, but then you have a concentration effect where an attacker can focus their resources on a single target, but a much more resourced defender can't necessarily afford to defend that target. We saw that play out with the UK's nuclear deterrent strategy in the cold war, where they focused on overwhelming Moscow's defenses, and were (probably) able to do it despite the USSR being so much bigger.
TW missiles can't "concentrate" because TW geography = all missile flight paths travels through boost, midcourse and terminal interceptors gauntlet along PRC easter theatre command which probably has the densest IADS in the world. PRC has like 3-4x more interceptors in eastern theater (8-12x more total) than TW has missiles. That's just land based, there's also 1000s of naval picket interceptors. Imagine if all of US patriot batteries in Florida, multiplied by 3, then asking what Cuba can do to saturate. Then add in USN DDGs and the answer is realistically nothing, because the industrial math is brutally lopsided. That's assuming TW gets to coordinate salvo their entire inventory, realistically most TELs would be glassed first, every part of TW is withing 5-7 min of PRC missiles and mlrs, less if fired from strait or loitering munitions, i.e. basically faster than abbreviated TEL setup cycle TW has for their tunnel to launch strike complex.
Honest question, from non-american: what is up with all the China scare? I just can't understand it. Is it because China is socialist and we want to see capitalism winning over?
It's because Xi has demanded that China's military be ready to invade and conquer Taiwan by 2027. It's because Xi has made reunification with Taiwan a test of the legitimacy of the CCP's rule over China. The combination of those two things gives you a "China scare" with respect to Taiwan, out of Xi's own mouth.
It's easier to explain if we knew your country. But in general: limited resources, us vs them, etc. Same thing as Rome vs Carthage.
I think the west is scared of China trying to take over the world by force like the USSR.
Anyone who is unironically saying China attacking Taiwan is a real threat (eg The Anthropic CEO quoted in the article) is either simply echoing the administration's painting of China as a geopolitical bogeyman or they're just ignorant of geopolitics, likely because they're projecting American economic imperialism onto China.
I'm glad the article dismissed this as a threat because it isn't one. The official policy of the US is the One China policy. You'll see this described as "strategic ambiguity". That's another way of saying that the official policy is simply to lie about supporting Taiwan's independence.
China can only hurt their position by taking military action against Taiwan. Also, it's highly debatable if they even have the military capability to invade Taiwan. Naval blockade? Sure. But to what end?
China is going to make their own chips. They'll just hire the right people to replicate EUV lithography. The article brought up nuclear weapons. It's a good analogy. At the end of WW2 the thinking of the US military was that the USSR would take 20+ years to get the bomb if they ever got it. It took 4 years. The gap with the hydrogen bomb was even less.
Western chauvinism in policy circles completely underestimates China's capacity to catch up in lithography. Not selling the best chips to China created a captive market for Chinese chipmakers.
I also think TSMC is being understandably cautious in not expanding their CapEx. AI companies really should focus on an economic use case for AI more than worry that foundry capacity will somehow limit a theoretical future AI use case.
jmyeet:
"Putin is in the wrong here but there are no good guys. US rhetoric on this has predicted a full-scale invasion that hasn't come to fruition multiple times and the media just laps it up. It's reminiscent of the WMD justification for invading Iraq. It's straight up Manufacturing Consent [1]. However, Putin has a point: extending NATO membership to Ukraine is an overtly hostile act by the US and NATO member states. Putin no more wants NATO bases in the Ukraine than the US would want Chinese or Russian military bases in Canada or Mexico.
But Russia is not and never was going to launch a full-scale invasion of Ukraine. It would destroy Russia. Trying to do this in Afghanistan, a substantially smaller and less developed country, played a significant factor in the collapse of the Soviet Union.
Russia wants a buffer between it and NATO and access to the Black Sea. That's it."
I got a friend who tends to be good at making strategic predictions but didn't see that;) because in addition to all the other bad things it would be strategically completely dumb move by putin. and it was.
it doesn't sound that Xi is as dumb as Putin but who knows.
TSMC just needs to change its name to USMC and the stock will easily go up 20%