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Comment by atty | Hacker News Reader

It may be true that TSMC and Samsung can meet demand during normal times, but it completely misses the point that NA and EU want significant production capacity locally not to reduce costs, but to secure a critical supply chain. Is this a situation where he may be concerned that significant expansion of production capability away from Taiwan and SK will reduce the West’s reliance on TSMC, which may be a security risk for TSMC or Taiwan? I’m nowhere near an expert on this sort of thing, I’m honestly curious.

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And frankly, this is everyone's motivation. EU wants to not depend on TSMC. US has gone all-in to not depend on TSMC. China has gone all-in to not depend on TSMC. And there are even rumors that Russia is trying to build their capabilities in this regard.

I think the leadership at TSMC is being a little naive. Alternatively, they may know very well what's going on here and they are being willfully obtuse to paint as bright a picture as possible of their long-term prospects.

You don’t become a leader in this industry by being naive. HN readers are being naive believing that TSMC really meant what they said. Anyone with a brain knows that the US wants to reduce reliance on TSMC

Yeah. It's not just supply chain, it's also national security.

> I think the leadership at TSMC is being a little naive. Alternatively, they may know very well what's going on here and they are being willfully obtuse to paint as bright a picture as possible of their long-term prospects.

It could be two things:

1. Some arrogance, "hah, this is harder than you think"

2. They're trying to discourage the competition because they know it will hurt their bottom line.

Even if they only lost 10% of their revenue, that can still hurt a lot. They could go from being a growing business to stagnating or shrinking.

3. They're trying to discourage competition, because competition impacts their (Taiwan's) national security.

I don't think TMSC is naive about the geopolitical importance that they have to Taiwan.

I was thinking about that recently. China can't realistically invade (or intimidate/sanction) Taiwan as long as they are dependent on TSMC, because of those semiconductor manufacturing plants went down, it could be a global economic disaster, and China would be one of the most heavily impacted, given the proportion of everyone's electronics they manufacture.

China can't realistically invade TW until it can take on USN 10-15 years from now after more build up / military modernization anyway. Happenstance of TSMC dominance is IMO blessing in this regard, buys PRC 10+ years of military and semi catchup time. There's going to be theatrics and political posturing in the interim by US/CN/TW, but ultimately TSMC buying TW time is buying CN time to close gap with US.

The West should deal diplomatically openly with Taiwan: some limited production creation in EU/US in exchange for international recognition and protection of Taiwan.

From the Taiwan point of view, allowing any competition is opening the door to trouble in the long run. Political winds come and go, but building semiconductor capacity can't be done overnight, so the longer they can keep their edge, the longer they'll be relatively safe from their neighbor to the north.

That would be incredibly dangerous for Taiwan because China would react if it felt the military balance would actually change.

More importantly, the EU/US are not really in a position to make a credible threat to China. Let’s say they China declares its intention to forcibly ‘reunify’ Taiwan. EU sanctions on China would be incredibly painful... for the EU. The EU just signed a new trade treaty with China which probably tells you all you need to know about that option.

So down to the US. If the US didn’t deter China by trying to change the facts around Taiwan when it was considerably weaker it’s hard to understand why the US would take that step now.

That’s kind of the problem here. There isn’t anything that would credibly deter China at all so taking moves to antagonize China don’t accomplish anything. Even if other countries felt threatened by this they would much prefer to engage in ‘buck passing’ rather than taking actions that would directly hurt them.

It doesn’t make economic sense to build basically an entire new supply chain though.

You can’t just build a modern foundry with any amount of money. TSMC is part of a massive supply chain and engineering cluster. If you wanted to build something that looked like TSMC and in an emergency could produce something in six months you are probably talking about tens of billions per year at a minimum. Most of your costs are things TSMC gets paid for.

Since that doesnt really make sense you probably want a homegrown competitor. You just don’t have the domestic experience and expertise to replicate what TSMC has; It will never be cost competitive. TSMC can send billions on fabs and recover their costs and a domestic alternative will never be able to. Modern chips have to be adapted to each foundry; a homegrown alternative will have to eat this cost at first just to get orders.

If you want to be competitive you need to go big and stay there. Something like $100 billion a year for the foreseeable future would be the minimum. You could probably limp along with massive discounts.

Ah yes interesting point. Obviously TSMC and the Taiwanese government want to maintain their quasi monopoly for economic reasons. But there is also a military component: is Taiwan still worth fighting over?

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