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Comment by modeless | Hacker News Reader

I'm starting to think it's a good idea to stock up on all the electronics you think you might need for the next decade. Because when China finally invades Taiwan, the supply of electronic devices worldwide is going to instantly disappear. How many electronic devices do you own that don't have any part of their supply chain in China or Taiwan or adjacent countries? The COVID shortages we all saw were practically business as usual compared to what may soon come...

I'm wondering what contingency plans US companies have for this? It seems to me like Apple would be screwed. Microsoft's hardware businesses would have problems. Google and Meta and Amazon are probably OK, though it may be tough to build and maintain datacenters, but everyone will be in the same boat.

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My other concern is the collapse of the tech sector in a few months. I'm roughly 80% certain I'll be subject to layoffs in October (though all my coworkers are clueless), and I don't think it will be anywhere close to as certain I can find a new job as during the pandemic (then for every one company doing layoffs there were two with "unprecedented-who-could-see-this-might-end" growth).

Lot harder to justify a new PC when no longer receiving a paycheck, though it will likely be even more important to have one then.

Just got a new System76 machine and I have to say, I'm really loving it.

Hard times ahead, unfortunately after that, it's even harder times.

Why is the tech sector about to collapse?

There are basically two types of companies in tech: a.) companies that don't make a profit, and b.) companies that make a profit from those companies. As an example just consider every startup is basically in category A, and Amazon's most profitable sector, AWS, in category B.

For more than a decade money was more or less free and the only sane choice for investors was to pour cash into anything that might one day get big enough to magically flip the profit switch and make a huge amount of net positive revenue.

I thought the pandemic would be the end of the tech boom, but I was wrong. Not only did more money get pumped into the market but into consumers wallets as well. This led to extremely rapid expansion in the tech industry as investors were willing to pump even more cash into any company (hoping for a rapid IPO and a the ability to cash our there chips before the casino closed) and consumers had a surprising amount of extra cash lying around from being locked up for months.

Unfortunately reality has started to show it's ugly face. Inflation is starting to hit hard, not because of the money supply, but because we are hitting some real resource limits due to a combination of supply chain problems and the Russian war with Ukraine (which, to be fair, is also happening because of resource strain). These are not temporary causes of inflation.

This has caused the central banks to rapidly attempt increase interest to combat this inflation. Ending the era of cheap cash. This is coupled with the fact that things cost more so consumers also can't spend as much (even though they are also taking on more debt then ever, an unsustainable trend).

Sure inflation is cooling a bit but that's largely because of a drop in oil prices (at least in the US) which is a political play from the democrats resulting the record low strategic oil reserves in the US (since 1984) [0]. This cheap oil cannot be sustained and will end after the next election cycle.

The immediate impact of all of this is that direct to consumer companies are seeing an immediate hit (e.g. streaming service subscribers are churning faster than ever). Then non profitable ad revenue companies start to take the hit (see Snap's layoffs today). Next it will be non profitable B2B. But then we'll start to see how much of those profitable companies bottom lines comes form non-profitable companies.

This will have a cascade effect, since as I mentioned, it won't be as easy for us tech workers to find an new job with anywhere near the same TC. As a 200k+ engineer, consider all the crap you pay for without thinking of it because you don't have to. All the ubers and door dash orders that are surprisingly pricy to the average person, but really a brainless decision for any tech workers.

It's just getting started. If you work at a B2B tech company I encourage you to go poke around your internal data and look at how your customers are doing. I promise it's not great.

Then look at the state of venture funding [1]. Sure it's still above 2018 levels but it's rapidly falling. The start up scene is going to dry up quickly.

There's is more I could dive into but this is a good start.

0. https://www.reuters.com/business/energy/crude-us-emergency-r...

1. https://www.cbinsights.com/research/report/venture-trends-re...

There are so very many companies that exist in category c.) companies that make a profit from non-tech companies. Many of them are not public. Many of them are small. Many of them "only" pay SWEs as CPA-level salary. Many of them are working on "boring" problems. But there are plenty. If you're concerned about categories A and B, perhaps search for a position at companies in category C?

Which companies you think are safest right now ?

Rent, gas & food are soaking up all disposable income, so B2C is toast. B2B is selling to the B2C, so their customers are going away.

Lack of high end tech will be the least of your problems if China and the US get into a hot war.

Or at least, it’s not obvious what electronic devices you actually would need if the supply was going to get cut off for ten years.

Right, that's what I was thinking.

This would mean catastrophic economic damage. Likely, would be far worse than the great depression. We important so many goods from China.

Why would China and the US get into a hot war anyway?

They aren’t. China needs the US more than the inverse

It's unclear whether the US would deploy its own military to protect Taiwan in case of a Chinese invasion... but it could happen.

My understanding is that TSMC is busy building factories in the US. Easy to suspect that this is (1) to keep up production in the event that China takes over Taiwan, (2) to tell China now that even if they do take over Taiwan TSMC production will not stop or be dependent on China but will continue in the US and, thus, lower the interest of China in attacking Taiwan, and (3) once the Chinese military is on the way to Taiwan possibly let TSMC be eager destroy their Taiwan factories on their way out of Taiwan and on the next flight to the US, Belgium, etc., .... Besides, if China does not act nice, they might find that they can't buy any chips to use or copy. The world might regard selling chips to Xi now like selling cordite to Hitler in 1939.

The headlines about Taiwan, I'm guessing, basically add up to a lot of desire by the media for eyeballs for ad revenue and a lot of face saving by Xi, that is, don't let the media and politician talk erode the long existing images and status of Taiwan.

Net, China has plenty to do now without making a big, real issue about Taiwan.

But there is no force guaranteed to keep Xi from making a mistake. E.g., he had China muscle into Hong Kong and violate the "one country, two systems" promise.

I'm guessing that if Xi does to Taiwan what he did to Hong Kong, then TSMC will be producing in the US and on their way out of Taiwan will junk their factories so that China gets nothing.

I am ready to buy every piece of hardware, smart phone, laptop, GPU in the minutes after an invasion or a blockade is announced, it will be the single best investment of a lifetime.

+ with such goods if you are in the EU, you have up to 14 days to send them back and get a full refund, so basically you have 14 days to resell them double the price with no downside risk.

“Minutes after” would be too late. Everything will be sold out and DDoSed hours/days before.

Online it might, but you can still go to a store. Just have to run very fast and hope it happens when the stores are open otherwise it will be too late.

ideally you know an insider working there to reserve the products for you.

I thought the same thing today after reading this Credit Suisse analysis from Zoltan Pozsar. https://news.ycombinator.com/item?id=32633505

The supply of TSMC chips won't disappear bc the US will defend Taiwan. It's far too important. The companies with major reliance on mainland China (Apple) are the ones that need to worry.

You really think TSMC will be able to fabricate and export chips at a significant fraction of full capacity during a war with China?

I'm doubt full capacity but I think there's no doubt the US will defend Taiwan with full force of military to protect those chips and this order is more evidence of that. They now seem to get how important AI is to future global order.

Yeah, and when China decides destroy their fabs with missiles. What are are you going to do then. In case you don't know, missile defense doesn't actually work well.

Well obviously if China wants to cripple the world's chip supply that would suck. They're not going to be allowed to control them though. Those fabs are rigged to be physically bricked if China is close to capturing TSMC anyways.

I don't think China will destroy the very thing they're trying to capture.

China would like the fabs but it's not the fabs that drives them to re-unify with Taiwan. That desire pre-dates the fabs by decades.

No, but trivial to shutdown fabs by destroying power infra down the chain. Capturing fabs that run on sanctionable supply chains to get look at hardware is secondary to PRC preserving fabs as barginning chip to restart semi production once countdown to western hightech industrial collapse starts ticking.

Is it possible to move fabs to bunkers? I know nothing about fabs so I know my question is probably naive.

Protection against a nuclear power is not that easy. If US plans to escalate it with full power against China, chips would be the least of my worries, than earth being fit for life after the war.

Probably yea

A Taiwanese war immediately means a naval blockade, the us won’t be able to lift it with any certainty. There is 0 interest in a hot war with China among Americans. I doubt we’ll see any American military action that could lead to a deployment other than naval.

> I doubt we’ll see any American military action that could lead to a deployment other than naval.

Err, you other points aside - that's how you'd contest a nail blockade, with an opposing naval force.

Outright sinking more than a couple Chinese naval vessels would lead to a conflict Americans aren’t interested in.

The US government is more than willing to go to war to keep the world's chip supply out of China's hands. They're also pretty good at ginning up support back home.

The Chinese would be the ones to sink American vessels first. You don't simply declare a blockade, you enforce it. By sinking American ships that don't accept your blockade.

> TSMC chips won't disappear

Of course it will. US isn't capable of defending TW anymore. They may spoil an invasion, but there's nothing US can do to prevent PRC from trivially destroying infra the keeps fabs operating. You should expect the entire semi supply chain in East Asian (which supplies the world) to stop functioning if US tries to intervene on TW, especially using JP or SKR infra, nearly everythign critical is within 60m PRC missile range. The reality is PRC has much more leverage over global semi supply chain in even of war vs US who has leverage during peace via sanctions.

> major reliance

Are all in US in terms of high tech industry supported and actual patent fees extracted from production of semi. PRC will lose bunch of manufacturing jobs, but indigenous semi efforts will keep chugging along. Both will be reset to as far back as 1980s tech depending on how PRC escalates, which ultimately cripples US as tech leader more.

there is no much defense from barrage of cruise missiles on tsmc facilities.

Saudis couldn't defend their oil assets from Iran drone attack for example.

Bombing TSMC facilities would be extremely counterproductive to the CCP objectives.

I am not sure they realistically expect to take them without being damaged. If China really invade, US may decide to destroy it themselves.

Counterpoint: Wolf Warrior Diplomacy is extremely counterproductive to CCP Foreign Policy and diplomatic goals. It does it anyways.

I'm not so sure. Doesn't seem to be hurting them much.

Physical production of things during a war is probably quite hard. Also, one of the likely scenarios for the war is a blockade enforced by missiles. [1]

[1]: NYT: How China Could Choke Taiwan (https://archive.ph/gS6qb)

Hence Foxconn building up in Vietnam. I guess if I were a manufacturing company the whole ASEAN region would start to look a lot more attractive. A lot of the China-based mfrs are Taiwan owned and I suspect they are all starting to build for resilience in case of geopolitical trouble.

The contingency is the chips act building more fabs in the us.

CHIPS bill is a decent start but there is no replacing TSMC. A $50B watered down investment into US chips is small potatoes in grand scheme of things. Consider Apple spent $275B building up Chinese manufacturing to gain access to their market.

Thinking the exact same thing. Jumping in on the new Ryzen socket.. gpu is yet to be determined.

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