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Comment by brookst | Hacker News Reader

It’s good news geopolitically, and the construction will produce a lot of jobs. But people should temper long-term job expectations.

This huge of an investment in a tech where TSMC will face competition from fabs in lower-cost countries almost certainly means the company believes it can use extensive automation to avoid having labor costs sink their ability to compete on price.

(Yes, there may be a window where they don’t have to compete on price, but you build fabs for 5-10 years of production)

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> It’s good news geopolitically

I actually think the opposite. It will be good for global supply chains but not geopolitics, because it reduces the reliance on Taiwan thus opening it up for assimilation.

Even if it were bad for Taiwan, geopolitics is about more than Taiwan.

But I’m not sure this is bad for Taiwan: today, China can wipe out TSMC overnight. With these fabs there will be Taiwanese revenue streams coming from mainland US, which streams can support Taiwan government and military.

Walk me through why it’s bad for Taiwan to be more economically diversified?

Well for one the US won't be so inclined to defend TW so much. Sure, there will be posturing, maybe even a proxy war like in Ukraine, but generally speaking the US will not be sending troops anymore, now that the golden goose has nested on its shores.

Or conversely the US will commit even more resources to the defense of Taiwan now that their own domestic supply of chips is safe.

The US had no strategic interest in Ukraine yet we’ve all seen the reaction. The US will gladly defend Taiwan and create the hill for the CCP to die upon.

Now please explain why would the US send troops to defend TW if there's nothing actually valuable there anymore? Ukraine was hugely important for it's position next to Russia, and so is TW. And still, no US troops on the ground in Ukraine, and there won't be any in TW. This is a smart way of giving up on TW without actually admitting it, and there's nothing to be ashamed of, really.

Far beyond the value of TSMC, Taiwan is the lynchpin of the first island chain [1]. Taiwan remaining friendly to US interests is crucial to the integrity of the first island chain and thus the US island chain strategy[2]. In the event of conflict with China, control of the first island chain would allow the US to effectively interdict all maritime trade to China by denying access through the chokepoints created by the first island chain. This is frankly much more valuable to the US from a strategic perspective than TSMC (though TSMC is obviously very important).

You can also note the importance that Chinese planners place on this as well by looking at the Belt and Road Initiative, in particular the land-based projects that aim to connect China to European markets via rail [3][4].

1. https://en.wikipedia.org/wiki/First_island_chain

2. https://en.wikipedia.org/wiki/Island_chain_strategy

3. https://en.wikipedia.org/wiki/New_Eurasian_Land_Bridge

4. https://en.wikipedia.org/wiki/China%E2%80%93Central_Asia%E2%...

You seem to be asserting a few contradictory things:

1. Taiwan can only be defended with US troops on the ground

2. Ukraine has no US troops on the ground and is being successfully defended

3. The US would only put troops on the ground to protect valuable things like TSMC fabs

4. (by implication) if China attacks Taiwan and destroys TSMC fabs tomorrow, the US would have no incentive to defend Taiwan because the fabs are gone

I don't see it. Ukraine looks likely to survive as a country without US troops on the ground. Ukraine, as you note, has no fabs or similarly valuable assets. Why can't those exact same conditions play out in Taiwan, which is also much much much harder to invade with ground troops than Ukraine was?

1. The topic was US defense of TW. How exactly would it be defended by the US without troops? 2. Ukraine is defended by the Ukr army - with copious amounts of ammo and weaponry yes from NATO but no troops. At the same time the US never said they would send the army into conflict to defend it; when it comes to TW, despite the strategic ambiguity or whatever it's called, the general belief is there would be US boots on the ground. 3. The US would send its soldiers if there was something valuable obviously - be it fabs or oil or whatever, but not just to fight China for a random island in the Pacific. Otherwise they would have done it already on the countless atolls that are being fortified. 4. Yes, pretty much that. Just that it would not be obvious, but rather a long war of words would precede it... Again, nothing wrong with it. As long as no lives are lost I guess it is for the better.

They might do it because of the value in denying China access to Taiwan. Even assuming that Taiwan blows their semiconductor fabs to prevent China from getting them, there's still all the know-how and all the other stuff that the US wouldn't want China potentially getting its hands on, like American weapons. There would also be the consideration of the risk to Japan (and other friendly nations in the region) created by allowing China to just take Taiwan without at least Ukraine levels of backlash.

The US isn’t giving up Taiwan- it’s the perfect opportunity to humiliate the CCP. China is in way over their heads if they actually believe they can achieve a naval landing on a fortified island without air superiority. It would be an absolute massacre.

Additionally, the US could simply embargo Chinese supply lines and dare them to engage.

I volunteer you to go fight in Taiwan to "humiliate the CCP".

I'm guessing Taiwan received quite a carrot in order to get their approval for the TSMC expansion.

No carrot I'm afraid :D I think this decision was 100% made by TSMC and the US. Both get what they want: - continuity of operations and safety for TSMC - locally sourced chips for the US and most importantly - much diminished importance for Taiwan, meaning they do not have to defend it with troops (which is the most important aspect of war - see Afghanistan, Vietnam, and so on).

> geopolitics is about more than Taiwan

That’s obvious and wasn’t stated otherwise.

I think it actually increases assimilation with the US instead. One of the things that improved US relations with Japan when there was fear that they would take over the US was when they started building a bunch of US-based manufacturing.

The US has no such fear about Taiwan. Taiwan has a fear that they will be invaded by China if they do not have industry that is too important to China to be interrupted by war.

Are you saying China is more likely to invade Taiwan if the destruction of TSMC’s Taiwanese fabs could be mitigated by buying the same products from TSMC’s US-based fabs?

I believe what they are saying that the US is less likely to risk war with China to protect Taiwan if they can get chips sources domestically.

I phrased that wrong. I meant that they want to be important to the world in general (and the US), not specifically China.

That's describing something different. In the 80s the US was worried that Japan would dominate the US economically. The dynamic here is that Taiwan is worried that China will dominate Taiwan militarily. The assimilation being referenced above is not between the US and Taiwan, but between the Taiwan and China.

Absent any form of fab redundancy in the global economy, the fabs make Taiwan fragile in the eyes of the Western powers. Taiwan is safer when it is not a pressure point for the entire Western economy because it's easier to defend territory that can withstand a few hits.

It may be a useful talking point to get the public to do the right thing on Taiwan, but frankly there's no meaningful economic reliance on TSMC/Taiwan and policy makers know this.

That fab will not be even 1% of US semiconductor consumption.

And it will come to a halt within weeks if consumables will stop coming from Taiwan.

Nope. Chips clearly have a national security component. Ensuring local supply reinforces national security. Which reinforces geopolitical commitments through making those commitments more credible.

Edit-removed a comment

> Nice try though.

I think you shouldn't use that type of wording on hacker news. It's clearly against the rules.

The geo in geopolitics means the whole planet, not just the USA. Destabilizing Taiwan could have major effects

> This huge of an investment in a tech where TSMC will face competition from fabs in lower-cost countries almost certainly means the company believes it can use extensive automation to avoid having labor costs sink their ability to compete on price.

What countries are you imagining that will suddenly become competitive in semiconductor manufacturing? As far as I know there are no up and coming companies of note. (Companies in China are not of note as they have been permanently prevented from further advancement.)

"Permanently prevented" -- semi manufacturing is an engineering problem, not magic. Engineering problems can be solved, unless you think Chinese people are inherently inferior engineers.

It‘s not that easy to duplicate the institutional knowledge of companies like Zeiss, for example, otherwise they would have a lot of competition already.

Yup, this isn't making the cheapest t-shirts possible. The cost of labor is nothing compared to the revenues. For a fab you want a stable government and environment, and good tax/trade situation, and reliable, quality labor.

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