Berkshire Hathaway sells entire stake in TSMC
cnn.com
cnn.com
Suggestions that seem to disregard Taiwan's autonomy over its own affairs, as if U.S. interests can dictate decisions like purchasing all of TSMC and relocating them and their personnel.
The assumption that China's primary interest in Taiwan is solely due to TSMC, with claims like 'China will lose interest once TSMC ceases its operations'.
Fair, but this autonomy seems to be tenuous at the moment and grows more so as time passes. You must be aware what the US is willing to do when it comes to national interest. Chips are on par with energy/oil, possibly regarded as even more important economically and militarily. I'm not sure if the US regards Taiwan's fall as inevitable or how they would act if they deemed it so. Regardless, a war over Taiwan would significantly slow chip production.
>as if U.S. interests can dictate decisions like purchasing all of TSMC and relocating them and their personnel.
I'm sure there will be a carrot and a stick, but if this happens, an offer will be made that TSMC can't refuse. TSMC seems to be more than interested in moving their fabs off Taiwan land, so I don't think this would be necessary.
>The assumption that China's primary interest in Taiwan is solely due to TSMC, with claims like 'China will lose interest once TSMC ceases its operations'.
Yes you are correct about this. China's current interest in Taiwan goes well beyond TSMC.
> I'm sure there will be a carrot and a stick, but if this happens, an offer will be made that TSMC can't refuse.
I comprehend this U.S.-centric viewpoint. However, from the perspective of an independent nation state, this narrative sends a cautionary message: 'Beware of creating a product that becomes too integrated into the U.S. supply chain, because you will get rich but risk forfeiting your right to self-determination.'
It is somewhat disappointing to see that, on this forum where more nuanced discussions are expected, this is the default (and appreciated) perspective.
If this was fundamentally about economic security for the average American, Washington would not jeopardize those with economic and military brinkmanship.
Their primary preference would be for no conflict, so they put up a front of bravado to discourage any aggression. He question does remain, if they'd actually respond to such an invasion.
In theory, this platform should be about curious intellectual discussion primarily about tech.
In practice, it suffers from upvote-itis which amplifies popular opinions and worldviews and silences others. That's a horrible environment for sharing knowledge about geopolitical issues that span far beyond SV.
It's why I was giving the example of EU or China or whatever offering up to buy the entire US military industrial complex. It would be impossible, and not only due to lack of funds.
Freakonomics podcast had a couple of episodes on Taiwan some time ago, and one of the points brought forward was that TSMC is a spearhead. In Taiwan, there is more semiconductor industry, and an established education structure able to produce the ongoing stream of skilled workers at every level. These feed into each other, and TSMC is at the apex of the pyramid. To produce an environment where you could transport TSMC to and have it continue to thrive, you'd likely need to first maintain a strategic focus for something like 15 years to build the necessary support structure.
I suspect that China is looking at this, but looks at it from another angle. If they invade Taiwan, they will end up disturbing the support structure that makes TSMC, well, TSMC. The edge of Taiwan's semiconductor industry is not that they have TSMC. Their edge is the entire environment that makes TSMC possible in the first place.
Or to be really blunt about it: once the CCP believes they can do without Taiwan's semiconductor industry, they'll send in the troops.
That's still a simplistic point. Will they not consider the practicality ot invasion?, like Taiwan beating them on its own, USA getting involved as promised, etc?
If not, then we'll likely have a war between major powers or they'll get to declare victory as with vietnam.
Whether or not that's its primary interest Taiwan, TSMC is partnering with the US and allies to geographically diversify its most advanced manufacturing. They are taking all the eggs out of one basket so China can't use its proximity to the basket as an advantage through threats or any designs they may have on acquiring the tech they have been unable to produce domestically.
Edit: To add a little more flavor. General population are getting more aware of this but they have a surface level understanding of it; mostly memes and soundbites they parrot like "silicon shield".
The silicon shield certainly has some merit to an extent but long term this causes more problems than it perhaps solves.
The all the eggs in one basket problem:
* China knows the world depends on those chips now, and all the most advanced chip manufacturing is sitting right off their coast. This really strengthens their hand in all sorts of ways.
* The world does rely on those chips, but the worlds major liberal democracies are unified in their commitment to ensuring this tech remains in-the-family so to speak. They can't destroy the basket because all the eggs are in it and everybody needs the eggs.
Another consideration; we were committed to Taiwan's defense before they came to dominate global chip manufacturing. Independent Taiwan is important to the Indo-Pacific strategy.
Edit2: I said "all the most advanced chip manufacturing" and that's not true. Intel has all the capability or is right behind perhaps but it does not have the capacity to meet worldwide demand.
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Buffet:
“I don’t like its location, and I’ve reevaluated that.”
“I feel better about the capital that we’ve got deployed in Japan than in Taiwan”
“[TSMC is] one of the best-managed companies and [most] important companies in the world.”
“There’s no one in the chip industry that’s in their league, at least in my view”
“Marvelous people and marvelous competitive position and everything, [but] I’d rather find it in the United States.”
Buffett said his reassessment of the company was in “light of certain things that were going on.” He had previously pointed to geopolitical tensions as a concern.
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TSMC is a key supplier of many companies, including Nvidia.
Not an ideal situation.
What do people expect plays out over the next few years?
Once this happens China will probably feel more emboldened to take Taiwan because US industry won't be so reliant on it and less likely to intervene. I'm not saying the US won't, but they would be less incentivized economically and in regards to self interest. I don't think the populace has the stomach for a long protracted, potentially nuclear war over Taiwan.
China will become significantly more isolated on the global scale if this happens, but they seemed determined to do it. They've fallen into a single-man dictatorial power structure under Xi. The China global economic experiment seems to have failed. It's a waiting game.
This is about geopolitics, and fulfilling the destiny of the Party/Nation that has for decades been embarrassed that their (in their eyes) territory was held by others and supported by the West.
EDIT: Estimate is off by 100x. I also agree that Taiwan would not like to lose the leverage TSMC gives them. I still think the offer should be made.
https://en.wikipedia.org/wiki/Committee_on_Foreign_Investmen...
Maybe that still holds true for Europe since the US doesn't want to piss of their strategic allies too much, but unless you're living under a rock, you've seen how that works for other less friendly countries.
If America pays for this because of fear of Chinese bullying, what is next? If you let the Chinese know America will pay, and people can flee and the Chinese can take what is left behind, what else does America let the Chinese take over? Middle East, Africa, South America?
I don't think being a coward and running away from a bully is the right thing to do.
Er, you might consider looking into China's so-called Belt and Road [0] initiatives with regards to Africa. The boomer-era IMF strategy of predatory lending to third-world countries with an eye to controlling export infrastructure via impossible loans has been noted and improved upon by the Chinese. IMO "we" (read: the Pax Americana) have already handed over much of Africa.
[0] https://en.wikipedia.org/wiki/List_of_projects_of_the_Belt_a...
TSMC is a key reason why anyone pays attention to that part of the world and only a fool would let that leverage slip away.
Of course US could force their hand, which would be equal to putting out an ad in NYT telling Xi to do whatever he wants to the island.
Yeah, I don't expect Taiwan to fall for something like this.
Neither would China!
Throw in the few they have in China to...
Seems starting with moving the most modern lines out of harms way, and building all new lines not on Taiwan, they would soon reach a state where what is left behind is multiple generations old, so worth far less
Certainly a good idea even if moving nothing, to also build nothing new within China's reach.
[Total Equip Loss Cost] * [Probability of Loss]
vs
[Additional Cost of Moving] + [Additional Cost of Downtime]
Especially Apple. Apple has an extremely short production buffer. Allegedly, they have complete inventory turnover every five days. https://www.theverge.com/2020/3/13/21177024/apple-just-in-ti...
I expect speculators will deplete Apple Stores' JIT stocks well before any belligerence begins. Some of those speculators may place their bets too early and lose money.
China fantasy version: China takes Taiwan and TSMC and everybody minds their own business. China miraculously converts this move into de facto monopoly. America can't get chips and tries to negotiate with China's tight new ally Mexico, losing California in the process! Holy sh*!
Maybe more real: China takes TSMC like a chess piece, tries to put it back on the board like in Xia...Shogi (sorry, my Japanese is better here). Except somehow (sanctions, brain drain, sabotage, etc) the piece metaphorically crumbles to ash. Buffett is still so very glad to be out.
Another one: Taiwan and foreign partners with lots to lose like US, Japan, and SK successfully turn Taiwan into a meat grinder. TSMC becomes a godforsaken piece of charred land. Miraculously a very-TSMC-like corporation appears split between those countries with some kind of Taiwanese stake as well.
Lots of possibilities to think about. Could happen in the next 5-20Y rather than a few though. WW2 for example had a very long build up from expeditionary moves to the bigger strategic conflict stuff if you look from the Japanese perspective, and this pattern has a lot of benefits to China given factors like US administration churn, etc.
Also we don’t know if whoever follows Xi will be better or worse.
Even if TMSC and other fabs are entirely moved off Taiwan, or reduced to Bhakmut-style smoking rubble, CCP will still have a serious fight on it's hands to gain control of Taiwan.
They think most likely scenario is through political means. Kuomintang is already Pro Beijing.
> China’s military flew 38 fighter jets and other warplanes near Taiwan, the Taiwanese defense ministry said Friday, in the biggest such flight display since the large military exercise in which it simulated sealing off the island earlier in April.
I'll buy that Chinese in China have that view, but flying 38 fighters near Taiwanese airspace is China actually using force.
At the same time, I do see China's larger gripe. Between Japan, South Korea, Taiwan, The Philippines, and Singapore, China's access to the open seas is boxed-in by western allies. Russia has a similar gripe with a warm-water port in Crimea and NATO slowly closing in on Russia by growing the alliance east.
Russia has multiple ports on its own black sea coast and before 2014 was building them out, especially Novorossiysk, to host the Black Sea Fleet, for when the lease of Sevastopol runs out.
But at the same time. You would think that if China does in fact believe Taiwan is theirs, then why would they bomb their own (eg. valuable TSMC, etc) infrastructure vs play the long game and take over politically.
Also, their sorties are more like a dog barking. It’s showing force, like North Korea doing those parades and launching missiles.
It is shocking how poorly they treat their employees. No wonder they are lagging: They can't keep people on the floor because they are poorly compensated and treated poorly.
The amount of middle manager bloat is STAGGERING. 5 bosses for every person actually doing work.
As my friend put it: "What if we retained employees instead of running a strategy where we expect 20% turn-over every quarter?"
I bring this up because I see Intel as TSMC's primary competitor, and I don't see how they can hope to compete with how inefficient and incompetent they are.
Their advantage is that they've made themselves into Taiwans entire national security strategy so they're able to push an idea of working yourself to death as a selfless patriotic act.
Is someone out there not sharing?
What inside information did Buffet act on? The fact that Taiwan is in a geopolitically unenviable position?