USA and China dependence on Taiwan for semiconductors

August 2, 2020

Taiwan has become a flashpoint in the technology war between USA and China.  This adds a whole new perspective to China's territorial claims over Taiwan.

  • "The world is becoming increasingly dependent on a Taiwanese company for the most advanced semiconductors, after a stumble by rival Intel. But TSMC is trying to pull off a high-wire act by keeping both China and the United States happy at a time of rapidly escalating geopolitical tensions. here are only three companies that can manufacture super-advanced chips in the world: Taiwan Semiconductor Manufacturing Company (TSMC), California-based Intel and South Korea's Samsung.

  • Intel (INTC) warned it was behind schedule on manufacturing 7 nanometer chips, and may outsource production of them.  TSMC is the most likely candidate the US firm could turn to for help. Samsung (SSNLF) is producing 7 nanometer chips, but its manufacturing business is small relative to TSMC. It also mostly makes memory chips, while Intel needs help manufacturing advanced processing chips."

  • "TSMC announced earlier this year that it is building a $12 billion manufacturing facility in Arizona that will be able to produce 5 nanometer chips by 2024. The announcement was a win for the Trump administration, which wants to have more advanced chip making capabilities in the United States, to secure supply chains for chips used in military or sensitive civilian applications."

  • "TSMC is the world's largest contract manufacturer of chips. Companies like Apple (AAPL), Amazon (AMZN AMAZON), Qualcomm (QCOM)and Nvidia (NVDA)can design advanced chips, but they don't have TSMC's costly fabrication manufacturing capabilities to build them. They are "fabless" chip makers."

 

 

Related article.

  • https://www.lowyinstitute.org/the-interpreter/semiconductor-industry-where-politics-gets-real-taiwan

  • "These tiny strategic products can profoundly change the world as the US and China fight over the brains of electronics.      One might wonder how something as small as five nanometres – about the width of two strands of DNA – could be of consequence to the complex political relationships between the US, China and Taiwan. Semiconductor chips are the brains of all our electronics, from mobile phones to cars to fighter jets. And the most advanced chips on the market today have billions of five nanometre switches on them."

  • "The industry has been a diplomatic asset for Taiwan, entrenching US and Chinese interests in Taiwan’s stability and autonomy."

  • "But Taiwan’s status as a neutral player is becoming harder to maintain. With US-China tensions rising, both fear the influence of the other over their supply of chips."

  • "For China, the new rules won’t bite for a little while. Huawei has reportedly stockpiled a year’s supply of chips."

  • "The ability of Taiwanese semiconductor firms to seek out friendly ties with both the US and China is also made harder by the ideological approach of President Xi Jinping to Taiwan’s status."

Another article I have read has suggested that, because of USA's strategic dependence on TSMC, that the USA would regard any seizure of Taiwan as an act of war on the USA. I can see why. But this may mean that Taiwan might become the flashpoint for war between USA and China.

 

 

 

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