[tehjoker]

TSMC is probably completely accurate. Their contention is that moving the supply chain would create "non-profitable capacity". However, national supplies do not need to be profitable if they are subsidized or fully funded by a state.

The state is free to, and often does, engage in non-profitable production to ensure essential domestic needs can be satisfied.

This doesn't make sense from a market perspective, but it can often make sense from a needs based perspective.

[blueblisters]

Won't this lead to innovation grinding to a halt? Right now TSMC has a decent profit margin to re-invest into newer technologies. If the margins become thinner, the industry will find it difficult to set aside R&D dollars for the newest technologies.

Of course, you can always have a newcomer who can disrupt the market but most Moore's law advancements appear to happen in government funded research labs and large semiconductor companies.

[tehjoker]

Not necessarily. Most innovation is state funded in general. Real innovation requires either monopoly profits or state funding because otherwise research must necessarily be directed towards short term payoffs.

Investors will not tolerate time lines of 10+ years and hundreds of millions to billions of dollars sunk.

[533474]

Do you mean healthy profit margins?...because I'd rather prefer a combination of big profits, state subsidies and healthy competition than a monopolised/oligopolised market

[tehjoker]

Unfortunately, I did mean monopoly profits. In a non-monopoly situation, competition exists which forces market participants to constantly reduce costs and compete on quality or price. Eventually, a single or few participants will be left standing as the others fail and the the remaining ones engage in a process of buying their supplies and workers at discount prices. This is not an environment that supports long term thinking.

There might be an exception here and there, but there will be some structural reason why long term planning is possible (such as competition not being able to step on each others toes). It's not true in the general case.

[mensetmanusman]

Most ‘expensive basic’ innovation is state funded.

Most short-term <10 year innovation is industry funded.

[tehjoker]

True, that's because the system is designed to subsidize expensive research and let industry exploit cheap research. It makes no sense to think that state funding, having already done the heavy lifting, can't do the last mile.

Industry mainly provides access to the scalable means of production for tinkering, which can be owned by anyone, not just industrialists.

[Strom]

> Won't this lead to innovation grinding to a halt?

No more than Taiwan getting blown up. It's going to be about balance. No good to have all the eggs in a single basket, whether that is TSMC or some subsidised national attempt.

[jandrese]

Companies can still invest in R&D even if they aren't a monopoly.

Note that this announcement comes right on the heels of TSMC announcing that they aren't reducing their prices this year.

[ffggvv]

IMO its just smart in case china tries to annex taiwan or initiates military moves and then we're cut off from semiconductors.

[tehjoker]

This is correct, but imo it is far more likely for the US (the largest military power in the world) to start something. No need to be hyper nationalistic about this.

[zepto]

It’s not obvious that the US will be the largest military power for long.

And china has been flying incursions into Taiwanese airspace with increasing regularity.

Plus, China has broken its treaty obligations in Hong Kong, and explicitly expresses the view that Taiwan is part of China, and it has no strategic semiconductor fabrication capability of its own.

Given all this, I’m not sure why you’d imagine the US would ‘start something’ purely because of the dollar amount it has spent on the military.

[tehjoker]

It depends on how you regard Taiwan. If you think of it like China's Texas, it's a domestic issue. If you think of it as a nation under threat, it's an international issue.

https://www.wsws.org/en/articles/2021/03/17/pers-m17.html

"Even as more than 1,000 people die from COVID-19 every single day in the United States, and the disease surges around the world, the US is preparing for a conflict that risks incalculable human suffering. Joining this offensive is the United Kingdom, with the highest COVID-19 death rate of the major European countries, which announced Tuesday a massive expansion of its nuclear weapons program, calling China a “major threat.”

It is not COVID-19, but China that the US has planted firmly in its sights. As Blinken made clear, “Several countries present us with serious challenges, including Russia, Iran, North Korea… but the challenge posed by China is different. China is the only country with the economic, diplomatic, military and technological power” to “challenge” the United States.

On March 10, Adm. Philip Davidson, commander of the US Indo-Pacific Command, told a Senate Armed Services Committee hearing he believes that China is likely to invade Taiwan within the next six years. “I think the threat is manifest during this decade, in fact, in the next six years,” Davidson said.

Given that the United States has, in the words of Defense Secretary Austin, “commitments to support Taiwan’s ability to defend itself,” to predict that China will invade Taiwan within the next six years is to predict a major Sino-American war within that same time period."

[zepto]

Your quote precisely supports what I explained - i.e. there is some likelyhood that China will try to seize control of Taiwan.

What it doesn’t say, is anything about the US starting something.

It’s totally absurd to consider Taiwan to be like a US state such as Texas.

For that to be a valid comparison, Texas would need to have a treaty with China where China had agreed intervene militarily to protect Texas from US federal government control.

You must know this is an absurd comparison.

[badloginagain]

If governments are looking at Chinese-Taiwan relations, and gaming the result of an occupied Taiwan, those supply chains become profitable pretty damn quickly.

[tehjoker]

If China took Taiwan, they would be selling to the rest of the world most likely. However, perhaps they are planning for a case where the US bombed the crown jewels to maintain supremacy. That would create profits for a domestic sector.

The USG is perfectly happy to spend taxpayer money and foreigners' money to make their corporate constituency happy even if the financial equation is overall negative.

[PeterisP]

I don't think that there is any plausible scenario where China takes Taiwan chip fabs intact - if they are not disrupted during the conflict, I strongly presume they would all be intentionally blown up as soon as invading forces get a beachhead.