If China takes over Taiwan, what happens to silicon chips?

[slimebot]

If China came to own Taiwan, what would it mean for our tech industry?

Is this China's master stroke? That it can be sure that the whole world will fall into line because we are reliant too heavily on Taiwan for silicon chips?

Or will Taiwan seek to destroy those factories before China can own them? Which would send the world into a crazy period, but will ensure China largely loses a significant advantage, and any victory is tainted.

[dirtyid]

TSMC like most advanced fabs rely on western supply chains for operation. TW fabs aren't priority targets for PRC take over, they're useful barginning chips for PRC more than TW. PRC will offer US some sort of production continuity and US will pressure TW gov to accept. Losing TSMC will set back US/western high tech industry years.

But ultimately TSMC is expendable. TSMC is a media side show that obfuscates the actual amount of strategic semi assets PRC can physically threaten that will take decades to diversify out of trivial PRC striking range. Most of which are in Korea/Japan with US security guarantee, hence TW getting more reporting - it's under more theoretic "threat", combined with TMSC making all the leading edge chips for newsworthy products.

East Asian supply chain supports ~80% of global semiconductor production. Destroying TW fabs sets back a few generations of leading edge nodes which are already deniable to PRC due to US origin tech% and effects some high tech industries. PRC undermining/destroying east Asian fabs will set back global semiconductor capex for decades an every node which is essential to every western industry that requires a chip. It will constrain majority of global manufacturing to 90-00s technology. That's the real semi MAD, and why everyone is trying to build capex off TW island.

[ThrowawayR2]

Some of these responses are really silly. What actually happens is:

- TSMC's foundries stop operating soon because they're not getting new equipment, replacement parts, or supplies to operate the foundry from ASML or anyone else in the West, thanks to the inevitable embargo/sanctions that would follow. Even if the fabs were supplied and operating, nobody would dare send their designs to them to be fabbed anyway.

- TSMC's senior research and engineering staff are either evacuated or, if captured, are less productive than before.

- TSMC's shareholders (you know, the people who actually own the company) work out intellectual property licenses to Samsung and Intel, who are not that far behind TSMC in fab prowess, to raise capital to complete their own fabs in the West.

- Availability of consumer electronics gets extremely tight for several years then life goes on.

[rasz]

>extremely tight for several years then life goes on

Strange way of saying "$2 Trillion Apple goes bankrupt because no chips means no product to sell".

[lmilcin]

Pretty sure Apple would still be there.

Remember, it is not just Apple that would be hit. All their competition would also. And out of all companies that produce phones Apple has probably most cash on hand. They have something like 200B USD in cash.

Also Apple is in best position to be first in line to by chips at a premium outside Taiwan as their products are already expensive and high margin. And even if that doesn't work, they are in best position to just set up their own production. This would take couple of years but would set them to kill all their competition for foreseeable future so I am pretty sure they would look it as fabulous investment.

Look at latest iPhone teardowns. There is just couple of chips in it, and already designed by Apple.

The only other company I can think of is Samsung, that sits on a pile of cash half the size of Apple's. But while Samsung is well diversified, basically all their lines of business rely on chips, too. While Apple does not need a lot of different types of chips, Samsung probably relies on so many that they would not be able to replicate all of them.

[rasz]

Apple is a good singular example with huge market cap. You are right, its not just Apple - all huge non Chinese/Korean car makers would be sol for couple of years, cant even retool to less electronics due to EPA/Euro standards.

Samsung owns cutting edge fabs and is pretty self reliant. China has SMIC.

[slimebot]

Maybe this underestimates the complexity in setting up these facilities, the time required, and the skills involved.

[cyanydeez]

easier to just strand a few chinese cargo ships in a few canals

[monocasa]

> Or will Taiwan seek to destroy those factories before China can own them? Which would send the world into a crazy period, but will ensure China largely loses a significant advantage, and any victory is tainted.

Word on the street is that TSMC buildings in Taiwan are already set up to be scuttled. Explosives located in locked rooms within the facilities.

[0xdeadb00f]

Seriously? I can't tell I'd that's badass or scary.... Probably both.

[desertraven]

Any sources on this?

[rasz]

No matter what happens to the fabs, China wins either way because they manufacture everything. As the recent crisis showed when push comes to shove China takes care of their internal needs first.

[jollybean]

Chinese takeover of Taiwan would mean war or trade war, in both cases all sides lose, China loses worse.

A lot of countries are building up reasons to not like China, that would be the tipping point.

Manufacturing would flood out of the country, there'd be massive sanctions, other fabs would ramp up and more would be set up over time.

'Belt And Road' would be kaput, and a bunch of nations that supposedly owe China money would probably cancel their debt.

It would cause a recession and everything would slow down for a bit, but that would be the tipping point for the 'Next Phase' of China's development and it would be bad news.

[yongjik]

> As the recent crisis showed when push comes to shove China takes care of their internal needs first.

Not sure what you mean by "internal needs", but China is currently suffering mass blackout because China banned Australian coal. Seems to me that China puts its domestic politics in front of people's need.

* Well, at least not burning coal is a massive win for the Earth, so there's that. :/

[Gustomaximus]

They are probably referring to medical gear at the early stages of COVID. China wouldn't export things they thought they would need even if there were contracts for items.

They also took it a step further and asked Chinese in other countries to get medical supplies back to China potentially leaving other countries in difficulty. E.g. https://www.smh.com.au/national/second-developer-flies-82-to...

It should be a wake up call for politicians, though no doubt will be forgotten. International trade is great and but this clearly showed nations should keep some base activity domestically for key/essential industries.

[iAm25626]

No surprise most held a western view. Would be interesting to see POV(point of view) from people live in Taiwan. I have some contacts in Taiwan and most are not worry. This dance between Taiwan/China have been going on longer than most people is alive on HN. Goes without saying that bad news sell.

[slimebot]

You're making massive assumptions about my background.

Taiwan Foreign Minister Joseph Wu literally said yesterday his country is preparing for war. I think he'd know.

[iAm25626]

My comment wasn't meant to single out anyone. Posturing is part of this political dance. case point North Korea. I don't have a crystal ball but country that trade together don't go to war. Follow the money make sense: https://money.cnn.com/data/world_markets/asia/ If war is imminent; i would suspect a crash. War is expensive and it's not economical for CCP to start one now. I like to think in positive because the alternative is "lost ancient tech"/back to fight with bow and arrow.

[pphysch]

You realize that USA is already economically dependent on China, right? No one can easily replace half a trillion per year in exported goods.

Taiwan being an autonomous province of PRC would not significantly change the current economic relationship between USA and China. In fact, it would probably improve it by resolving unnecessary tension.

[slimebot]

I see it differently. China and USA are both dependant on Taiwan.

China and USA are diverging with or without war. The question is will Taiwan's capacity be claimed by China, or will it be massively downgraded.

[bllguo]

you'd think "WMDs!!" was enough of a lesson, but I guess not. When China does not start a senseless war over Taiwan in the next few years, I hope at least some of us will do some introspection about all the current hysterics.

[slimebot]

Taiwan Foreign Minister Joseph Wu has literally said war is imminent.

I agree the WMD situation was a low point in morality and humanity. But this situation has a massively different dynamic.

[astlouis44]

There would be war over it.

[slimebot]

For sure. Yet I'm not convinced America can take that too far. So I wonder if it is willing/wanting to lose the Silicon factories, and cause a giant technological reset

China would be at a massive disadvantage if it won Taiwan and lost the chip factories. That really would be a massive cold war, then.

[GravitasFailure]

Considering how important Taiwan's fabs are to the US it seems unlikely the US would turn a blind eye to the attack, and an escalation like that would signal further threats to Korea, Japan, and Australia.

[wrycoder]

1. If Taiwan loses, the fabs will be scuttled.

2. If China loses, they will bomb the fabs on the way out.

3.

[triactual]

Number three is run away profit for every other fab in the world. Like the fabs in hard-to-bomb parts of the US. I realize they are not at the level of TSMC but that’s because they have not had to get to that level. They will.

[rasz]

Line in Ukraine with extensive defense warranties? https://en.wikipedia.org/wiki/Budapest_Memorandum_on_Securit...

[jollybean]

Crimea has no value to anyone, it's a sparsely populated barely industrialized island and 1/2 the population is Russian anyhow.

I don't think there will be war over Taiwan, because if it was an effective Chinese invasion - there is nothing anyone could do about it. If China takes the Island, then they will keep it, not even the US could displace them without incredible force of power.

If the US was involved in the fight and US took casualties i.e. downed fighters/bombers, or worse, a ship sunk, then the US will extract blood for that in other ways, notably, I can see the US and allies pushing China out out of the S. China Sea as a form of retaliation because it's militarily plausible.

But it would take nuclear war for anyone to push China off of Taiwan if they secured it and were well dug in and nobody's going to do that.

[pphysch]

Crimea has significant (defensive) strategic value to Russia, not unlike Taiwan for China or Cuba for USA. They really don't want a hostile power putting missile silos or aircraft carriers there.

[devKnight]

wonder if there's a plan to evac everyone who has crucial know-how abroad, a la Operation Paperclip and its soviet counterpart. If they can move all of the machinery and people out in time( This is taking into account, that the worst has come to happen ). They could setup shop elsewhere in probably under a year.

[post_from_work]

I've somewhat joked on other forums that this is exactly what the US should do. Wholesale shift the entire population and industry of Taiwan to Texas/Arizona/New Mexico/Colorado. Green cards for everyone. Like when the Soviets shifted their heavy industry to the Urals during Operation Barbarossa. The Chinese military would walk into Taipei and only find a note with "you wanted this rock...you can have it middle finger" as a tumbleweed rolls by...

[vladTheInhaler]

I don't think there's any chance moving most of that machinery on short notice, what with the incredibly small tolerances and clean-room conditions required in that industry. Here [1] is one EUV source. It's the size of a shipping container. The power source is "so large that it has to be placed on a separate floor". And that's just one tiny (but essential) piece of the puzzle. You would have to somehow bundle it up totally airtight, get it to the port, and safely across the ocean through an enemy blockade. Possibly while troops are landing at the beaches, and planes are bombing you.

The personnel seem a bit more possible, though I'm sure China would not be interested in its most economically productive "citizens" fleeing, so it probably wouldn't allow them through a naval blockade either.

[1] https://www.laserfocusworld.com/blogs/article/14039015/how-d...

[elzbardico]

They will be sold by a company incorporated in the PRC. The Chinese wouldn’t be crazy to bomb fabs

[josephcsible]

Nobody thinks the Chinese will bomb the fabs. The speculation is that Taiwan or an ally would bomb them if China capturing them is otherwise inevitable.

[vfulco2]

If this occurs, the Japanese will acquire nuclear weapons.

[ashwagary]

I can only make one high probability guess, the cost of chips will go down drastically.

[chatoyance]

China isn't taking Taiwan risking nuclear war. Xi may say it's a goal, but it is likely merely promised vaporware to rally the Party.

[synergy20]

Let me rephrase this:

If China takes over Taiwan, how soon can USA build a united force with Japan, Australia, South Korea, probably British, India etc to take it back, like what occurred in Kuwart?

This might set all of us back 2 decades but other options will be worse?

[tdeck]

A world war would be better than a disruption in the newest generation of chip production?

[GravitasFailure]

Twenty minutes, if I'm allowed some hyperbole. China has been trying to throw their weight around with Australia and none of China's neighbors would be happy with them turning expansionist.

[ngcc_hk]

I guess they are building it now. On top of having a second factory in other places. Slowly though.

[unmole]

A war involving 4 nuclear powers. What could go wrong?

[Georgelemental]

China has nukes. So do the United States, Britain, and India.

None of the leaders of the listed nations want to die in a nuclear holocaust.

So no, your "united force" will never happen.

[synergy20]

When everyone has nukes, the only possibility is none will be using it, or dare to. It's the least of worries.

The new thing might be lots of drones with bombs though.