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Here we're looking at an industry where the US used to be dominant. So it's not a question of "how did another country beat the US to this sort of industry despite having less money floating around than the US?" It's specifically "how did this industry leave the US and why is it non-trivial to rebuild some of it?" I'm talking about the how of them becoming the best in the world, not arguing that they aren't the best now. As money for semiconductor manufacturing moved to overseas companies, initially driven by costs, those companies ended up with the money to invest in getting good at it. But that money was directed there as a result of specific actions by people in the US. So yes, all the conversation about immediate-cost-focused decisions, and the difference in the labor costs, are relevant. It's not "American exceptionalism" to be aware of this history, it's "American exceptionalism" that caused this and that drives the laissez faire attitude that there wouldn't be domestic impact like loss of expertise and reliance on overseas producer from a focus on immediate cost over all else. The idea that if we wanted to, we could simply build the industry back up. Because we're America! Same as all the rest of "it can't happen here" BS that people use to excuse ignoring various domestic issues. -- To frame the labor cost issue a different way, let's look at what the reverse process, bringing that expertise back to the US, would look like: let's say tomorrow the US wanted to build up a domestic best-in-the-world alternative company. They'd have to hire a bunch of engineers! Even best-case, it would take those engineers quite a while to reproduce all the earned knowledge and expertise of TSMC's engineers. All the while you're gonna have to pay those engineers more than TSMC's engineers are making, because it's a more expensive labor market. And then even if they do produce equally high levels of output after a while, all those higher costs are going to put them at a competitive disadvantage. So if you want to be good at it domestically, and you live in a country with more competition for labor, you really have to commit to spending extra to do it. (Getting TSMC to build some plants domestically is a way of short-cutting the knowledge acquisition step, but it's just a small step towards really rebuilding the industry.) |
A lot of manufacturing did move to Taiwan in the 70s and 80s because labor costs were lower there then, and because the US was investing a lot in Taiwan because of its strategic role vis-a-vis mainland China. But that wasn't especially high tech, and was decades before TSMC became relevant on the global market for anything but very low-end chips.
The way that TSMC ended up on top was by beating Intel at its own game. It did that at a time where Taiwan was already rich, and the US wasn't actively subsidizing the semi-conductor industry, whereas Taiwan's government was. It seems naive to assume that Intel wouldn't have had a decade of missed deadlines if it'd just thrown more money at the problem. In that this article started off about corporate culture, it's not hard to argue that much of what killed US chip fabrication dominance was Intel's corporate culture (as opposed to cheap Asian labor).
Basically there was a lot of consolidation in fabrication in the US, then with all of the eggs in a couple of baskets, the US-based fabs dropped the ball, and TSMC and Samsung smelled blood and stepped up their game.