The more complex the process becomes, the harder it is to have equivalent competition so you're bound to have issues where a single company's investment decisions have widespread impacts.
My perspective on the China risk differs some, though. China wouldn't benefit much from attacking TSMC. This is the first time I've heard anyone suggest that they might. At best they'd like to have it in-tact if they do take Taiwan, but there have been talks about machines being rigged to explode to deny them from China, or the US striking them in that scenario.
If neither we nor China get to work with TSMC, then we're still ahead in relative terms. If China did attack TSMC, they set the norm that the fabs (including their own) are now a fair target which would be a larger disadvantage for them than it would be for us since China's physical power projection remains pretty regional outside of Chinese nationals abroad engaging in sabotage.
That is one of their biggest weaknesses. Yes they have a lot of manufacturing capacity and a large population with many talented people, but in a way we have lent them the power to scale up to see what they'll do. We are already putting some pressure on that scale now that they've shown who they are, but if it came to war it would be very doable to start reversing their scale and their capacity to do the same to us would degrade as ours increases.
Even if all the AI in the world was destroyed, that's how it would play out. The problem is that Taiwan remains in close proximity to China so similar to Ukraine it would likely come down to how long they're willing to throw everything at it.
If Russia and China wanted to be powerful, it's just idiocy to show the existing superpower that you cannot be trusted with the power you have. If they fancy a merit based society, they forgot that merit isn't omnipotence and you still need the right ideas to be at the top to accompany the merit. For China maybe they need AI for that alone, but western societies at least have ways for the right ideas to make it to the top without the strict need of AI.
The US has shown that it can't handle any level of discomfort. The reason Trump is back in the white house is because grocery prices went up a little bit. Can you imagine the failure of the tech companies that are propping up the entire economy? That would happen under a Taiwan invasion scenario. China has a much high pain tolerance than US citizens at least. I'd argue they would outlast the US. Would they outlast the US military? I don't know. But it may not matter as given enough pain the US population will make itself heard.
I think you're conflating different contexts and scenarios. People aren't used to war being brought to the US itself. Look at Pearl Harbor and 9/11, both rallying the country pretty well. Attacking the US mainland is a losing strategy.
If people generally understand that we're intervening in a China/Taiwan conflict for the right reasons, and China attacks us at home it would only accelerate the west. If you look at Vietnam, the logic around that war fell apart and it no longer made sense to continue it. The people were right to push back. Iraq and Afghanistan went on for a long time without much fuss.
Some kind of conflict in South East Asia would likely largely be a naval and resource war, with many casualties being naval rather than mainland. Most losses on both sides will probably be drones, AI or not.
If it came down to attrition, it would maybe be AI machine attrition or drone/missile attrition which is in a way a resource war which the US could win even without TSMC, but from where we're standing today it would take more ramping up which is a process that has already started.
If OpenAI, Google, Microsoft, Amazon, etc were attacked by China in a more critical way, it would have to be for some major short term advantage that is capitalized on immediately, because long-term it would be a losing strategy by itself. China has systems to disrupt as well, so if they let loose on cyber then the US has options too.
Either way, don't conflate general economic preference around an election for whether people would tolerate being unable to access Gmail or order from Amazon like they would all rush to riot in the streets. I think that misreads the situation.
I really don't understand why companies are ignoring intel's foundry services... for the first time since probably the 2000's, intel's 18A nodes are significantly ahead of what TSMC is offering. Apparently they have capacity and are demonstrating wafer production with their own chips.
It seems wholly illogical that Apple would get refused wafer volume by TSMC and still refuse to give volume to intel foundry services. When you layer on geopolitical factors and national security implications + the fact that Apple is a US company - what reason could they possibly have to turn the shoulder to intel's foundries?
If Taiwan ends up imploding in any of the numerous ways we are aware of today - and which this article adds to - I think there are exactly zero reasons to feel like this couldn't have been avoided.
Some of us are old enough to remember the last time Intel was definitely, 100%, for-sure committed to offering foundry services, and then changed their mind and canceled the whole thing (it was in 2018) and want to see (a) someone else have success with 18A first and (b) intel show an actual long-term commitment to using their foundry for outside customers before we risk our companies' future on them.
There are risks with TSMC, but "TSMC just decides it's not interested in making chips for other people, and cancels the whole business" isn't one of them. The same cannot be said for Intel.
If Intel decides they're not going to continue foundry services after 14A - you can just shift back to TSMC like everyone did between Samsung and TSMC?
>intel's 18A nodes are significantly ahead of what TSMC is offering
A nice comparison table linked below. The best comparison imho is transistor density which is 313MTr/mm2 for TSMC's latest in-production process vs 238 for intel (higher is better).
Shewie, given all the replies to this, and my personal living memory/experiences with these kinds of things as they relate to said replies, sounds like buying intel stock is probably a pretty good idea.
From a NatSec perspective, TSMC isn't really a bottleneck - most weapon systems use SoCs and microcontrollers that can be fabbed on "legacy nodes" (ie. 28/40/60/90nm) or 14/20/22nm nodes, and compound semiconductors.
The ability to mass produce a Pascal or Volta comparable GPU or Apple A11 comparable SoC is all you need for more cutting edge systems.
Power Electronics and Compound Semiconductors (GaN, SiC) have historically been the biggest bottleneck.
The bigger risk for the TSMC-China aspect is TSMC's planned exit of GaN foundry production by 2027. Most Chinese manufacturers still depend on TSMC-produced GaNs wafers instead of domestically produced GaN vendors due to reliability concerns. China will probably end up matching TSMC's specs for compound semiconductors in 4-7 years, but that implies that the Sullivan Doctrine still holds and is a loss for China.
Every other country with compound semiconductor production capabilities at scale (US, Germany, France, South Korea, Japan, Israel, Russia, India) either limits their exports or cannot export them to China without facing sanctions from other buyers (primarily Russia as India does not allowing commingling of SKUs for defense vendors who sell to Pakistan/China as well, and Russian vendors are members of India's EW and DEW program).
If a US-China War was to arise, worst case we would probably see a mass reversion back to 2018-22 level technology, which isn't the end of the world.
Additonally, the China-Taiwan situation is orthogonal to semiconductor dependency.
>If a US-China War was to arise, worst case we would probably see a mass reversion back to 2018-22 level technology, which isn't the end of the world.
It wouldn't be the end of the world if those 2018 chips came at 2018 prices and only impacted commodity stuff like phones, datacenters and laptops, but they'll be at 10x the 2018 price and impact critical stuff like automotive, the cars and trucks that gets your food delivered to the supermarket, and if those become impossible to buy or fix anymore, then your groceries will also get more expensive, triggering an end-of-the-world riot from taxpayers who can't afford food anymore.
People need to view this issue as not just being stuck with 2018 laptops and phones which isn't that bad, but has much wider societal implications.
> impact critical stuff like automotive, the cars and trucks
Most capacity for legacy nodes is already ExTaiwan and ExChina. TSMC leapfrogged American and Korean fabs in the late 2010s/early 2020s with sub-14nm process nodes, but Samsung and Intel have caught up for 5nm and 7nm capacity. And Taiwanese firms have largely diversified OSAT and ATMP away from Taiwan and China to ASEAN, US, and India.
This is something everyone adjacent to this space has been thinking about and acting on since 2017.
> only impacted commodity stuff like phones, datacenters and laptops
Data Center and enterprise applications are prioritized in most ExTaiwan sub-7nm fabs such as Intel 18A.
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A US-China War over Taiwan would be devastating, but not getting an M1 Macbook will be the least of your worries.
> Anthropic Chief Executive Officer Dario Amodei said selling advanced artificial intelligence chips to China is a blunder with “incredible national security implications” [...] “I think this is crazy. It’s a bit like selling nuclear weapons to North Korea.”
This is all a smoke screen. He knows very well that China can and will develop their own hardware to train AI models (and in fact, they are successfully doing just that; e.g. the recently released GLM-Image was trained on their own silicon). His only objective here is to slow them down enough so that they don't eat Anthropic/Claude's lunch releasing open-weight models that are increasingly competitive. But he can't just openly say "hey, we don't like that they release open weight models for free", so he's engaging in the AI version of the "think of the children" argument.
Anthropic's whole modus operandi was always pretty much "we should control this technology, no one else". It's not a coincidence they're the only major lab which has not released any open weight models, they don't publish any useful research (for training models) and they actively lobby the lawmakers to restrict people's access to open weight models. It's incredibly ironic that Dario is worried about (I quote) "1984 scenarios" while that's exactly what his company is aiming towards (e.g. giving Palantir access to those models is not "unsafe", but an average Joe having unrestricted local access is an immediate 1984-style dystopia).
"AI has a physical dependency in Taiwan that can be easily destroyed by Chinese missiles, even without an invasion" ?
Arguably false. Why do you think the US has encouraged TSMC foundries, now inside Arizona ? It's obviously to protect against the scenario that China takes Taiwan. In that case, give it 6 months or less for US TSMC foundries to produce the finest. China taking Taiwan will likely not result in the CCP getting any technology, certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded.
> Why do you think the US has encouraged TSMC foundries, now inside Arizona ? It's obviously to protect against the scenario that China takes Taiwan. In that case, give it 6 months or less for US TSMC foundries to produce the finest.
American business culture works pretty strongly against "give it 6 months or less for US TSMC foundries to produce the finest."
I think it's most likely those fabs will stagnate and the American MBAs running them will just milk them for short-term profits. Why invest in technology when you can buy back shares? After all, your only goal is number-go-up.
> China taking Taiwan will likely not result in the CCP getting any technology, certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded.
Not necessarily. Technology isn't so much the machines, it's the know-how. TMSC employees will still need jobs, post invasion, and I'm sure China will pay them very well. Some fraction will go to work for Chinese fabs, and teach them TMSC's tricks and knowledge.
>American business culture works pretty strongly against "give it 6 months or less for US TSMC foundries to produce the finest."
>I think it's most likely those fabs will stagnate and the American MBAs running them will just milk them for short-term profits. Why invest in technology when you can buy back shares? After all, your only goal is number-go-up.
The same American business culture that produced Apple/Amazon/Alphabet/Microsoft/Meta/Tesla/etc? They seem to invest quite a bit in "technology".
> The same American business culture that produced Apple/Amazon/Alphabet/Microsoft/Meta/Tesla/etc? They seem to invest quite a bit in "technology".
Yeah. There can be sparks of innovation, but the overall trend seems to be squandering advantages for short term financial gains. And honestly, some of your examples aren't great: Telsa's probably going to lose to the likes of BYD (but for unusual leadership reasons); Microsoft seems to be losing former capability, which is reflected in many of its products (https://www.windowscentral.com/microsoft/windows-11/windows-...); and I don't think Meta has done much besides sell ads.
IIRC, Chinese companies, on the other hand, tend not actually make very much money for their investors.
The sentiment I was countering was that American businesses do not invest in technology, nor do American business leaders think about the long term, and the examples surely show that. Successful or not, and selling something detrimental or not, they do spend many, many billions of dollars on bets that may not pay out.
You can even look to pharmaceutical companies for American business that have development timelines measured in the decades and investments measured in the billions. These aren't plays that executives profit from in 6 months, or maybe even 60 months. Real estate development is another business where investment timelines are in the decades.
I don't know enough about Chinese businesses, but I assume I cannot compare the motivations of Chinese business leaders to American business leaders, as Chinese business leaders seem less free than American businesses to capture profits for their investors.
There certainly are idiot MBAs (and non MBAs), and perhaps the ratio is too high in the USA, but based on the pre-eminent businesses in the USA, I wouldn't say it's "the" culture.
One of the reasons Intel failed and TSMC succeeded is because Intel was unwilling to pay what the other big tech companies were paying (and part of that pay is with RSUs which stock buybacks help offset). However, for workers in Taiwan, TSMC was the best option, so TSMC could pay less.
TSMC's Arizona fabs (edit: need to qualify this with "today" and in the near future) are wholly inadequate to shift wafer volume out of Tawian if that were to ever happen. TSMC themselves have been candid about this - both the fact there is insufficient skilled labor and insufficient economics (materials supply chain, construction costs/process, subsidies, OPEX). If TSMC was serious about this they'd have invested heavily both in staff pipeline (university programs and hiring onramps), domestic executive function and supply chain - aside from taking subsidies and building tiny fabs that trail their Taiwan process nodes considerably, they've done little to diversify their fabs.
90% of TSMC's capacity is still in Taiwan. A substantial amount of global high end chip capacity is also in South Korea and Japan, which would likely get pulled in.
A war would not wipe out chip production, but the squeeze would be immense for many years.
I don't even know what it means. "even without an invasion"? The author think China will destroy TSMC just because? To slow down AI progress?
> if we got to a situation where only the U.S. had the sort of AI that would give us an unassailable advantage militarily, then the optimal strategy for China would change to taking TSMC off of the board.
Lmao it's not. The author doesn't know what they're talking about at all. Let's be realistic: the current TSMC technology will be accessible to China, likely via espionage. The question is just how soon. It has already happened before. China's 7nm process was developed with the help from one of the highest level ex-TSMC researcher[0].
If cutting edge were a hard requirement then given the lead times involved I think the author would be correct. However I think there's a fundamental error in failing to account for the fact that you don't need cutting edge chips to do AI. Sure it makes it cheaper and faster but it's absolutely not a requirement. You could train a state of the art model on cluster of 12+ year old boxes (ie Intel's 22 nm and DDR3) but if you want to get the job done in a similar timeframe you're going to pay out the ass for electricity. Your research pipeline would necessarily be narrower due to physical and monetary limitations but that's not the end of the world.
Hiring people isn't espionage. Key talent leaving a dominant manufacturer for a paycheck at a struggling competitor and bringing their knowledge is just about the basis of capitalism.
The overwhelming bulk of production, in a massively oversubscribed industry, is in Taiwan. If Taiwan's production went offline, there would be enormous turmoil.
"certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded"
Given the way things are going, a rationalist would surmise that Taiwan is likely in talks with China for a peaceful reunification, Hong Kong style. The old way is very much over, the US is a worthless if not negative-value ally, and it's pretty clear to every living human with a functioning brain that this is going to be China's century.
Indeed, the article casually says "Taiwan is claimed by China, which has not and will not take reunification-by-force off of the table", which is technically true it isn't contextually informative. For those not fully up to date on the history of this conflict, for decades Taiwan claimed all of China (and most Western countries treated Taiwan as the singular government of all of China), and held out for reunification-by-force. This isn't as simple and straightforward like Trump's "we have a military ergo we get to steal better countries because they make us look bad".
He hasn't offered any production services to third parties whatsoever (seems to end at patents/standards gifting) - I wouldn't expect a fab open to third parties at all - if anything it'll be reserved for tesla/space-x/x.ai usage and candidly I don't think there's enough demand there to justify the capex involved in a fab.
There are some near ready foundries in the US and in EU, not to mention South Korea. It would take a few years to catch up of course.
What I worry more about is the full lock-in of TSMC production capacity by nvidia/apple/amd/etc for their chips on their latest and greatest silicon process (aka the best in the world). There is 'no space' for performant large RISC-V implementations or other alternative (and it will require several iterations and mistakes will be made)
Interesting point, although it's clearly not in TSMC's interest to land themselves in a monopsony situation by allowing Apple (e.g.) to squeeze all their competitors out of the market.
Tenstorrent managed to secure TSMC manufacturing capacity, I doubt many other RISC-centric fabless companies would have any issues aside from aggressive competition.
I wonder when we will see RISC-V (rva23+) large implementations, for instance for performance "desktop" at 5GHz+ on latest silicon process...
I know I can already replace my rpi3 with a linux supported out of the box RISC-V SOC board (aka, the enabling of assembly written software = no planned obsolescence from computer languages anymore, near 0-SDK).
TW doesn't have any munitions that can remotely breach gravity dam like three gorges, i.e. bunker buster, which even if they did, they wouldn't have survivable platform to deliver it (strategic bombers, too heavy for TEL). US MOP tier 30000kg penetrator munitions isn't designed to crack three gorges, TW missile inventory are like 1500kg, at most they'll inflict scabbing or break exposed components like power infra, lock gates, which is not nothing, but not remotely compromise structural integrity of dam. This not to mention TW missile trajectory is geographically constrained and overflies the densest IADS environments on earth, assuming their TELs are survivable in the first place. They're much better off trying to threaten PRC coastal nuclear, but either way gets them the Gaza treatment.
A conventional missile or even missiles is not going to destroy a huge gravity dam like that. They are incredibly tough structures and missile warheads aren’t big. We’re talking concrete hundreds of feet thick.
To add some background. During WWII the allies successfully used massive specialized depth charges but those were much smaller dams. [0] During the Korean war the US struggled to merely destroy the sluice gates of a dam using aerial torpedos. [1] Eventually the Geneva Conventions were amended to forbid attacking dams if it would kill a large number of civilians (which was pretty obviously implied to being with for what it's worth).
So unless Taiwan has a method to deliver something the size of a bunker buster to the underwater base of the upstream side of the dam I don't think it's going to happen. And if they did manage to pull it off they'd presumably be condemned as war criminals more or less universally.
Obviously the actual number of missiles Taiwan has is not public, but I suspect they have enough that reliably intercepting a full barrage is not something even the us could pull off.
The general calculus is that an interceptor costs as much as the missile it intercepts, so defenses are only effective against an adversary with much less resources. Hence Israel can defend against Hamas/Hezbollah, and the US can defend against North Korea, but Israel struggles against Iran and the US doesn't even try to defend against China/Russia.
China obviously has a lot more resources than Taiwan, but then you have a concentration effect where an attacker can focus their resources on a single target, but a much more resourced defender can't necessarily afford to defend that target. We saw that play out with the UK's nuclear deterrent strategy in the cold war, where they focused on overwhelming Moscow's defenses, and were (probably) able to do it despite the USSR being so much bigger.
Honest question, from non-american: what is up with all the China scare? I just can't understand it. Is it because China is socialist and we want to see capitalism winning over?
It's because Xi has demanded that China's military be ready to invade and conquer Taiwan by 2027. It's because Xi has made reunification with Taiwan a test of the legitimacy of the CCP's rule over China. The combination of those two things gives you a "China scare" with respect to Taiwan, out of Xi's own mouth.
Anyone who is unironically saying China attacking Taiwan is a real threat (eg The Anthropic CEO quoted in the article) is either simply echoing the administration's painting of China as a geopolitical bogeyman or they're just ignorant of geopolitics, likely because they're projecting American economic imperialism onto China.
I'm glad the article dismissed this as a threat because it isn't one. The official policy of the US is the One China policy. You'll see this described as "strategic ambiguity". That's another way of saying that the official policy is simply to lie about supporting Taiwan's independence.
China can only hurt their position by taking military action against Taiwan. Also, it's highly debatable if they even have the military capability to invade Taiwan. Naval blockade? Sure. But to what end?
China is going to make their own chips. They'll just hire the right people to replicate EUV lithography. The article brought up nuclear weapons. It's a good analogy. At the end of WW2 the thinking of the US military was that the USSR would take 20+ years to get the bomb if they ever got it. It took 4 years. The gap with the hydrogen bomb was even less.
Western chauvinism in policy circles completely underestimates China's capacity to catch up in lithography. Not selling the best chips to China created a captive market for Chinese chipmakers.
I also think TSMC is being understandably cautious in not expanding their CapEx. AI companies really should focus on an economic use case for AI more than worry that foundry capacity will somehow limit a theoretical future AI use case.
The more complex the process becomes, the harder it is to have equivalent competition so you're bound to have issues where a single company's investment decisions have widespread impacts.
My perspective on the China risk differs some, though. China wouldn't benefit much from attacking TSMC. This is the first time I've heard anyone suggest that they might. At best they'd like to have it in-tact if they do take Taiwan, but there have been talks about machines being rigged to explode to deny them from China, or the US striking them in that scenario.
If neither we nor China get to work with TSMC, then we're still ahead in relative terms. If China did attack TSMC, they set the norm that the fabs (including their own) are now a fair target which would be a larger disadvantage for them than it would be for us since China's physical power projection remains pretty regional outside of Chinese nationals abroad engaging in sabotage.
That is one of their biggest weaknesses. Yes they have a lot of manufacturing capacity and a large population with many talented people, but in a way we have lent them the power to scale up to see what they'll do. We are already putting some pressure on that scale now that they've shown who they are, but if it came to war it would be very doable to start reversing their scale and their capacity to do the same to us would degrade as ours increases.
Even if all the AI in the world was destroyed, that's how it would play out. The problem is that Taiwan remains in close proximity to China so similar to Ukraine it would likely come down to how long they're willing to throw everything at it.
If Russia and China wanted to be powerful, it's just idiocy to show the existing superpower that you cannot be trusted with the power you have. If they fancy a merit based society, they forgot that merit isn't omnipotence and you still need the right ideas to be at the top to accompany the merit. For China maybe they need AI for that alone, but western societies at least have ways for the right ideas to make it to the top without the strict need of AI.
The US has shown that it can't handle any level of discomfort. The reason Trump is back in the white house is because grocery prices went up a little bit. Can you imagine the failure of the tech companies that are propping up the entire economy? That would happen under a Taiwan invasion scenario. China has a much high pain tolerance than US citizens at least. I'd argue they would outlast the US. Would they outlast the US military? I don't know. But it may not matter as given enough pain the US population will make itself heard.
I think you're conflating different contexts and scenarios. People aren't used to war being brought to the US itself. Look at Pearl Harbor and 9/11, both rallying the country pretty well. Attacking the US mainland is a losing strategy.
If people generally understand that we're intervening in a China/Taiwan conflict for the right reasons, and China attacks us at home it would only accelerate the west. If you look at Vietnam, the logic around that war fell apart and it no longer made sense to continue it. The people were right to push back. Iraq and Afghanistan went on for a long time without much fuss.
Some kind of conflict in South East Asia would likely largely be a naval and resource war, with many casualties being naval rather than mainland. Most losses on both sides will probably be drones, AI or not.
If it came down to attrition, it would maybe be AI machine attrition or drone/missile attrition which is in a way a resource war which the US could win even without TSMC, but from where we're standing today it would take more ramping up which is a process that has already started.
If OpenAI, Google, Microsoft, Amazon, etc were attacked by China in a more critical way, it would have to be for some major short term advantage that is capitalized on immediately, because long-term it would be a losing strategy by itself. China has systems to disrupt as well, so if they let loose on cyber then the US has options too.
Either way, don't conflate general economic preference around an election for whether people would tolerate being unable to access Gmail or order from Amazon like they would all rush to riot in the streets. I think that misreads the situation.
I really don't understand why companies are ignoring intel's foundry services... for the first time since probably the 2000's, intel's 18A nodes are significantly ahead of what TSMC is offering. Apparently they have capacity and are demonstrating wafer production with their own chips.
It seems wholly illogical that Apple would get refused wafer volume by TSMC and still refuse to give volume to intel foundry services. When you layer on geopolitical factors and national security implications + the fact that Apple is a US company - what reason could they possibly have to turn the shoulder to intel's foundries?
If Taiwan ends up imploding in any of the numerous ways we are aware of today - and which this article adds to - I think there are exactly zero reasons to feel like this couldn't have been avoided.
Some of us are old enough to remember the last time Intel was definitely, 100%, for-sure committed to offering foundry services, and then changed their mind and canceled the whole thing (it was in 2018) and want to see (a) someone else have success with 18A first and (b) intel show an actual long-term commitment to using their foundry for outside customers before we risk our companies' future on them.
There are risks with TSMC, but "TSMC just decides it's not interested in making chips for other people, and cancels the whole business" isn't one of them. The same cannot be said for Intel.
If Intel decides they're not going to continue foundry services after 14A - you can just shift back to TSMC like everyone did between Samsung and TSMC?
This is why: https://arstechnica.com/gadgets/2026/01/core-ultra-series-3-...
Intel doesn't have any spare capacity.
>intel's 18A nodes are significantly ahead of what TSMC is offering
A nice comparison table linked below. The best comparison imho is transistor density which is 313MTr/mm2 for TSMC's latest in-production process vs 238 for intel (higher is better).
https://en.wikipedia.org/wiki/2_nm_process
Also make sure to read the drama around https://en.wikipedia.org/wiki/Arrow_Lake_(microprocessor). Intel literally gave up making their own CPU on their own 20A process and instead utilised TSMCs fab.
Shewie, given all the replies to this, and my personal living memory/experiences with these kinds of things as they relate to said replies, sounds like buying intel stock is probably a pretty good idea.
From a NatSec perspective, TSMC isn't really a bottleneck - most weapon systems use SoCs and microcontrollers that can be fabbed on "legacy nodes" (ie. 28/40/60/90nm) or 14/20/22nm nodes, and compound semiconductors.
The ability to mass produce a Pascal or Volta comparable GPU or Apple A11 comparable SoC is all you need for more cutting edge systems.
Power Electronics and Compound Semiconductors (GaN, SiC) have historically been the biggest bottleneck.
The bigger risk for the TSMC-China aspect is TSMC's planned exit of GaN foundry production by 2027. Most Chinese manufacturers still depend on TSMC-produced GaNs wafers instead of domestically produced GaN vendors due to reliability concerns. China will probably end up matching TSMC's specs for compound semiconductors in 4-7 years, but that implies that the Sullivan Doctrine still holds and is a loss for China.
Every other country with compound semiconductor production capabilities at scale (US, Germany, France, South Korea, Japan, Israel, Russia, India) either limits their exports or cannot export them to China without facing sanctions from other buyers (primarily Russia as India does not allowing commingling of SKUs for defense vendors who sell to Pakistan/China as well, and Russian vendors are members of India's EW and DEW program).
If a US-China War was to arise, worst case we would probably see a mass reversion back to 2018-22 level technology, which isn't the end of the world.
Additonally, the China-Taiwan situation is orthogonal to semiconductor dependency.
>If a US-China War was to arise, worst case we would probably see a mass reversion back to 2018-22 level technology, which isn't the end of the world.
It wouldn't be the end of the world if those 2018 chips came at 2018 prices and only impacted commodity stuff like phones, datacenters and laptops, but they'll be at 10x the 2018 price and impact critical stuff like automotive, the cars and trucks that gets your food delivered to the supermarket, and if those become impossible to buy or fix anymore, then your groceries will also get more expensive, triggering an end-of-the-world riot from taxpayers who can't afford food anymore.
People need to view this issue as not just being stuck with 2018 laptops and phones which isn't that bad, but has much wider societal implications.
> impact critical stuff like automotive, the cars and trucks
Most capacity for legacy nodes is already ExTaiwan and ExChina. TSMC leapfrogged American and Korean fabs in the late 2010s/early 2020s with sub-14nm process nodes, but Samsung and Intel have caught up for 5nm and 7nm capacity. And Taiwanese firms have largely diversified OSAT and ATMP away from Taiwan and China to ASEAN, US, and India.
This is something everyone adjacent to this space has been thinking about and acting on since 2017.
> only impacted commodity stuff like phones, datacenters and laptops
Data Center and enterprise applications are prioritized in most ExTaiwan sub-7nm fabs such as Intel 18A.
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A US-China War over Taiwan would be devastating, but not getting an M1 Macbook will be the least of your worries.
> Anthropic Chief Executive Officer Dario Amodei said selling advanced artificial intelligence chips to China is a blunder with “incredible national security implications” [...] “I think this is crazy. It’s a bit like selling nuclear weapons to North Korea.”
This is all a smoke screen. He knows very well that China can and will develop their own hardware to train AI models (and in fact, they are successfully doing just that; e.g. the recently released GLM-Image was trained on their own silicon). His only objective here is to slow them down enough so that they don't eat Anthropic/Claude's lunch releasing open-weight models that are increasingly competitive. But he can't just openly say "hey, we don't like that they release open weight models for free", so he's engaging in the AI version of the "think of the children" argument.
Anthropic's whole modus operandi was always pretty much "we should control this technology, no one else". It's not a coincidence they're the only major lab which has not released any open weight models, they don't publish any useful research (for training models) and they actively lobby the lawmakers to restrict people's access to open weight models. It's incredibly ironic that Dario is worried about (I quote) "1984 scenarios" while that's exactly what his company is aiming towards (e.g. giving Palantir access to those models is not "unsafe", but an average Joe having unrestricted local access is an immediate 1984-style dystopia).
"AI has a physical dependency in Taiwan that can be easily destroyed by Chinese missiles, even without an invasion" ?
Arguably false. Why do you think the US has encouraged TSMC foundries, now inside Arizona ? It's obviously to protect against the scenario that China takes Taiwan. In that case, give it 6 months or less for US TSMC foundries to produce the finest. China taking Taiwan will likely not result in the CCP getting any technology, certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded.
That's over-optimistic.
> Why do you think the US has encouraged TSMC foundries, now inside Arizona ? It's obviously to protect against the scenario that China takes Taiwan. In that case, give it 6 months or less for US TSMC foundries to produce the finest.
American business culture works pretty strongly against "give it 6 months or less for US TSMC foundries to produce the finest."
I think it's most likely those fabs will stagnate and the American MBAs running them will just milk them for short-term profits. Why invest in technology when you can buy back shares? After all, your only goal is number-go-up.
> China taking Taiwan will likely not result in the CCP getting any technology, certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded.
Not necessarily. Technology isn't so much the machines, it's the know-how. TMSC employees will still need jobs, post invasion, and I'm sure China will pay them very well. Some fraction will go to work for Chinese fabs, and teach them TMSC's tricks and knowledge.
>American business culture works pretty strongly against "give it 6 months or less for US TSMC foundries to produce the finest."
>I think it's most likely those fabs will stagnate and the American MBAs running them will just milk them for short-term profits. Why invest in technology when you can buy back shares? After all, your only goal is number-go-up.
The same American business culture that produced Apple/Amazon/Alphabet/Microsoft/Meta/Tesla/etc? They seem to invest quite a bit in "technology".
> The same American business culture that produced Apple/Amazon/Alphabet/Microsoft/Meta/Tesla/etc? They seem to invest quite a bit in "technology".
Yeah. There can be sparks of innovation, but the overall trend seems to be squandering advantages for short term financial gains. And honestly, some of your examples aren't great: Telsa's probably going to lose to the likes of BYD (but for unusual leadership reasons); Microsoft seems to be losing former capability, which is reflected in many of its products (https://www.windowscentral.com/microsoft/windows-11/windows-...); and I don't think Meta has done much besides sell ads.
IIRC, Chinese companies, on the other hand, tend not actually make very much money for their investors.
The sentiment I was countering was that American businesses do not invest in technology, nor do American business leaders think about the long term, and the examples surely show that. Successful or not, and selling something detrimental or not, they do spend many, many billions of dollars on bets that may not pay out.
You can even look to pharmaceutical companies for American business that have development timelines measured in the decades and investments measured in the billions. These aren't plays that executives profit from in 6 months, or maybe even 60 months. Real estate development is another business where investment timelines are in the decades.
I don't know enough about Chinese businesses, but I assume I cannot compare the motivations of Chinese business leaders to American business leaders, as Chinese business leaders seem less free than American businesses to capture profits for their investors.
No, the same idiot MBAs that almost destroyed Intel and Boeing and General Electric.
There certainly are idiot MBAs (and non MBAs), and perhaps the ratio is too high in the USA, but based on the pre-eminent businesses in the USA, I wouldn't say it's "the" culture.
One of the reasons Intel failed and TSMC succeeded is because Intel was unwilling to pay what the other big tech companies were paying (and part of that pay is with RSUs which stock buybacks help offset). However, for workers in Taiwan, TSMC was the best option, so TSMC could pay less.
TSMC's Arizona fabs (edit: need to qualify this with "today" and in the near future) are wholly inadequate to shift wafer volume out of Tawian if that were to ever happen. TSMC themselves have been candid about this - both the fact there is insufficient skilled labor and insufficient economics (materials supply chain, construction costs/process, subsidies, OPEX). If TSMC was serious about this they'd have invested heavily both in staff pipeline (university programs and hiring onramps), domestic executive function and supply chain - aside from taking subsidies and building tiny fabs that trail their Taiwan process nodes considerably, they've done little to diversify their fabs.
90% of TSMC's capacity is still in Taiwan. A substantial amount of global high end chip capacity is also in South Korea and Japan, which would likely get pulled in.
A war would not wipe out chip production, but the squeeze would be immense for many years.
> A war would not wipe out chip production
It probably wouldn't but it definitely could.
I don't even know what it means. "even without an invasion"? The author think China will destroy TSMC just because? To slow down AI progress?
> if we got to a situation where only the U.S. had the sort of AI that would give us an unassailable advantage militarily, then the optimal strategy for China would change to taking TSMC off of the board.
Lmao it's not. The author doesn't know what they're talking about at all. Let's be realistic: the current TSMC technology will be accessible to China, likely via espionage. The question is just how soon. It has already happened before. China's 7nm process was developed with the help from one of the highest level ex-TSMC researcher[0].
[0]: https://en.wikipedia.org/wiki/Liang_Mong_Song
If cutting edge were a hard requirement then given the lead times involved I think the author would be correct. However I think there's a fundamental error in failing to account for the fact that you don't need cutting edge chips to do AI. Sure it makes it cheaper and faster but it's absolutely not a requirement. You could train a state of the art model on cluster of 12+ year old boxes (ie Intel's 22 nm and DDR3) but if you want to get the job done in a similar timeframe you're going to pay out the ass for electricity. Your research pipeline would necessarily be narrower due to physical and monetary limitations but that's not the end of the world.
That’s like saying you could train a state of the art model by hand, and it’ll only cost you a lot of man-hours.
Realistically, to train a frontier model you’d need quite a lot of compute. GPT4, which is old news, was supposedly trained on 25,000 A100s.
There’s just no reasonable way of catching modern hardware with old hardware+time/electricity.
Hiring people isn't espionage. Key talent leaving a dominant manufacturer for a paycheck at a struggling competitor and bringing their knowledge is just about the basis of capitalism.
The overwhelming bulk of production, in a massively oversubscribed industry, is in Taiwan. If Taiwan's production went offline, there would be enormous turmoil.
"certainly Taiwanese have "contingency plans" to vaporize all tech in the event they are invaded"
Given the way things are going, a rationalist would surmise that Taiwan is likely in talks with China for a peaceful reunification, Hong Kong style. The old way is very much over, the US is a worthless if not negative-value ally, and it's pretty clear to every living human with a functioning brain that this is going to be China's century.
Indeed, the article casually says "Taiwan is claimed by China, which has not and will not take reunification-by-force off of the table", which is technically true it isn't contextually informative. For those not fully up to date on the history of this conflict, for decades Taiwan claimed all of China (and most Western countries treated Taiwan as the singular government of all of China), and held out for reunification-by-force. This isn't as simple and straightforward like Trump's "we have a military ergo we get to steal better countries because they make us look bad".
https://www.youtube.com/watch?v=pF-ZN11DRSE
> Rather, the only thing that will truly motivate TSMC to take on more risk is competition.
Maybe I missed something, but if Google, Microsoft, Apple, OpenAI, etc want more capex on fabs, they can front that money themselves?
I remember Elon saying in an interview recently that the only piece of the vertical stack he doesn't own is chips.
I strongly suspect some sort of fab built by Elon associated companies will be announced soon. Almost all supply can be bought by Tesla and xAI.
It makes sense, IF he can get the tech to work at the bleeding edge. But he seems to be quite good at this.
He hasn't offered any production services to third parties whatsoever (seems to end at patents/standards gifting) - I wouldn't expect a fab open to third parties at all - if anything it'll be reserved for tesla/space-x/x.ai usage and candidly I don't think there's enough demand there to justify the capex involved in a fab.
There are some near ready foundries in the US and in EU, not to mention South Korea. It would take a few years to catch up of course.
What I worry more about is the full lock-in of TSMC production capacity by nvidia/apple/amd/etc for their chips on their latest and greatest silicon process (aka the best in the world). There is 'no space' for performant large RISC-V implementations or other alternative (and it will require several iterations and mistakes will be made)
Interesting point, although it's clearly not in TSMC's interest to land themselves in a monopsony situation by allowing Apple (e.g.) to squeeze all their competitors out of the market.
Tenstorrent managed to secure TSMC manufacturing capacity, I doubt many other RISC-centric fabless companies would have any issues aside from aggressive competition.
I wonder when we will see RISC-V (rva23+) large implementations, for instance for performance "desktop" at 5GHz+ on latest silicon process...
I know I can already replace my rpi3 with a linux supported out of the box RISC-V SOC board (aka, the enabling of assembly written software = no planned obsolescence from computer languages anymore, near 0-SDK).
> AI has a physical dependency in Taiwan that can be easily destroyed by Chinese missiles, even without an invasion
Taiwan has missiles with the range and warheads to strike the three gorges dam.
An attack by China would end very poorly for everybody. There are millions of people living in the inundation zone.
TW doesn't have any munitions that can remotely breach gravity dam like three gorges, i.e. bunker buster, which even if they did, they wouldn't have survivable platform to deliver it (strategic bombers, too heavy for TEL). US MOP tier 30000kg penetrator munitions isn't designed to crack three gorges, TW missile inventory are like 1500kg, at most they'll inflict scabbing or break exposed components like power infra, lock gates, which is not nothing, but not remotely compromise structural integrity of dam. This not to mention TW missile trajectory is geographically constrained and overflies the densest IADS environments on earth, assuming their TELs are survivable in the first place. They're much better off trying to threaten PRC coastal nuclear, but either way gets them the Gaza treatment.
A conventional missile or even missiles is not going to destroy a huge gravity dam like that. They are incredibly tough structures and missile warheads aren’t big. We’re talking concrete hundreds of feet thick.
To add some background. During WWII the allies successfully used massive specialized depth charges but those were much smaller dams. [0] During the Korean war the US struggled to merely destroy the sluice gates of a dam using aerial torpedos. [1] Eventually the Geneva Conventions were amended to forbid attacking dams if it would kill a large number of civilians (which was pretty obviously implied to being with for what it's worth).
So unless Taiwan has a method to deliver something the size of a bunker buster to the underwater base of the upstream side of the dam I don't think it's going to happen. And if they did manage to pull it off they'd presumably be condemned as war criminals more or less universally.
[0] https://en.wikipedia.org/wiki/Operation_Chastise
[1] https://en.wikipedia.org/wiki/Hwacheon_Dam
Could the chinese construct a sufficient anti-missle defence?
Obviously the actual number of missiles Taiwan has is not public, but I suspect they have enough that reliably intercepting a full barrage is not something even the us could pull off.
The general calculus is that an interceptor costs as much as the missile it intercepts, so defenses are only effective against an adversary with much less resources. Hence Israel can defend against Hamas/Hezbollah, and the US can defend against North Korea, but Israel struggles against Iran and the US doesn't even try to defend against China/Russia.
China obviously has a lot more resources than Taiwan, but then you have a concentration effect where an attacker can focus their resources on a single target, but a much more resourced defender can't necessarily afford to defend that target. We saw that play out with the UK's nuclear deterrent strategy in the cold war, where they focused on overwhelming Moscow's defenses, and were (probably) able to do it despite the USSR being so much bigger.
Honest question, from non-american: what is up with all the China scare? I just can't understand it. Is it because China is socialist and we want to see capitalism winning over?
I think the west is scared of China trying to take over the world by force like the USSR.
It's because Xi has demanded that China's military be ready to invade and conquer Taiwan by 2027. It's because Xi has made reunification with Taiwan a test of the legitimacy of the CCP's rule over China. The combination of those two things gives you a "China scare" with respect to Taiwan, out of Xi's own mouth.
Anyone who is unironically saying China attacking Taiwan is a real threat (eg The Anthropic CEO quoted in the article) is either simply echoing the administration's painting of China as a geopolitical bogeyman or they're just ignorant of geopolitics, likely because they're projecting American economic imperialism onto China.
I'm glad the article dismissed this as a threat because it isn't one. The official policy of the US is the One China policy. You'll see this described as "strategic ambiguity". That's another way of saying that the official policy is simply to lie about supporting Taiwan's independence.
China can only hurt their position by taking military action against Taiwan. Also, it's highly debatable if they even have the military capability to invade Taiwan. Naval blockade? Sure. But to what end?
China is going to make their own chips. They'll just hire the right people to replicate EUV lithography. The article brought up nuclear weapons. It's a good analogy. At the end of WW2 the thinking of the US military was that the USSR would take 20+ years to get the bomb if they ever got it. It took 4 years. The gap with the hydrogen bomb was even less.
Western chauvinism in policy circles completely underestimates China's capacity to catch up in lithography. Not selling the best chips to China created a captive market for Chinese chipmakers.
I also think TSMC is being understandably cautious in not expanding their CapEx. AI companies really should focus on an economic use case for AI more than worry that foundry capacity will somehow limit a theoretical future AI use case.
TSMC just needs to change its name to USMC and the stock will easily go up 20%