TSMC and Taiwan: three aspects

located in China?

In the aftermath of WWII, two armed parties fought for control of China. The Nationalist army, generaled by Chiang Kai-shek, lost to Mao. Chiang and his followers fled to Taiwan, where they disenfranchised the local population and set up a new government as the Republic of China (ROC), separate from the People’s Republic of China (PRC) on the mainland. The PRC maintains the ROC is a runaway province, still subject to PRC rule. The ROC says it’s a separate country. The rest of the world has generally opted not to express an opinion.

Prior to Xi’s becoming in charge, the stock market argument in favor of Hong Kong remaining relatively autonomous was that the big prize for Beijing was always the ROC and that treating Hong Kong with kid gloves was the best way to lure the ROC back into the fold.

designing vs. building semiconductor chips

As I see it, the two big trends in the semiconductor industry over the 30+ years I’ve been watching it are:

the rise of ARM Ltd, a semiconductor and software design company founded in 1990, whose overall chip design infrastructure allowed small groups of engineers to make cutting-edge chip designs independently, rather than as cogs in the bureaucratic machine of a large semiconductor conglomerate

–at the same time, Taiwan became the center of a new global industry, contract manufacturing of semiconductor designs created by others. This gave smaller users of ARM-based designs a way of putting their work on silicon–thus giving them a way to create products to sell to industrial users

the GM-ization of Intel

For a long time, the most powerful commercially-available semiconductors in the world came from INTC. The main issues with them were/are that they’re large, clunky and throw off a lot of heat. But until the past five years or so its factories were the most advanced in the world. And its plants are located in the US or in countries generally favorably inclined toward the US.

Today, TSMC is considerably ahead of INTC, partly due to its excellence, partly to INTC stumbles.

The result of all this is that the political status of Taiwan now matters a lot, especially since the US is denying the PRC access to US-owned IT intellectual property.

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