Sometime soon TSMC will be building its most advanced fab yet on the island of Taiwan. This will continue the world’s reliance on Taiwan for semiconductors. Fun!
If all goes to plan, the CTSP administration expects to complete all land acquisition for its second phase by the end of 2024. It will then hand over a large parcel to TSMC in 1Q25 so that it can start construction on its most advanced fab ever, which will produce 2nm chips. While we don’t know yet who TSMC’s potential customers for 2nm chips are, we should note that OpenAI has recently abandoned its own plans to build its own factories and is relying on Broadcom and TSMC to make chips for it. And even as TSMC’s U.S.-based fabs are starting production and could even hit higher yield than comparable Taiwan-based fabs, it seems that the company wants it latest and greatest technologies to still be based on it home island.
A 2nm fab is in the works and that’s great and all.
Just one problem.
Taiwan as you know is claimed in its entirety by China and it seems China has plans for the reunification of Taiwan with mainland China through the use of force at some unknown point in the future. China is currently building out a huge blue water navy and increasing the quality of its air force so the overall threat of force is very real.
In the event force is used to take Taiwan, the United States would become embroiled, and factories and fabs will be fair game in the ensuing conflict. And even if fabs are not destroyed, supply lines to the United States will be severed both by air and by sea. The United States simply does not have the required number of forces in the theater to adequately defend Taiwan and Taiwan itself does not have the forces necessary either.
Any war between the United States, China, and Taiwan would initially be hot and fast with missiles flying all over the place and aircraft flying endless sorties… but a hot and fast war would deplete inventories of advanced munitions rapidly for both China and the United States, leaving China with an old fashioned blockade of Taiwan enforced by air and sea and the United States impotent. So again, supplies of chips are at great risk.
Continuing to build fabs on Taiwan is not really a good idea in the current social and political climate. It’s not Taiwan’s fault their neighbor is a jerk, but it doesn’t matter. China is a jerk and we have to face that fact.
Ultimately China will force the capitulation of Taiwan. China will acquire all of Taiwan’s advanced technologies. China will acquire and use TSMC’s advanced fabs. The people of Taiwan will be subjugated and oppressed and absolutely will continue to manufacture advanced technologies for China. China in a single war will catapult its manufacturing and technological abilities to be on par or even better than the United States.
It’s a bleak picture but it’s a realistic one based on the knowledge we have of China’s political ambitions. The subjugation of Taiwan may not be imminent but it is a very real threat to the world. The supplies of all kinds of chips is under threat.
More fabs for the United States and Europe, fewer for Asia. That’s what we should all be hoping for.