In a recent interview Intel’s Gelsinger emphasized the good relationship Intel has with TSMC. Presumably this is to do some damage control for the report of TSMC cutting a discount Intel had because Gelsinger rightfully pointed out the precariousness of using Taiwan island based fabs.
Well I’m going to say that Gelsinger was right. It is precarious to use Taiwan based fabs for production of semiconductors. Taiwan fabs may have 40% of the worlds capacity but that does not mean that that is an acceptable practice. Not only is there geopolitical risk to using Taiwan for the world’s semiconductors there is a very real risk of earthquakes. Taiwan is highly prone to earthquakes, with several major faults running through the island.
When Chiang Kai-shek and the Nationalist removed some electronics manufacturing from the mainland to the island of Taiwan they had no idea that semiconductors would come to be. They had no idea that electronics manufacturing would eventually take off on the island and become a strategic industry. But here we are! Taiwan is vital to the electronics ecosystem.
Which is unacceptable in the modern world. No Western country, from the United States to France, can continue to solely rely on Taiwanese fabs. Now we have TSMC fabs being built inside the United States, that’s nice’ but it isn’t enough. It feels almost like a token fab to keep the US government off their backs.
And that’s where we are. New fabs are being built by TSMC, Samsung, and Intel inside the United States but their output will not satisfy the Western world’s demand for semiconductors. We need more fabs. We have the CHIPS Act to provide funding to make semiconductor manufacturing more economical in the United States but it isn’t enough. Intel for example has spent $30 billion so far but still hasn’t received its $8.5 billion in cash. That’s not good. We need a CHIPS Act II to keep these companies alive and building more fabs to meet domestic demand.
We simply cannot continue to rely on Taiwan.