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The World's current and next Innovations depend on a single country, Taiwan (erickhun.com)
160 points by burgerquizz 11 months ago | hide | past | favorite | 45 comments

Intel had the manufacturing edge for a long time. Things change. Just because one company is up now doesn't mean it will be up forever.

I think one thing TSMC does better than intel is they have a more long term view. They aren't as concerned about hitting next quarters earnings. Their single biggest shareholder is the government of Taiwan. One of their board members a is Taiwanese minister, So I think the government wants to make sure TSMC is around for the long term. They also provide a lot of jobs in Taiwan. If have ever been to Hsinchu you could see how many jobs the semi industry provides. Everything from engineers to more blue color workers.

TSMC is in a league of its own. Only Samsung currently has the capacity to compete on a similarly international level. There are a variety of startup competitors from mostly China and the US, but TSMC is so technologically advanced, and the demand for ever faster chips is so great, that they will easily retain the dominant global position for at least the duration of the 2020's.

It might seem like Samsung is caught off balance by TSMC's recent progress, but they are still very much in this race.

I haven't worked for Samsung in ~7 years, but last I recall they were aggressively pursing all manner of value optimization angles. They also have an existing presence in the US, whereas TSMC is going to be about 5 years out on their US factory. Keeping American workers around to inject ideas into your manufacturing process can be invaluable if you have typically been operating the business like a Borg cube (i.e. relentless standardization throughout, potentially at the cost of more complex value-add proposals).

Fabs seem like a classic example where the market will trend to a monopoly. Each generation makes fabs themselves more expensive along with the incremental R&D . As each generation largely obsoletes the previous, the price of being second goes up.

Also a perfect case study of where the free market worldview and the nation-state worldview bump heads. The free market tends towards a single global monopoly for these highly capital intensive industries in the name of economic efficiency, but this inevitably erodes the sovereignty and independent action of countries that have to depend of the good graces of wherever this monopoly has its HQ.

Until a startup with an innovation in fabrication itself comes along disrupting the industry and rendering all those incumbent investments suddenly obsolete.

Happened again and again. In free markets, of course. Even if they may trend to, only controlled markets reach monopoly.

There are plenty of counter examples, and I'd dare say the majority of notable historical "true" monopolies were disrupted due to government intervention rather than disruption. While intel has had a process lead for decades, they've never had a monopoly on fabrication.

Do you have some examples? Any monopoly I know of was government granted, usually through regulations. I actually know of much more examples of disruption...

Now the market can arrive to a state of monopoly due to some powerful player, but as long as the startup mechanism is functioning, competition will arrive and disrupt.

Standard Oil, US Steel, AT&T are the best known examples in the US. None of these (including AT&T) were government granted. They also share a few key traits

1) They dominated their "primary" markets

2) Their primary market was deep, and competing with them was cost prohibitive for any economic entity as in lose the GDP of a small country expensive.

Ok, I can’t talk about the first two because, frankly, it’s been a while.

But AT&T - you kidding me?! It was illegal to even bring your own phone device to their network! It was a classical example of government protected monopoly.

A free market will break its own monopolies. A market corrupted by government regulation will need government intervention.

https://en.wikipedia.org/wiki/Kingsbury_Commitment has a useful summary of the 5 attempts made by the government to curb AT&T's market power.

With regards to it being illegal to connect to the phone system with your own device... this was a notion pushed by AT&T's legal, and operations teams. https://en.wikipedia.org/wiki/Carterfone has some useful context on the regulatory decisions which compelled AT&T to allow third party devices on "their" network.

Ultimately large monopolies contort the institutions, governments, and legal systems they are surrounded by. You wouldn't believe that a Trillion dollar corporation would argue for legislation that wasn't in their favor.

Yeah, but it is the legislation that is preventing the competition and thus making them a monopoly, otherwise they would be disrupted by nimbler, faster startups of the day for which a monopolized market is an irresistible target (little competition and large profits).

This doesn't really work for natural monopolies, a small phone operator doesn't connect you to many people, a small steel mill doesn't have the economy of scale as a large mill, small oil operators couldn't build their own oil distribution.

I don't think those are actually natural monopolies. But there are ways to compete when you are small and you can't compete on the usuals (price, distribution, etc). It takes creativity though.

I remember when the local telecom monopoly in my town held ski-high Internet prices, regular people started laying up Ethernet cables in the air between high-rises. A new ISP was born that way, who now has completely wiped out the original telecom.

Of course though, there is now a regulation against doing that kind of thing...

Maybe after twenty to fourty years this will happen. So far, this hasn't happened in this field.

It seems that any activity where R&D is a significant chunk trends towards a monopoly.

Drexlarian nanotechnology?

>Today’s TSMC’s monopoly is probably the result of a 40 years relationships with partners, with tight relationship and trust between each others.

From the following link:


Taiwan Semiconductor Manufacturing Co. is working with Google and other U.S. tech giants to develop a new way of making semiconductors more powerful.

It seems they're getting some help (how much?) from companies like Google, AMD, NVIDIA, Apple, etc when it comes to chip packaging.

TSMC is the 11th most valuable company in the world, with a market cap of 489B US dollars.

What's the "next TSMC" (as an investor?)

TSMC is just beginning to reap the rewards of its market dominance. Samsung is a similarly promising investment, but they are listed in South Korea, which is normally inaccessible to Western investors. If you're convinced of TSMC I'd also look into shorting Intel. That bird has flown.

XSD is a good ETF for semis

I would look at the smaller Chinese (not SMIC) ones. Without looking I'd guess they are already highly valued. I have no idea though how long it could take to overtake TSMC/Intel/Samsung.

>The world needs (and want) better semiconductors

Does it really? What kind of exclusive capabilities would humanity meaningfully lose if we regressed back to 14nm? Ray tracing?

More realistic title is lack of foresight allowed Taiwan to monopolize leading fab production for next 5-10 years. A mistake every major party is rapidly correcting. TSMC is one US sanction or one Chinese glitterbomb away from being irrelevant. Long term money is on Samsung.

>The world’s current and next innovations depend on a single country: Taiwan. It’s probably one country you might never hear about, or perhaps confuse with its neighbor, Thailand, or even think it’s a part of China.

>I’ve been living in Taiwan for 3+ years, and am baffled that I never pay attention to semiconductors.

I can't imagine how baffled he's going to be when he discovers Taiwan considers itself part of China.

This is misleading. The two dominant parties are the KMT, the descendants of the post civil war military dictatorship that wants political union with the People's Republic of China, and the DPP, which wants to preserve Taiwan's independence as its own liberal democratic nation.

The DPP has won the last 2 elections, so it is fair to say that more Taiwanese believe Taiwan is an independent nation than not.

To a large degree, KMT supporters don’t even want unification. They’re happy with a de facto independent ROC. Only a disappearing fringe consider themselves to be a province of China in 2021.

Taiwan has really changed rapidly in this millenium but the average Western perception of its politics seems locked in the 1970s.

Afaik Taiwan considers (or considered) itself to _be_ China: https://en.wikipedia.org/wiki/Taiwan,_China#Background_and_a...

Maybe back in the 70s. I have KMT friends who openly say that there’s no likelihood of unification with mainland China. For the most part they like the status quo, they love their Chinese cultural heritage, and don’t really care that it’s confusing for the rest of the world as to whether they are Taiwan or ROC.

The reason that ROC still de jure claims 20th century territory (including Mongolia) is because redrawing the borders would upset the status quo and signal independence to PRC which is a red line for missile attack. In every practical way, the Taiwan province has been streamlined away and the ROC _is_ Taiwan.

KMT certainly for a time nursed hopes that eventually they will "retake" mainland, atleast during the time that CKS was in control.

CKS looked down on the possibility of "settling" for Taiwan alone.

Subsequent ROC/Taiwanese governments have not renounced that line of thinking. Even DPP officialy endorses "Status Quo".

Taiwan is split politically on the issue of whether or not it is a part of China or a unique independent nation.

It is also a status quo not really worth rattling at the moment, since all indications are that when Taiwan changes its mind the PRC will start treating it like a breakaway province and start the invasion.

That’s not what GP means. He means they consider themselves to be the “true” China and the “true” ruling faction of China.

That's not what I mean. The political party that won the last 2 elections, DPP, disagrees with both of your points. They believe the Taiwan government is "true" Taiwan and People's Republic of China is "true" China, and their is no overlap because Taiwan and China are separate, independent nation-states. It's the minority party, KMT, that maintains, along with the PRC, that Mainland China and Taiwan are inseparable constituents of the same "Chinese motherland."

> Taiwan considers itself part of China.

China, not the CCP. They view themselves as the rightful leadership party.

This is very historical though. When polled on whether Taiwan would want to become part of China, remain independent, or become part of the US (!), the majority wants US Statehood.

I'll go look up sources and cite them in just a bit.

Edit: Wikipedia cites https://web.archive.org/web/20090326142909/http://www.tvbs.c...


Wouldn't be surprised. Taiwan only exists as an independent entity because of American actions in Asia.

Yet it was American actions that handed over Taiwan's seat in UN and Security Council to PRC.

Yep, at the end of the day the whole fiasco between Taiwan and the PRC isn't really about Taiwan. It's about US-PRC relations and who gets the final word in Asia. Taiwan is just a game piece.

Assuming the respondents were not answering in jest, the odds of this ever happening round to 0.

The blog post seems to have good logic reasoning regards semiconductors, but it is wired to open with statements that involves political views.

I think you have it backwards; China considers Taiwan to be part of China. https://www.cfr.org/backgrounder/china-taiwan-relations

The current govt of Taiwan held the China seat on the UN Security Council until 1979. The history on this issue is complex.

The Cross-Strait issue is explicitly mentioned in the preamble of the PRC'S constitution.

>Taiwan is part of the sacred territory of the People's Republic of China. It is the lofty duty of the entire Chinese people, including our compatriots in Taiwan, to accomplish the great task of reunifying the motherland.


Taiwan also claims the entire mainland as their territory, and KMT especially continuing to claim Taiwan as the "true" China.

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