Sun. Jan 29th, 2023

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

December 6, 2022

There is no doubt that US and China are competing for global dominance. There is no doubt that Taiwan is a challenging issue for the US and China to manage for the future. But it is not true that “Taiwan at the center of China-U.S. tensions in 20223.”

The key is that public in Taiwan just do not wish to be drawing into a direct conflict, instigated by the US, with China. They looked at the war in Ukraine and they have learned a good lesson. Taiwan is a democratic society so the US should respect people’s choice and leave them alone.

Taiwan benefits from trades between mainland China and the volume is bigger than the US-Taiwan trades. There are somewhere 1.5 to 2 million Taiwanese enjoy their life/business in mainland anytime. Before COVID-19 virus hit the world, there were hundreds direct flights everyday between major cities. When COVID-19 lock downs are eased, hopefully soon, these flights will see resurgence quickly.

There is also no reason for the US and China fighting any war over Taiwan. There is absolutely no urgence to make Taiwan a flash point now. Yes, PRC has not renounced the use of force to reunite Taiwan. But the US keeps selling advanced military equipment to Taiwan and it is a fortress: Taiwan’s military strength is ranked no. 21 in the world two notches above Canada.

TSMC’s major investment in the US is good news for the US, but not necessarily good news for Taiwan. Because TSMC is Taiwan’s single most important industry base, now it is being diluted. The news report used the term “ecosystem” of partners which is very challenging for the US to provide qualified workforce to support “10,000 high-paying high-tech jobs, including 4,500 direct TSMC jobs” in such a short time. But it will not be President Biden’s responsibility because he should be retired when TSMC’s state of the art facilities have to kick start!

Taiwan at the center of China-U.S. tensions in 2023

Tue, December 6, 2022 at 4:07 AM

House Speaker Nancy Pelosi’s visit to Taiwan in August lifted the military threat to its highest level in years.

China read it as U.S. support for independence and launched war games near the island, including firing missiles over Taipei for the first time ever.

Taiwan maintains Beijing’s claims of sovereignty are void, and says it will defend itself if attacked.

Any war over Taiwan, a major producer of semiconductors, could crash the global economy and draw the U.S. and its allies into direct confrontation with China.

China sees Taiwan as the most important and sensitive issue in its relations with the U.S., a message Chinese President Xi Jinping reiterated to President Joe Biden when they met in Bali in November.

Washington has a policy of “strategic ambiguity” on defending Taiwan from a military attack. But in September, Biden was more explicit. He told CBS 60 Minutes that U.S. forces would defend Taiwan if there was an unprecedented attack.

Beijing has never renounced the use of force in Taiwan, which Xi made clear at the 20th Communist Party congress in October.

Biden Joins Tim Cook to Hail TSMC’s $40 Billion US Chip Venture

Debby Wu and Jenny Leonard

Tue, December 6, 2022 at 2:30 PM

(Bloomberg) — President Joe Biden celebrated Taiwan Semiconductor Manufacturing Co.’s plans to increase its investments in Arizona to $40 billion and construct a second factory, with companies like Apple Inc. eager to source more chips from the US.

TSMC’s plans are a showcase of the administration’s efforts to encourage companies to bring more chip manufacturing to the US and prevent a repeat of the supply disruptions over the last two years that cost companies hundreds of billions in sales.

Major customers have urged TSMC to build more advanced semiconductors in the US. Cook confirmed in remarks at the event that Apple would use chips sourced from Arizona.

AMD’s Su said her company would also source chips from the Arizona plants, calling the investments “critical for both the semiconductor industry and our extended ecosystem of partners and customers.” “AMD expects to be a significant user of the TSMC Arizona fabs and we look forward to building our highest performance chips in the United States,” Su said in a statement.

“TSMC is committed to building a strong semiconductor manufacturing ecosystem in the United States,” Liu said at the ceremony.

Construction will begin at TSMC’s second Arizona site in the coming year with production slated to start in 2026. In addition to the over 10,000 construction workers who will help build the site, the two Arizona fabrication plants are expected to create an additional 10,000 high-paying high-tech jobs, including 4,500 direct TSMC jobs.

But Taiwanese and company officials have said they intend to keep the latest technology at home.

WSJ

TSMC’s Arizona Chip Plant, Awaiting Biden Visit, Faces Birthing Pains

Taiwanese company cites high costs and shortage of skilled personnel as it pushes to open $12 billion factory next year.

Throwing Money at Chips

Over the last two years, though, lawmakers and corporate executives have been forced to think a lot more about these chips, given worldwide shortages. While supplies have improved of late, the geopolitics surrounding chip production are getting worse, with most of the world’s advanced chips manufactured in Taiwan, an island increasingly pulled between the U.S. and China.  

But the headlines obscure another reality, according to Barron’s Tae Kim. It will take much more than $40 billion to win the “chip war.” Tae writes: 

By the time the new Arizona TSMC plants come on line they will be one or two generations behind the most advanced processes being used in Taiwan. J.P. Morgan expects TSMC to start making 3-nm chips in the first quarter of next year—something that won’t be made in the U.S. until 2026. By that point, Taiwan Semiconductor’s home factories are likely to have moved on to a more advanced technology.

That means that even by 2026 Apple is unlikely to build its latest iPhones, which require the newest chips, at the U.S. factories. Meanwhile, in the world of chip making, $40 billion doesn’t go all that far.

The U.S. has to start somewhere if it wants to be a global power in chip manufacturing. Just don’t expect it to happen quickly.

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