Moon of Alabama Brecht quote
February 08, 2021

U.S., Taiwan Manipulate Chip Supplies To Press For War With China

The current government of Taiwan is trying to break the U.S. and Europe's One-China policy to become an independent country under U.S. and NATO protection.

The Peoples Republic of China, the mainland, insist, historically correct, that Republic of China, Taiwan, is a part of mainland China.

Since 1972, when Nixon went to China, the U.S. has supported that position:

In the case of the United States, the One-China Policy was first stated in the Shanghai Communiqué of 1972: "the United States acknowledges that Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China. The United States does not challenge that position."

The ruling Taiwanese nationalist Democratic Progressive Party under President Tsai Ing-wen's leadership now has a plan to break that policy. Despite regime change in Washington DC it has support from U.S. anti-China hawks:

[Taiwan's Representative to the US] Hsiao’s invitation to Biden’s inauguration, taken together with Blinken’s language at the confirmation hearing, indicates that the Biden administration is willing to adopt a large chunk of the Trump administration’s Taiwan policy.

While in office, Pompeo pushed back against China and acted as a guarantor to Taiwan — Beijing viewed him as an outright enemy.

Through well planned economic development policies Taiwan has achieved a near monopoly in the production of computer chips. There were until recently three companies which could mass produce computer chips with the most tiniest structures. Then the U.S. company Intel screwed up its development of a production process for 7 nanometer chips. It is now at least two years behind the competition. Its newest chips are no longer the most powerful in the market. The CEO and the technical leadership have since been fired but it still will take years, if ever, to regain the leadership. A second big production facility is owned by the South Korean Samsung conglomerate. It is mainly used to produce the chips for Samsung's own products.

The third and by far biggest producer of chips is the Taiwan Semiconductor Manufacturing Co (TSMC). TSMC does not produce consumer products. It manufactured, until recently, for everyone in the global industry. It is the go-to producer for high-end chips other companies need. It has now become a weapon in the hand of the Taiwanese government.

Under pressure from Trump, who put sanctions on Chinese companies including Huawei, TSMC reduced its sales to China. It also had to commit to open a production facility in the U.S. Trump's use of the chip production capacities as economic and political weapon has given the government of Taiwan new ideas:

Taiwan’s role in the world economy largely existed below the radar, until it came to recent prominence as the auto industry suffered shortfalls in chips used for everything from parking sensors to reducing emissions. With carmakers including Germany’s Volkswagen AG, Ford Motor Co. of the U.S. and Japan’s Toyota Motor Corp. forced to halt production and idle plants, Taiwan’s importance has suddenly become too big to ignore.

U.S., European and Japanese automakers are lobbying their governments for help, with Taiwan and TSMC being asked to step in.

The ongoing pandemic first led to a slump in consumption. Car manufactures lowered their sales target numbers and their orders for new chips. But soon chip demand increased for products needed to work from home. When the car demand came back TSMC told the car manufactures that there was not enough capacity to produce chips for them. Whether that explanation for the current shortages is really true is questionable:

The auto industry’s pleas illustrate how TSMC’s chip-making skills have handed Taiwan political and economic leverage in a world where technology is being enlisted in the great power rivalry between the U.S. and China -- a standoff unlikely to ease under the administration of Joe Biden.

Taiwan’s grip on the semiconductor business -- despite being under constant threat of invasion by Beijing -- also represents a choke point in the global supply chain that’s giving new urgency to plans from Tokyo to Washington and Beijing to increase self-reliance.

It takes some ten years to build a new chip fabrication facility. The investment necessary for an up-to-date 'fab' has steadily increased and is now more than $10 billion. While the U.S., Japan and Europe have recognized the danger of a chip production monopoly it will take quite some time before they can become less dependent on TSMC.

This gives the Taiwanese government a window of several years to use TSMC for strategic purposes:

“Taiwan is the center of gravity of Chinese security policy,” said Mathieu Duchatel, director of the Asia program at the Institut Montaigne in Paris. Yet while Taiwan’s status in the global chip supply chain is a “huge strategic value,” it’s also a powerful reason for Beijing to stay away, said Duchatel, who’s just published a policy paper on China’s push for semiconductors.

Assuming Taiwanese forces were to be overwhelmed during an invasion, “there is no reason why they would leave these facilities intact,” he said. And preserving the world’s most advanced fabs “is in the interests of everyone.”

For all the moves to reel back domestic chip fabrication, it’s optimistic to think the supply chain for such a complex product as semiconductors could change in short order, Peter Wennink, ASML chief executive officer, told Bloomberg TV. “If you want to reallocate semiconductor build capacity, manufacturing capacity, you have to think in years,” he said.

China has threatened to invade Taiwan should it declare independence. But as long as it depends on Taiwanese chips it can only do that while also damaging its own industries. Still there is little doubt that China would be willing to take that risk:

The Chinese government said Wednesday that actions like its warplanes flying near Taiwan last weekend are a warning against both foreign interference in Taiwan and any independence moves by the island.

Asked about the flights, Zhu Fenglian, a spokesperson for China's Taiwan Affairs Office, said China's military drills are to show the nation's resolution to protect its national sovereignty and territorial integrity.

"They are a stern warning against external interference and provocation from separatist forces advocating for Taiwan independence,” she said at a regular briefing, giving the Chinese government's first official comment on the recent flights.

Taiwan thus still needs protection. But as long as the U.S. and others still adhere to the One-China policy it is unlikely to get sufficient support. The plan then is to use Taiwan's chip industry to press others into guaranteeing it military support:

Wang Che-jen (汪哲仁), an assistant research fellow at the government-funded the Institute for National Defense and Security Research (INDSR), said in a recently published paper that the current shortage of automotive chips has highlighted Taiwan's strategic place in the global semiconductor industry. The shortage shows that the supply chain for such products has become a matter of diplomatic, security and strategic concern, Wang said in the paper, titled "Automotive chip shortage: A look at Taiwan's strategic place in the semiconductor supply chain."
The American and Japanese governments, for example, have invited Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, to build facilities in their countries, he noted.

Wang, however, warned against such a move, saying that while it may help to shorten the global supply chains, it may also weaken Taiwan's strategic advantage in the semiconductor industry.

"For Taiwan to maintain its 'silicon shield,' it needs to persuade the European countries and the U.S. that keeping TSMC in Taiwan is the best option," he wrote.

The concept of a "silicon shield" describes Taiwan's strategic position in the technology supply chain as a shield against any attack by China.

The blackmailing through chip supplies is not just an academic concept. The Taiwanese government is now openly using chip supplies to press other governments into economic and political concessions:

Taiwan's high-tech chip foundries are some of the world's biggest and most advanced, and so European car manufacturers have been reaching out to Taipei for help.

"Our government and chip manufacturers are mulling how to assist them," Minister of Economic Affairs Wang Mei-hua told reporters on Thursday.
Wang said she spoke to industry representatives on Wednesday, including Germany's de facto ambassador to Taipei.

She said she hoped Europe would help Taiwan obtain vaccines for the coronavirus.
"We need other countries to help Taiwan acquire vaccines, especially for medical workers as a top priority," Wang said.

"I told the German representative yesterday that we can help them acquire automotive chips to solve the problems facing the auto industry and we hope they can do what they can to help Taiwan acquire vaccines," she added.

Vaccine blackmail is one thing.

Nick Siemensma @nicksiem - 6:05 UTC · Feb 6, 2021

Taipei openly offering a quid pro quo to Germany. Is vaccine a fair price? Taipei turned up its nose at Fosun-manufactured supply of the Pfizer-BioNTech vaccine, so perhaps Germany can offer something more. And was no similar exchange of favours available to the USA?

The exchange with the U.S. is about much bigger things than vaccines. To press for political support that involves a potential war with China is on a different scale. Still the ball seems to start rolling:

The Daily Mao @TheDailyMao - 8:58 UTC · Feb 4, 2021

8/ Up until 2020, US tech-economic strategy was mainly to profit off the Chinese market. But after the COVID shock, that's shifted: the US now wants to bleed out the Chinese economy and specifically cripple Chinese tech companies with semiconductors

9/ In terms of bleeding out the Chinese economy, autos are where it starts. My TSMC source tells me they have been asked by the TW/US govts to prioritize chips for auto plants outside China and for US/JP carmakers, to punish the EU for the #CAI

10/ Yesterday, he mentioned that his TW govt counterpart was literally 'trying to stifle a smile' when he told her some of TSMC's Chinese customers in auto would have to shut down because they weren't getting enough chip supplies.

11/ But this isn't just some sort of 'happy accident' that a 'free market' will fix. TSMC does not have carte blanche to expand capacity as much as it wants. The market is not allowed to function in this instance... thanks to the TW regime.

12/ He has disclosed to me that the DPP has been using enviro regulations and other methods of pressure to keep TSMC from expanding its facilities 'too fast' - the TW regime seems to want an artificial shortage of chips to give them greater leverage in international negotiations

13/ And again, this is done in collaboration with the US government - to make sure 'every planned production line that comes online is instantly filled with US orders only.'

This is what was agreed upon between Tsai, Krach, and Morris Chang...

14/ ...and maintaining these artificial shortages to hurt companies producing in China are what Tsai means when she talks about restructuring the global supply chain away from China.

15/ As you may already have guessed, the EU is not happy about this arrangement. Besides the surface issue of their automakers being caught in an undeclared trade war, the EU also feels deeply betrayed by Taiwan's regime over this issue.

Please see the linked thread for more details and supporting sources. 

This Taiwanese and U.S. brinkmanship make a war with China more likely and put it nearer than I had previously thought. This summer the situation could already become critical:

The Daily Mao @TheDailyMao - 18:05 UTC · Feb 5, 2021

BREAKING: The DPP of Taiwan has privately indicated to the US it might back an independence referendum in August of this year

In an interesting coincidence this summer will also see some European forces deployed to the South China sea:

In an interview with the Sydney Morning Herald on November 2, German Defense Minister Annegret Kramp-Karrenbauer declared that her country  will dispatch a frigate to patrol the Indo-Pacific from next year.
Her remarks comes two months after Germany became the second European Union member to release guidelines for the Indo-Pacific. France’s foreign ministry released a strategy document in 2018 for the Indo-Pacific, following a major policy speech by President Emmanuel Macron in Australia earlier that year. A subsequent French security strategy for the region was released by the country’s defense ministry in 2019.

The Brits, now a mere U.S. proxy force, also join in:

Japanese and British foreign and defence ministers on Wednesday began a meeting via videoconference to affirm stronger security cooperation amid China's growing assertiveness in the East and South China seas.
The ministers were also expected to agree to work closely on Britain's plan to dispatch an aircraft carrier strike group, centred on the Queen Elizabeth, to the western Pacific for joint naval exercises with the Japanese Self-Defense Forces, the officials said.

Japan welcomes the dispatch of the Queen Elizabeth, Britain's largest warship commissioned in 2017, as it shows the country's strengthened commitment to the Indo-Pacific region, they said.

From the U.S. perspective a conflict with China as soon as possible is preferable to one in later years after China had time to build its capabilities.

It may therefore well be that the U.S. is pushing Taiwan into an summer independence referendum while both use the chip supply issue to press 'allies' into supporting them in a potential war.

Posted by b on February 8, 2021 at 18:16 UTC | Permalink

next page »

Taiwan cannot cut China out of the global chip supply without massively impacting it's own profitability.

China is the engine of chip demand for TSMC.

Further, China is the source of a large percentage of the very supply chain that enables TSMC to produce chips to sell back to the mainland in the first place.

So this strategy is suicidal.

Now, if China, in desperation, decided to invade Taiwan it would have the metaphorical effect of a nuclear attack on the global chip supply:

China has threatened to invade Taiwan should it declare independence. But as long as it depends on Taiwanese chips it can only do that while also damaging its own industries. Still there is little doubt that China would be willing to take that risk:

Regardless of any damage to its own industries in the aftermath of this 'nuclear attack' China would be best placed to reconstitute the global chip supply chain by virtue of being a long way towards attaining 7nm and 3nm fabrication capability.

Being both the biggest market and the in control of a large chunk of the supply chain gives China a massive advantage whatever the outcome of a chip war, or real war with Taiwan.

And if they could take Taiwan with TSMC intact ...

Posted by: Arch Bungle | Feb 8 2021 18:38 utc | 1

First: China's industrial espionage skills are world class and I am certain China has infiltrated Taiwan's chip makers and know exactly how to produce cutting edge chips.
Second: If needed, China can throw more money at a problem than any country in the world. If China truly wanted, it could spend tens of billions and build chip fabrication plants in record time that would astonish everyone. They have done this many times in other industries.
Third. If all else fails, China could simply retake all of Taiwan in a matter of days and the small occupying US forces would offer no resistance at all to the massive Chinese military. The people of Taiwan are fully aware of this fact.

Posted by: Mar man | Feb 8 2021 18:39 utc | 2

Posted by: Mar man | Feb 8 2021 18:39 utc | 2

First: China's industrial espionage skills are world class and I am certain China has infiltrated Taiwan's chip makers and know exactly how to produce cutting edge chips.

Indeed. This accords with a pattern of precendent which has been consistent over at least 50 years.

TSMC was founded by mainland Chinese, not Taiwanese.
A large percentage of chip specialists in TMSC Taiwan are actually foreign workers from China mainland.
A large number of Taiwanese chip specialists and ex TSMC employees are actually employed in mainland China.

Based on that alone I'd say the "Reversing" process is far further along than anyone realises ...

My prediction: China will achieve mastery of the 3nm process within 2021.

Posted by: Arch Bungle | Feb 8 2021 18:45 utc | 3

"It may therefore well be that the U.S. is pushing Taiwan into an summer independence referendum while both use the chip supply issue to press 'allies' into supporting them in a potential war."

Hmm. It would be interesting.

It's true that if the US is planning this war, then now is the time, because 10 years from now it'll be too late.

But are they really planning it? It remains to be seen.

Posted by: Mao Cheng Ji | Feb 8 2021 18:46 utc | 4

Posted by: Mao Cheng Ji | Feb 8 2021 18:46 utc | 4

It's true that if the US is planning this war, then now is the time, because 10 years from now it'll be too late.

But are they really planning it? It remains to be seen.

These will be the key signs:

- There will be a massive shortage in chip supplies caused by stockpiling.
- Massive chip stocks will flow to stockpiles in the West from Samsung and TSMC.
- There will be a revival in the dormant Japanese chip fabrication industry
- There will be an urgent push to open the promised TSMC plant in the USA.
- There will be a total ban on ASML producing lithography machines for China.

These will all happen in order to support an anticipated global chip shortage which might result from conflict in the SCS.

Posted by: Arch Bungle | Feb 8 2021 18:53 utc | 5

Thanks for the posting b.

I agree with all of it except that I think that we will have world wide economic collapse before then. We are in a MAD phase of human relations and I believe that China knows that the only way to stop empire is to have the economy crumble under it.

2020 was just the prelude.

The shit show continues until it doesn't

Posted by: psychohistorian | Feb 8 2021 18:54 utc | 6

The U.K. sending it’s Aircraft carrier to that region is a risible move. If China decided to sink it, would NATO then try to start a major war?
The stakes are high and as far as the U.K. is concerned, does it really want to be in a conflict with China and it’s allies?

Posted by: Beibdnn | Feb 8 2021 18:59 utc | 7

This looks like another example confirming the saying: "A simple answer to a complex problem is always wrong."

Posted by: foolisholdman | Feb 8 2021 19:01 utc | 8

It is interesting to see this story play out, but the part of it relating to automobile mfg seems suspicious to me. Demand should be much reduced due to less travel and work-from-home. The auto makers, like so many other industries, esp airlines, are in a state of denial about the decimation of their demand, and this is a convenient excuse to reduce production for goods they will never sell.

Posted by: ptb | Feb 8 2021 19:10 utc | 9

Great work about a topic uncovered virtually anywhere else.
Some additional points:
-TSMC and everyone else on bleeding edge nodes are all dependent on Dutch ASML EUV scanners. ASML and the Dutch are under pressure from both US, China and EU for some time now
-Samsung is stepping up its game, NVIDIA is already on the 8NM node, and AMD is rumored to follow moving at least some CPUs and GPUs there too from TSMC
-The Software for designing chips is nearly exclusively US IP. At least the market leaders, which are needed to design at the leading edge. The software also needs a special software library for each fab and node. This is maybe after the ASML issue the biggest problem China has.
-China has planned for this years ago by pushing a few fabs to go leading edge. But this effort has now effectively been derailed because the needed equipment for the fabs is being denied by western producers.
-The chemicals needed are also in hands of Japanese, South Korean, US and European firms, as well as many other needed materials
-Chinese orders for leading edge nodes are at this point nearly down to next to nothing if anything at all at TSMC.

In short: This is a massively effective weapon against china. Maybe the most effective there is. Until the chinese can secure the supply of leading edge equipment, materials and software from EU, Japanese, South Korean or American companies, they will have to build up domestic sources, that are able to compete with the market leaders. It is nothing even 100s of billions of $ worth of chinese state investment can magically bring about.
It is the task of decades. I am sure, if anyone can do it, china can. But not under a decade, even with a laser focus and massive investment.

They, like the EU and Japan have no other choice. In this day, it is of essential survival and national security for any sovereign regional and superpower.

Posted by: DontBelieveEitherPr. | Feb 8 2021 19:11 utc | 10

Another thought:

Semiconductor fabrication is heavily dependent on rare earth metal inputs, which China is the major supplier of.

Before any attempt is made to completely shut China out of the chip market, there would need to be an attempt to secure non-Chinese sources of rare earth metals sufficient to meet Western demand.

This is a risk because it requires an entire new industrial complex to be created in the West or Western-friendly countries with the capability to meet chip making demand. The risk arises when China decides to drop the cost of rare-earth metal products thereby collapsing any newly constructed western production capacity.

The chances of the scenario b outlines look more an more remote the more one thinks of it ...

Posted by: Arch Bungle | Feb 8 2021 19:12 utc | 11

@ ptb | Feb 8 2021 19:10 utc | 9 who wrote
It is interesting to see this story play out, but the part of it relating to automobile mfg seems suspicious to me.

Good observation. Substitute MIC for cars and everything will make sense.

Posted by: psychohistorian | Feb 8 2021 19:13 utc | 12

meanwhile, China seems to have successfully suppressed the January outbreak of Covid, with no indigineously transmitted cases reported in today's ministry of health briefing.

Posted by: ptb | Feb 8 2021 19:15 utc | 13

I've been studying China for 40+ years, and for the last several it's been more hawkish on its territorial integrity and sovereignty than ever before. Do please look at the geography that's made Taiwan part of China for centuries:

"The island of Taiwan is separated from the southeast coast of China by the Taiwan Strait, which ranges from 220 km (140 mi) at its widest point to 130 km (81 mi) at its narrowest. Part of the continental shelf, the Strait is no more than 100 m (330 ft) deep, and has become a land bridge during glacial periods."

Given the above, there's no possibility of any nation or group of nations providing "protection" to Taiwan from its Sovereign at this time. Long ago that was possible but for pragmatic reasons was never done. Why? Because there's no effective way to defend Taiwan from China. And politically, Taiwanese are essentially split on the issue of secession. Indeed, the KMT--the party that fled there in 1949--actually favors unification under the One-Nation-Two Systems Policy offered by China. The only way the DPP exists is via CIA monies. China has stated many times that if any steps are taken toward secession, it will simply take over the island and put an end to such ideas once and for all. And Chinese media makes mention of China's maintaining its territorial integrity daily--domestically and internationally--along with its position about Taiwanese secession.

Ultimately, Taiwan is a domestic Chinese issue as it's said over and again since 1949, and the vast majority of the planet agrees with China. There's absolutely no way Biden or any other POTUS can triumph over China in a Taiwan conflict; although given the 1930s nature of our times, insanity might again rule.

Posted by: karlof1 | Feb 8 2021 19:31 utc | 14

The Global Times(extra-official newspaper) has already published and article about this:

Chip supply shortfall inhibits security equipment makers in China

However, the insider said that there is a trend of chip stockpiling in the global market due to fears of shortages because of production halts amid the epidemic.

Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times that tight chip supplies may persist into the second quarter and even the second half of 2021, until supply has stabilized.

With demand for non-FinFET processes remaining strong amid tight foundry industry capacity, Chinese leading chipmaker SMIC expects its capacity for non-FinFET to continue to be fully loaded and pledges to increase monthly non-FinFET capacity for both 8- and 12-inch chips this year.

Doesn't look like the Chinese government is worried about this. They predict normalization of supply by the end of 2021.

The information looks legit. It's a stupid and completely insane plan, but that makes sense, as it comes from the demented Taiwanese government.

I agree with the opinion that this is a last and desperate attempt for Taiwan and the USA to destroy China in a single conventional war.

Posted by: vk | Feb 8 2021 19:38 utc | 15

I'm not so sure about a shooting war. Remember the 5g Huawei episode, and the capture of their lady CEO and subsequent blackmail. "Lateral thinking" combat seems more likely. But the Biden crowd seem to be less capable than the Trump lot. A bit early to see.

Throw in the shortage of rare earth metals....
and all the other urgent needs of the over developed ......
Countries that have rare earths will also become "reduced, for their own good". Pity about the natives.

Pompeo and Blinken in a ring
as the fat lady began to sing.
Let us take all we can see
for soon the natives we will free
from their rare metals and industry
as well as their hopes, fears and liberty.
It is not as difficult as it may seem
if we use our trick of changing regime"

As usual the EU is left bleating on the doorstep.. blaaa, blaaa

Posted by: Stonebird | Feb 8 2021 19:40 utc | 16

There is talk China offered full blown alliance proposal to Russia. If true and if happens, this will protect China from belligerents. There is also possibility Russia will decline, to keep control on escalation, in case war does happen - but will supply all the weapons and intel like full blown ally, so same thing.

Also, there is simple solution - if choke on China becomes too tight, it can use precision strike to destroy Taiwan's chip industry, so everyone loses.

Posted by: Abe | Feb 8 2021 19:43 utc | 17

Sorry to contradict but TSMC has been founded by a Taiwanese, and there are no mainlanders working in their Xinju headquaters.

Posted by: Mich | Feb 8 2021 19:51 utc | 18

The countries mentioned in the article as building up military forces in the area - US, UK, France, Germany, Japan - are five of Eight-Nation Alliance that ganged up to subjugate China 120 years ago in 1900.

Back then, Taiwan had just become Japan's first oversea's colony, which Japan occupied for 5 decades (1895-1945). Prior to that, Taiwan had been part of China, and after Japan's imperial expansion was stopped in 1945, Taiwan was part of China as well, only ending up in the current state of things in 1949 as a result of the civil war in which the US was backing the warlord/druglord/gangster Generalissimo Chiang Kai-shek.

This time China has Russia's backing, while India and Australia seem to be new members of a reconstituted gang surrounding China again and pushing to strip the island away permanently.

ZH also had an article on the semiconductor chip shortage today:

Posted by: Canadian Cents | Feb 8 2021 20:05 utc | 19

thanks b and the many insightful commentary here in the comments section....

this thought of possible war always drags its sorry ass out into the conversation... the reason for it being someone wants to have power over someone else.. frankly, i can't see it myself... but as karlof1 and psycho note - given how insane the usa is at present, it is always possible.. i highly doubt it... i know the concept of getting along just doesn't jive with capitalism... but at some point our systems of living have to reflect what is best for people and the planet and it sure isn't threatening war 24-7..

Posted by: james | Feb 8 2021 20:05 utc | 20

So finally you admit B, that Tronald was indeed preparing a war which he would have fought, had he been able to retain the presidency. So what's the difference to have the BliBids in power? Earth is doomed by the Borg in one or the other way. While it last in social and enviromental matters the Biden-Admin at least is a bit less fascistic them Tronald's.

Posted by: pnyx | Feb 8 2021 20:07 utc | 21

It takes some ten years to build a new chip fabrication facility.

That seems an extraordinarily long time; longer than an auto assembly plant, and perhaps even longer than building and commissioning a nuclear power plant.

What are the rate limiting factors in constructing a modern chip making facility?

Posted by: gm | Feb 8 2021 20:07 utc | 22

I’ve often wondered if the US might offer to station ballistic nukes on Taiwan.

Posted by: Patroklos | Feb 8 2021 20:09 utc | 23

Global Times today offers two articles on the chip topic, "Chip supply shortfall inhibits security equipment makers in China", and "Chinese tech firms ‘cautious’ over Biden’s 'extreme competition' remark". One must remember that China's had almost a four-year lead time to deal with this problem since Trump's anti-China Crusade began soon after he gained office in January 2017, and actually much longer given Obama's aggressive sanctions and South China Sea policies.

The first article reports the unevenness with which the shortage has impacted Chinese businesses, with many of the opinion it's mostly pandemic related and that the supply shortfall will ease later in 2021. The second article is more ominous and agrees with b to a degree:

"After US President Joe Biden warned of 'extreme competition' with China, while also making clear that he would not pursue the same path his predecessor Donald Trump took, many in China's technological arena took that as a clear sign that the US government's crackdown on Chinese technology companies would continue, if not further escalate.

"Chinese industry insiders and analysts have urged businesses to abandon any 'illusions' that things would improve meaningfully under Biden, particularly with regard to what could be an escalating rivalry in the technological realm that would decide the two countries' global standing in the coming years and decades. However, some still suggested that Biden might avoid certain 'irrational behavior' undertaken by Trump."

I've already commented on the Rules game Biden pitched on the week-in-review thread. Apparently, the Cui Tiankai interview also touched this issue:

"In an interview with CNN on Saturday, Chinese Ambassador to the US Cui Tiankai also made that clear, when asked about a potential "technology 'cold war' or a decoupling."

"'All these companies, what they want is a major market share in China. I don't think their goal is to share technology with China; they just want to make money in the Chinese market,' Cui said, noting that technology should benefit the entire world, 'but this issue has been so politicized. This is very unfortunate....'

"Given mounting US pressure, the Chinese technology sector as well as the entire country has embarked on an urgent mission to boost domestic technologies and independent supply chains, particularly in crucial areas such as semiconductors. In 2020 alone, investment in research and development for chips surged 400 percent to 140 billion yuan ($21.69 billion), according to industry data." [My Emphasis]

We've seen China's capabilities when it applies its full force to solving any crisis. And as the article notes, such "extreme competition" also damages business interests in the Outlaw US Empire, so Biden will have only so much latitude if he desires domestic business to rebound. IMO, if he hopes to have any sort of domestic economic success, Biden will need to cease Trump's Trade War. He ought to think what the situation will be five years hence when China has mastered the entire chip chain of production and undermines domestic chip production because China can do it less expensively and thus sell at a lower price.

Posted by: karlof1 | Feb 8 2021 20:09 utc | 24

Here's why Taiwan's plan - which essentially comes down to dominate the entire world with just one semiconductors foundry - is pure nonsense:

Taiwan island’s semiconductor sector should not be hijacked by secessionists to damage China’s national unity: experts

If there is to be a major hot war between the USA and China, it will be on the USA's terms, for the USA's interests only - not of Taiwan.

The Taiwanese are just disposable pawns in the American "great chessboard".

Posted by: vk | Feb 8 2021 20:09 utc | 25

Patrokolos @23--

China has stated that if it detects radiation of that sort it will immediately invade.

Posted by: karlof1 | Feb 8 2021 20:13 utc | 26

Mich @18, going by Wikipedia it seems that the founder of TMSC was born in mainland China and grew up there until 17-18 when he moved to Hong Kong and then to the US. Going by Britannica, he was recruited by the Taiwanese government in 1985 (when he would have been around 54). So seems he's a combination of mainland-Chinese-American-Taiwanese. I'm just looking this up, so feel free to correct any of this.

Posted by: Canadian Cents | Feb 8 2021 20:28 utc | 27

Why do humans (especially males) periodically have this urge to FIGHT one another? Why can’t we evolve beyond those primitive and destructive motivations? “We can work it out!”

Posted by: norecovery | Feb 8 2021 20:36 utc | 28

Support for secession in Taiwan is less than 30%.

Posted by: jayc | Feb 8 2021 20:50 utc | 29

"US semiconductor industry leaders yesterday called for Taiwan and the US to sign a free-trade agreement and for Taiwan to enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)"

"They would also like to see Taiwan and [South] Korea join the CPTPP, as well as the US."

"TSMC also presented its plans to establish a manufacturing facility in Arizona."


Posted by: Canadian Cents | Feb 8 2021 21:01 utc | 30

China has a long tradition of industrial production, and then exporting it. I doubt that the US can stop it, by military action.

Posted by: Laguerre | Feb 8 2021 21:01 utc | 31

There is an ever increasing amount of ICs with manuals (called "datasheets") exclusively in Chinese. The Chinese internal market is big.

Posted by: passerby | Feb 8 2021 21:11 utc | 32

Looks like the whole situation is more complex than we think:

Chipmakers reallocate wafer capacity to ease global chip shortage for vehicles

"Amid rising demand for electronic equipment and insufficient wafer capacity, some large plants stocked up. But if wafer capacity remains low, the shortage will worsen in the short term," Zhang Xiaorong, director of the Cutting-Edge Technology Research Institute, told the Global Times.

However in other sectors such as 5G, data centers, artificial intelligence and the industrial internet, China Resources Microelectronics said there will be a historic opportunity for China's semiconductor industry to boom.

"With the containment of the coronavirus and the capacity recovery in China, Chinese semiconductor players may have a chance to restructure the industry chain while overseas major plants are being shut down," the company said.

It seems Taiwan is overestimating its situation in the semiconductors market. It will be able to squeeze the supply for auto chips (used to make automobiles) only, not chips in general. For the areas highlighted in the excerpt quoted above, restructuring seems to be already taking place at an accelerated pace in the Mainland.

The situation is very simple: Taiwan doesn't really have a monopoly on the chip making technology. It really is just a matter of time and investment. It's analogous to China's "monopoly" on rare earths: it is not really a monopoly, as rare earths are only rare in name - the largest known reserve is in Colorado, USA, and China only enjoys de facto monopoly because it is extremely polluting to extract it, only China having the will and the scale to do that. If Taiwan forces its hand, even its capitalist allies will begin to relocate to other places and even to their home countries (national security). That's why TSMC is not going all in with its monopoly powers:

In a statement on Thursday, the company said it is addressing chip supply challenges affecting the automotive industry as a "top priority."

"TSMC is currently expediting these critical automotive products through our wafer fabs. While our capacity is fully utilized with demand from every sector, TSMC is reallocating our wafer capacity to support the worldwide automotive industry," read the statement.

This is the typical short blanket situation: if Taiwan decides to cover its head (i.e. squeeze China) it will automatically leave its feet uncovered (restructuring of the industry, relocation). The numbers simply aren't there for Taiwan's alleged master plan to work; it looks like a delusional plan that tries to theoretically accommodate both the USA and Taiwan as equal partners in an idealized alliance of equals.

Posted by: vk | Feb 8 2021 21:16 utc | 33

i wish someone would come out with a car without computers in them... old school... this way you are held hostage to computers... it is bound to happen eventually..

Posted by: james | Feb 8 2021 21:32 utc | 34

@3 Arch Bunngle

"My prediction: China will achieve mastery of the 3nm process within 2021."

China hopes to be making 28nm by 2022 (without needing US technology / licenses). 28nm tech was achieved by at least one US company in 2004. China is way, way, way behind in its ability to manufacture chips on its own and I believe last year manufactured only 16% of its own chips; it had a goal of 40%. They have been on a hiring binge recently, but compressing 20 years of neglect into 2 years is most unlikely.

I have also read that unless Huawei can figure out how to make 14nm chips, they will not be able to make 5g base stations once their chip hoard runs out (and I assume would then be acquired by Google or Cisco for little consideration, which I am pretty is what all of this Huawei drama is about).

28nm self-sufficiency

Posted by: schmoe | Feb 8 2021 21:36 utc | 35

A country that is desperate enough to use biological weapons to turn the trade war in its favor is desperate enough to launch conventional war if the bio warfare didn't do the trick.

The US doesn't have years. China isn't just building chip foundries, but the entire tech chain required by those foundries. Furthermore, it isn't just about chips. It is about aircraft engines and airframes. It's about rocket science. It's about software. It's about electric vehicles and "green energy". Even if their development pace were leisurely China would absolutely dominate in all of these fields within another decade, two at the most. But this development effort was accelerated in China even before Trump's trade war. China has been preparing for this inevitable conflict for years already. They have the initiative. They have the ball and are running hard for the goal, and they have a head of steam that they have built up over years. The US still hasn't even done warm-up stretching exercises yet, much less started running despite Trump's crude ham-fisted efforts to get the country off its collective couches.

China is playing by the rules and winning, while the US is breaking the rules but losing anyway. That rule against wars? America is definitely going to break that one again because Americans cannot see an alternative.

Posted by: William Gruff | Feb 8 2021 21:38 utc | 36

"i wish someone would come out with a car without computers in them... old school... this way you are held hostage to computers... it is bound to happen eventually"

Posted by: james | Feb 8 2021 21:32 utc | 34

I couldn't agree more. There is no real need to put a little computer in everything.

The thing that strikes me about this situation (Taiwan) is the attempted resort to blackmail, and the short-term thinking it shows. Being an unreliable supplier is never a good way to attract customers. This fits with what Patrick Lawrence says about Biden policy going forward:

PATRICK LAWRENCE: The Diplomacy of No Diplomacy

Which sounds right to me, sounds like the Joe Biden I know. Needless to say, this will not work well.

Blinken looks unhappy and stressed out.

Posted by: Bemildred | Feb 8 2021 21:43 utc | 37

A few things I'd like to throw in the mix (and yes I'm generalizing so nitpickers beware):

1. What's being choked is the bleeding edge semis. We're talking top-line microprocessors, FPGAs and such. There's a current squeeze because every customers' designs and tooling was done long before this saga and assumed status quo on their supply. Auto makers do not need 4 or 7nm micros to make self-crashing cars. They'd like to, but they don't need to.

If everyone (is willing or forced to) step back a couple semi generations to say 22 or 32nm them this problem basically goes away. Yeah things will be a bit bigger and run a little hotter, but there'll be no loss of function really. Short of crypto mining and MIC applications the real world impact of using a chip a couple of gens back is minimal. People don't need 7nm or 4nm semi to watch netflix or stupid dance clips on tiktok.

2. So China only needs to catch up a gen or two to 14nm to nullify taiwans ruse. A task that's imminently achievable in a year or 2 if not sooner. Semi modernisation started with "Made in China 2025". US is trying to cut it off at the knees but over the years China has also hired a lot of ex TSMC staff across the creek.

3.while I agree Biden will probably see the folly of a war in china's backyard i highly doubt the sanity of his team and the DPP is downright insane. Their entire platform is built on doubling down on anti-mainland sentiments, not realizing or wilfully ignoring their the entire island's prosperity is dependant on the mainland.

4. The key will be how the Dutch will play their cards with ASML exports. TSMC is where they are only because they have become the biggest contract fab and drove everyone out of business (including American fabs like IBM, AMD, MOT, National Semi... list goes on). With their size they're then able to write the biggest checks early to buy from the likes of ASML. If Taiwan actually have the tech they wouldn't need ASML themselves.

So US is actually partnering and egging on the very people who took jobs away from the good 'ol US of A. Bravo and Touché!

Posted by: A.L. | Feb 8 2021 21:56 utc | 38

Here's an interesting hypothetical: the PLA moves quickly and decisively and manages to seize the island with a minimum of damage. The TSMC plant is secured by PLA paratroopers in the first hours of the conflict and, when the fighting stops, is completely intact.

What does the USA do under those circumstances?

Do they just resign themselves to having a vital, irreplaceable resource in the hands of its strategic rival?
Or does it send in the USAF to blow that fabrication plant into tiny bits to deny it to the mainland Chinese?

Everyone posits the idea that the TSMC plant might get destroyed in the fighting between PLA and ROC forces.

But what if it isn't?

What if the more likely outcome is that the USA decides they have to destroy the village to save the village?

After all, they've done it before.

Posted by: Yeah, Right | Feb 8 2021 22:00 utc | 39

@35 schmoe The mainland can compress 20 years of neglect into a month. Maybe even weeks, if it is bold enough.

It already has everything it needs to do that: the PLA.

Posted by: Yeah, Right | Feb 8 2021 22:04 utc | 40

@ A.L. | Feb 8 2021 21:56 utc | 38 who wrote
So US is actually partnering and egging on the very people who took jobs away from the good 'ol US of A. Bravo and Touché!

I will be a nitpicker and offer a friendly update to your last sentence.

So the global financial elite that own the politicians in the US are actually partnering and egging on the very people who were given jobs by the elite from the good 'ol US of A. The ending of private finance cannot come soon enough.

I also want to support the crux of your point number 1 that older processors will do just fine until China has all the pieces to make their own cutting edge ones.

And finally I want to comment that after skimming the Intertubes I conjecture that the time to the next phase of the civilization war we are in can be measured in weeks. The expulsion of EU diplomats by Russia has the EU doubling down and expelling Russian diplomats. I am also going to conjecture that the next phase will include the picking/establishment of sides in our civilization war.....the lines are being drawn....the sorting out of that process will be where fireworks come into play as nations are herded into opposing camps.

Posted by: psychohistorian | Feb 8 2021 22:12 utc | 41

james @34--

And thus my comment the other day about preferring an "old-tech" vehicle!


In his essay today, Alastair Crooke touches on the China-Taiwan issue amongst what is mostly about the import of Putin's Davos Speech:

"Quite possibly, the door to a peaceful resolution of U.S. tensions with China already is closed. China’s intention always has been peacefully, through economic integration, to re-absorb Taiwan into China. It is committed to that. But it seems from Biden Administration statements that it is equally committed to exacerbating the Taiwan autonomy issue sufficiently so that Beijing has no other option, but to annex Taiwan by force (a last resort for Beijing). In the pages of mainstream U.S. media, experts ostensibly regret this, yet nonetheless conclude that America will again ‘be obliged’ to intervene, in order to stop ‘an aggressor state’ from occupying a democratic, American ally.

"Again in the context of the U.S. internal tensions, this is more about the fragility of the U.S. psyche at a moment of potential Thucydides’ angst, than of China posing any real threat to America. China will overtake the U.S. economically, at some point. U.S. leaders seek to suggest that America still has the power to alter ‘reality’ [Link at original] to fit to its own exceptionalist myth."

(The article at the link is exceptional to the point where I had to provide the link myself as I'm going to cite some of it, wherein "Chas Freeman, who served in top State Department positions and as Richard Nixon’s chief interpreter on his historic 1972 visit to China," says the following:

"'Since around 1870, we have been the preeminent society on the planet – the wealthiest and technologically most advanced, the most influential. And China’s overtaking us,' Freeman says. 'So there’s a psychological issue here. The good deal of what we’re doing is better explained by psychology than by statecraft. China does threaten American economic supremacy, may have already passed us in many ways… Whether that’s a threat or not depends on your perceptions. We’ve chosen to treat it as a national security or a military threat. It’ll be very good for the military industrial complex for a while.'")

Regarding Europe and its offspring, Crooke takes us back to a time with even eerier parallels than the 1930s:

"Italy in the 1400s had experienced psychological stresses somewhat similar to todays’ – the upending old ‘myths’, old cultural ties and sources of social cohesion, triggered by the gathering storm of Reformation and Scientific Enlightenment. The new leaders insisted to put old values and the ethos of ‘continuity’ to the auto da fé bonfires of sceptical rationalism’s shiny, new culture. There was then, no China to blame, but the witch and Satan hysteria of that era – a mass collective hysteria – led to some ten thousand Europeans being ‘cancelled’: they were burned alive for clinging to ancient ways (judged to be denials of ‘Truth’). Ultimately the Inquisition was instantiated to condemn and punish heresy."

He doesn't say so, but the message is clear--BigTech Tyranny would be worse than 1984--since the West is completely unwilling to listen to Putin's logic and sanity as noted here:

"The future course for the western economies is obvious – one only has to observe the return of (former Fed head) Janet Yellen to the U.S. Treasury; of (former IMF head) Christine Lagarde to the ECB and (former ECB head) Mario Draghi as PM in Italy, to understand that a full blown ‘reflation trade’ is underway."

For humanity's sake, I hope the other @150 nations listened well to Putin's very timely warnings and will have the courage to stand up to the Exceptionalist Godfather and its goons to create a new international monetary order that favors no one nation.

Posted by: karlof1 | Feb 8 2021 22:13 utc | 42

"The Peoples Republic of China, the mainland, insist, historically correct, that Republic of China, Taiwan, is a part of mainland China."
I am shocked that you would so glibly repeat historically inaccurate PRC claims without examination.

According to Wikipedia:

* Austronesian speaking Taiwanese peoples - not Han Chinese - settled the island of Taiwan around 6,000 years ago. It was not until the 17th century when partial Dutch colonization opened the island to mass Han Chinese immigration.

* Parts of the island were annexed in 1683 by the Qing dynasty, but in 1895 were ceded to them empire of Japan.

* The Republic of China, which had overthrown and succeeded the Qing in 1911, took control of Taiwan on behalf of the World War II Allies following the surrender of Japan in 1945.

* The resumption of the Chinese Civil War resulted in the Republic of China's loss of mainland China to the Chinese Communist Party.

Thus Taiwan was only ever under the control of 'Mainland' China from 1683-1895 and from 1945-1949. It was never under the control of the PRC.

Posted by: groucho | Feb 8 2021 22:15 utc | 43

@Yeah, Right | Feb 8 2021 22:00 utc | 39

Interesting thought experiment...

I would think in that scenario US' next step will be to embargo all the precusor materials which will run out in weeks. As others have said, they are mainly from abroad like JP and SK. China is moving to enable import substitution but like its indigenous lithography tech its still playing catch up.

What is more interesting that's highlighted by your scenario is if it goes noisy it'll happen very fast and very decisively. We're talking China going all in, throwing all their LHDs, landing crafts, subs and the kitchen sink at Taiwan for they're not really that useful anywhere else. With supply chain not being an issue I'd think probably half their ground forces will be involved to maintain overwhelming numerical advantage.

China can't play the slow blockade game, while the JP, SK bases along with the entire surface fleet and aerial refuellers can be neutralised with missiles the US sub fleet is still way ahead of any competition, in both numbers and effectiveness. And in any event will lead to a nuclear exchange once the first US carrier goes swimming with the fishes.

Posted by: A.L. | Feb 8 2021 22:20 utc | 44

So the global financial elite that own the politicians in the US are actually partnering and egging on the very people who were given jobs by the elite from the good 'ol US of A. The ending of private finance cannot come soon enough.

Posted by: psychohistorian | Feb 8 2021 22:12 utc | 41

Mine was tongue in cheek, i agree completely :)

Posted by: A.L. | Feb 8 2021 22:23 utc | 45

There have in the past always been a few issues that were clearly known to be "cause for war" if they happened.

There have been a few more that so disturbed relations that they kept great powers on the edge of war. Alcase-Lorraine was one of those between 1870-1914. It was war waiting to happen.

Taiwan is both. It is left in limbo as a constant disturbance.

It is also absolutely clear that a dramatic move against China's position regarding Taiwan (for independence) will lead to more or less instant war on a large scale. China will attack, just as it did over the Yalu into the Korean War. Debate the merits or outcome, but know that they will fight.

Posted by: Mark Thomason | Feb 8 2021 22:40 utc | 46

Interesting article. Two niggles:

1. "The Peoples Republic of China, the mainland, insist, historically correct, that Republic of China, Taiwan, is a part of mainland China”. It's not just historically correct, it is legally and constitutionally correct. Taiwan stopped being an independent nation and became a Chinese client state in 1972 by The Shanghai Communiqué and the 1982 Joint Communiqué and the August 17 Communiqué. It’s the 23rd province of China. All of this his was codified and made permanent on October 1971, when the United Nations General Assembly passed Resolution 2758, which recognized the government of the People’s Republic of China as the only legitimate representative of China at the United Nations and established the One-China Principle. The problem with America today is that the oligarchy believe that the rest of the world are the same as Americans; meaning whatever the media says becomes the new reality. It isn't that way at all.

2. From the U.S. perspective a conflict with China as soon as possible is preferable to one in later years after China had time to build its capabilities. We are attempting to provoke an invasion that will justify more sanctions on China. We are no match for the PLA in the West Pacific, let alone on Taiwan, on land, sea, or air. Should we attack the Chinese Mainland, China will simply attack the US mainland. They have proven repeatedly that they do not fear us.

Posted by: Godfree Roberts | Feb 8 2021 22:43 utc | 47

@ Posted by: groucho | Feb 8 2021 22:15 utc | 43

Modern Taiwanese are mainly Han Chinese (including the all the nationalists who fled to the island in 1949). Austronesian Taiwanese were exterminated and are only 2% of today's Taiwan population.

Posted by: vk | Feb 8 2021 22:50 utc | 48

Note that chip fabs are fragile and extremely costly facilities full of poisonous gases under high pressure. So a single WWII bomb would take out a whole chip fab for weeks and lose lives of trained staff. Several drones could destroy a whole fab, requiring years to rebuild. So a major hostile disruption of industry in China by routing the chips elsewhere could be retaliated without invasion.

Posted by: Sam F | Feb 8 2021 22:59 utc | 49

Posted by: vk | Feb 8 2021 22:50 utc | 47

Just like Japan then.... But it's probably "curated" out of any popular texts.

Have pity on anyone that cites Wikipedia as reference on anything but basic scientific facts...

Posted by: A.L. | Feb 8 2021 23:06 utc | 50

"We're talking China going all in, throwing all their LHDs, landing crafts, subs and the kitchen sink at Taiwan for they're not really that useful anywhere else."

I think China will go all in if the need arises, but that doesn't necessarily mean the various landing crafts and amphibious assault stuff doesn't have use elsewhere.

If the USA joins the fray, they will try to use the Philippines and many small islands as forward bases to harass the Chinese Navy and give their planes/drones places to land. There is also South Korea, which would be very vulnerable to a joint North Korean/Chinese assault. In all these areas, Chinese amphibious assault capabilities could be very useful.

American submarines would be a major problem, but within the first island chain China has many ways to mitigate the submarine threat, and chip away at that advantage if the USA pushes their subs that close to China.

China doesn't even have to invade Taiwan, they could sink its Navy and take out its air force without much risk, maybe bomb the chip factory while they are at it. Effectively blockade and neutralize Taiwan daring the US to intervene.

Any US intervention would require a draft, with the stability here in America kind of iffy, Biden forcing the children of the deplorables to fight on the other side of the planet might be a bridge to far. At least a third of the military is anti-Biden to begin with, and although that third tends to be fairly racist and anti-chinese, how willing will they be to go die for the Biden Administration?

Posted by: Jason | Feb 8 2021 23:57 utc | 51


Whoever said the build time for a wafer fab is 10 years is inhabiting some region of the dim and distant past.

TSMC announced last year that they will build a 5nm wafer fab in Pheonix, Arizona. They will break ground this year and production will begin in 2024. To those surprised that the company would be willing to build a cutting edge fab in a foreign company, please keep in mind that production of 3nm wafers will begin in Taiwan wafer fabs this year, 2022. TSMC has an effective strategy for building up new fabs, and they will follow this, the effective one they used to expand out of Hsinchu to Taichung and Tainan (both in Taiwan). They send proven management teams for the first steps of building and operating. Taiwanese management will run Arizona for three years. The biggest question mark is the stability (or lack of) of the American work force. The Taiwanese work force is FAR superior in manufacturing such a this, a process of well over 1,000 steps that demands consistency all the way. That means a dedicated work force that takes pride in its work.

Posted by: frankie p | Feb 9 2021 0:09 utc | 52

@karlof1 42
fantastic links, thanks!

Posted by: ptb | Feb 9 2021 0:19 utc | 53

Why is America getting a new 100 billion nuclear weapon?

100 minutes and that's all folks

Posted by: RKelly | Feb 9 2021 0:32 utc | 54

ptb @52--

Thanks for your feedback! Good to see you back with the occasional comment!

Posted by: karlof1 | Feb 9 2021 0:33 utc | 55



Posted by: RKelly | Feb 9 2021 0:35 utc | 56

Chinese semiconductor manufacturer, SMIC, is one of the largest in world. Doubt China will need to rely on TSMC in the not so distant future. China is also TSMC's biggest customer.
Another reason the West(US) does not care for Chinese companies is that the majority are employee owned. Never hear about that in the MSM.
Off topic, but how many genocides has China been involved in? How many have western nations been involved in? Colonizing other nations often involves pacification/genocide of the locals.

Posted by: Joe | Feb 9 2021 0:37 utc | 57

ptb @52, et al,

China's "Big T~Boys" (only one child policy, no girls created a very abundant male population), came to USA in the aught years provided via Geithner & Paulson with 5K/mo, no taxes to pay IRS, for 5 years and jobs plus very highly well educated women to court. That deal got the Transnational corporations, Et Al, into China & Taiwan (e.g., Nike, Starbucks), and the Chinese thanked USA for the uplifting of Chinese poor. CHINA is still very unhappy about House of Rothchild's Opium Wars and the USFEDERAL LOL Reserve Bank is not other than the Rothchild global network system indeed indeed.

Nuclear Winter? Maybe. Garden, sustainable, gas in metal containers generators running quietly on no alcohol super unleaded, PRI-G. 1 yr food, survival. Bosnea collapse on PBS worth watching

Posted by: RKelly | Feb 9 2021 0:51 utc | 58

Maybe someone should remind President Tsai Ing-wen and her Democratic Progressive Party who Taiwan's main import and export partner is. Who buys about 26% of Taiwanese exports and sells to Taiwan about 19% of Taiwanese imports?

Curious that the Guomindang (the old Kuomintang) doesn't appear to be onboard with President Tsai's zeal to cut Taiwan loose and adrift, trailing after the US.

Posted by: Jen | Feb 9 2021 1:05 utc | 59

From David P. Goldman at Asia Times, DECEMBER 24, 2020:

The tech war that isn’t - US tech curbs on China bend to market reality

"The trouble is that China’s market for semiconductor technology is growing so fast that American firms fear for their long-term viability if they are not involved. ... American chip design companies’ China sales are booming. Cadence Design Systems, one of America’s top two makers of design software, reports a near-doubling of China sales during the third quarter – after the controls went into effect. Meanwhile, America’s top design firms are investing in the Chinese startups that are hiring away some of their best talent, in order to keep a foot in the door of the Chinese market if they are prevented from selling directly.

Meanwhile, Chinese firms are poaching engineers en masse. from Taiwanese foundries and American chip software firms.

Chinese fabrication plants can use a combination of Chinese, South Korean, Japanese and European fabrication equipment to produce less-efficient chips with a gateway width above the 3 to 7-nanometer chips that power high-end cell phones. Used American equipment as well as Extreme Ultraviolet lithography machines from Holland’s ASML, the world’s only provider of the highest-end etching equipment, are available on the secondary market.

Another prospective bottleneck for Chinese chip independence is the design and testing software that the whole semiconductor industry uses to create and verify chip architecture. Two American firms, Synosys and Cadence, dominate the field, and the Commerce Department last August banned Huawei from acquiring their software.

Nonetheless – or rather because of the Commerce Department ban – sales of US software design firms to China exploded during 2020. Cadence, one of the two top US firms, showed a nearly 100% gain in sales to China during the third quarter. Synosys, the other key player, does not break down its sales by country, although press statements earlier in 2020 indicate a brisk growth in China sales.

Everyone but Huawei is buying chip design software, and engineers who used to work at Huawei’s chip design subsidiary HiSilicon now work for startups, many funded by Chinese local government entities. If their designs find their way into Huawei products, that is a matter of intellectual property transfer among Chinese firms, and not subject to US restrictions.

According to some analyst projections, China’s market for electronic design automation (EDA) tools will grow at a 12% compound annual rate during the next seven years, twice as fast as the rest of the world. China’s EDA market will reach $3.9 billion by 2027, compared to a present US market of $2.8 billion. Companies like Cadence and Synopsys can’t maintain their leading position if they are excluded from the world’s fastest-growing (and soon biggest) market for their products.

Top executives of Synopsis and Cadence quit last year to start up EDA firms, including X-Epic, Shanghai Hejian, and Amedac. A former top manager at Synopsys China who earlier worked for cadence, Wang Libin, founded X-Epic in March 2020, at precisely the moment when the Trump Administration wheeled out restrictions on sales of US semiconductor technology to Huawei. Dr. Wang hired other top engineers from American EDA firms. Two months later another Synopsys engineer founded Shanghai Hejian with funding from the Shanghai municipal government investment fund as well as Chinese venture capitalists.

Another startup headed by a top Synopsys engineer, Amedac, opened its doors in September 2019. In this case Synopsys took a 20% stake in the firm, in partnership with China’s Academy of Sciences. As China reduces its dependence on software tools subject to control by the US government, Synopsys’ stake in Amedac is an insurance policy against its eventual loss of market share.

A number of Western commentators warn that Chinese’s ascent up the learning curve of chip design and fabrication will not be easy and that it may take years to lift Chinese capacities up to American levels. But a senior executive at a Chinese semiconductor firm commented, “These people don’t understand China. In America, everyone thinks in terms of efficiency, and efficiency means return on equity and a rising price. The Chinese don’t care about that when national security is involved. If they have to, they’ll put 10,000 engineers on a problem and work day and night until they solve it.”

China also has access to semiconductor fabricating equipment outside the United States, although firms like Applied Materials and LAM still dominate some segments of the complex, variegated machinery market. China sales at Tokyo Election, number three in the semiconductor equipment market by some rankings, doubled between 2018 and 2019. The US may put pressure on Tokyo Electron to limit equipment sales to China, as it did in the case of Holland’s ASML, but Japan is less likely to accept American dictates on its China trade after the signing of the Regional Comprehensive Economic Partnership trade pact earlier this year."

Posted by: daffyDuct | Feb 9 2021 2:36 utc | 60

Mr. Daffyduct


While the Americans were busy teaching Chinese the EDA technology and business, the Mad King and vassal were busy fighting Islam across Africa and the Near East, all over a sliver of land in Eastern Mediterranean sea.

Posted by: Fyi | Feb 9 2021 2:44 utc | 61

The majority of Taiwanese want neither independence nor unification with China, knowing that the inevitable consequence of independence is forced unification with China, so they prefer a continuation of the ambiguous status quo. China, though it has made quite clear its red lines, is also content to continue with the status quo, it is prepared to delay unification until the time is right. There is little appetite amongst Taiwanese to fight a war for independence.
Over 40% of Taiwan's exports are currently to China and HK. Taiwanese investments in China are enormous and a significant number of Taiwanese work in China. Clearly, if Taiwan were ever to become too problematic, the way for China to pressurise Taiwan would be economically - worst case, an air and sea blockade - not militarily. If the economic prosperity of Taiwan's business community and general population were ever in jeopardy, the governing party could not survive the electoral backlash.
Relations between China and Taiwan are always frosty when the DPP is in power. If the KMT had put up an electable candidate at the last election, it is doubtful that Tsai Ing Wen would be serving a second term. The DPP are unlikely to fare well in the local elections next year as the electorate guides the government back towards maintaining the status quo with China.

Posted by: betty | Feb 9 2021 2:50 utc | 62

Jen@ | Feb 9 2021 1:05 utc | 58,

KMT is history already, as well as ROC. KMT is just DPP-light now. DPP would only lose the presidential election in Taiwan if its amerikka master decides that it needs a break. KMT serves the same master as DPP does. After two Chiangs, Taiwan moves away from China by its politicians' deliberate actions.

China will reunite Taiwan. Sadly, a peaceful solution is impossible now due to Taiwan's own choice. Whether amerikka is going to sell out Taiwan is not an if, but at what price. This is what amerikka always does, isn't it?

Posted by: LuRenJia | Feb 9 2021 3:04 utc | 63

@1 -- "Now, if China, in desperation, decided to invade Taiwan it would have the metaphorical effect of a nuclear attack on the global chip supply: ..."

No need for all that high cost/risk drama ... a fire 'accident' at the factory would be effective enough to cripple the system for everyone. Why these idiots build such critical infrastructure on political fault-lines is beyond me.

Posted by: imo | Feb 9 2021 3:15 utc | 64

If we take the comments from

daffyDuct | Feb 9 2021 2:36 utc | 59
betty | Feb 9 2021 2:50 utc | 61

as credible then what does that say for the potential of serious pressure on China?

China and Russia are protecting the rest of the world as the wailing of dying empire echoes from the rooftops.

Thanks for the comments. It sure is nice to read some detailed reality instead of the "ism" BS that some insist is useful commentary spewed continually here.

Posted by: psychohistorian | Feb 9 2021 3:19 utc | 65

One day we will wake up to an announcement from Taiwan that mainland China has agreed to join it to form One China and a parallel announcement from Beijing that Taiwan has been reunited with the mainland.

Both will include in their statement that China is indivisible and any effort by any country to draw them apart will be resisted- militarily if necessary.

That will be the end of the story.

Posted by: jiri | Feb 9 2021 3:23 utc | 66

@65 jiri - "That will be the end of the story."

You are correct, beyond all other speculation, and in a fair world yours would be the last word. I am proof that it isn't. But it should be.

Posted by: Grieved | Feb 9 2021 3:38 utc | 67

@65 ...

Well the imperial renegade provincial government of Taiwan ("Chinese Taipei" and Japanese Formosa) would have to first give up constituted claims on Mongolia, Korea and probably a few other places. It is basically Mainland China's Crimea.

"The ROC constitution, meanwhile, still claims Taiwan, China, Mongolia, and the entire South China Sea as its territory, reflecting Chiang’s desire to restore control over areas the Qing Dynasty ruled or claimed at its height, before European, Japanese, and American colonialism began eating away at it."

Posted by: imo | Feb 9 2021 4:10 utc | 68

DontBelieveEitherPr. | Feb 8 2021 19:11 utc |
Brief but good summary. I'll add that demand for the EUV component is large and ASML cannot follow demand. The bottleneck seems to be Carl Zeiss who delivers the mirrors/lenses.

Posted by: GV | Feb 9 2021 4:19 utc | 69

Let's look at the current situation in a real economic context.

Car Sales By Country 2019:

1. China: 23,754,875 - GM sold 3.7M, VW 3.1M, Honda 1.5M,

2. US: 7,175,893 - GM sold 2.94M, Toyota 2.52M, Ford 2.39M

3. Japan: 5,271,985 - Toyota 1.51M, Honda 0.75M, Suzuki 0.71M

4. Germany 3,436,112 - VW 0.64M, Mercedes 0.32M (0.69M sold in China), BMW 0.27M (0.72M sold in China )

Car Sales By Country 2020:
1. China: 19.79M
2. US: 14.45M
3. EU: 11.96M

IF Chinese customers decide to buy less GM/VW/Mercedes/BMW/Japanese cars, then the chip shortage would go away eventually. Problem solved.

Thereby goes also the much media-hyped Taiwan's strategic chip-nuclear power.

Bloomberg & Co's articles about auto chip shortage and "in consequence of China invading of Taiwan" projection, which I'm pretty sure will become the hot topic all over CNN/BBC/MSNBC in next few days, is in fact a bogeyman set up by Western politicians and coordinated by MSM, just like "safeguard freedom of navigation" in South China sea, to pre-conidtion Western people for a potential war against China.

Btw, Britain used the exact "freedom of navigation" as an excuse to start its Suez Canal War against Egypt.

Posted by: lulu | Feb 9 2021 4:23 utc | 70

1. The strategic thinking capability of the Taiwanese and (potential) American thinkers behind this "chip" blackmail is laughably idiotic. Not only they think Taiwan has the "chip" to stop and deter China's invasion, they also believe they can use the "chip" to blackmail the world (US, Japan, EU,...) to support their fight against China. That is delusion of grandeur.

2. Furthermore, while Taiwan has a chokepoint on the advanced "chip", they have thousands of chokepoints being held by China and foreigners: energy, raw material, food, vaccine, medical equipment, trade route, and countless more. Taiwan really learn this tunnel vision from Trump's trade war logic - that trading is not a win-win, but a one-sided charity from America to China. It is as stupid as it can get.

3. Finally, if the Chinese invasion did happen (for whatever reasons), I believe the Taiwanese will NOT blow up their factories like some "experts" predict. Those are expensive capital equipment owned by the Taiwanese themselves, and it is idiotic to think it is advantageous to themselves by blowing them up. Even if some radicals managed to planted bombs to damage some, the engineers and expertise of the chip making will still be there. It will probably take a few months to a year to rebuild them. Meanwhile, those radicals who planted the bombs will become the enemy of both Taiwan and China, and likely be hunted throughout the world for the rest of their lives.

Posted by: d dan | Feb 9 2021 4:28 utc | 71

China has stated that if it detects radiation of that sort it will immediately invade.

Posted by: karlof1 | Feb 8 2021 20:13 utc | 26

Since September 15th 1950, China warned UN and US to NOT cross 38th Parallel, otherwise China would change her neutral position. On Oct. 3rd, Premier Zhou Enlai asked Indian Embassador to inform US & UK that if their troops would cross 38th Parallel, then China would join the fight to protect her border safety and sovereignty.

US and UK didn't believe that China would dare to send in her peasant army without air force to fight the mighty US, UK and allied army. The rest is history.

I sincerely hope that the sane and true patriotic US politicians, government officials and arm generals, who truly care about American people and their beloved country, do remember the history and its lessons.

Otherwise, there will be nuclear war that is going to kill all of us.

Posted by: lulu | Feb 9 2021 4:58 utc | 72

One can only imagine why it would take 10 years to build an IC chip factory from scratch. It's either that you have to wait for something to "grow" such a chemical crystals, or that the a vital element in the production process is so temperamental that it takes 5 years of trial-and-error tinkering to get it to work properly?

It's easy to forget that the China we see today bears little resemblance to the China of 1950. And that logarithmic development is entirely the result of the diligent massaging and execution of 13 consecutive 5-year Plans. Most Christian Colonial Countries can't be sure what they'll be doing next month, let alone in 5 years time - apart from covering up their blunders and/or blaming someone else for them, and reminding themselves that they're the smartest people in the Universe. COVID-19, anyone?

China will have this covered. 5 year plans aren't set in concrete because there's a "What could possibly go wrong" Department which issues warnings and those warnings are Listened To and carefully considered.

There's not going to be a war with China because Russia and China agreed in the 1980s that the world has entered the Missile Age. If Iran can destroy individual structures on a US military base a hundred+ Km away, it's not much of a stretch to assume that Russia and China can destroy 750 US military bases scattered around the world whilst simultaneously Iraqifying AmeriKKKa & Friends' water and power infrastructure.

The Yanks believe way too much of their own bullshit and fairy tales.

Posted by: Hoarsewhisperer | Feb 9 2021 5:09 utc | 73

@ bemildred and karlof1....

well that makes 3 of us wanting an old school car with no computers in it.... it reminds me of the time i needed a part for my yamaha exciter motorcycle.. i think i paid maybe 500 for the bike and i found out i needed the computer replaced which was going to cost me about 450 for the part - new or used, i can't remember.... at that moment in time - 90's i think - i realized how i was being held hostage to a computer and the new design of everything with computers.. same deal the 2007 honda fit... when the ignition system went - you can't just replace the ignition system yourself, as you have to get the computer to recognize the new system you install... the dealership has you over a barrel as it has to be ''coded'' which is short for - ''we got you'' with the computer feature!! so, yeah these computers in cars are a bitch! do i need an electric window, or can i roll it down on my own?? apparently not!!

@ 42 karlof1 -

i must have missed your earlier comment... that is a really great article with aaron mate interviewing chas freeman late december 2020! thanks... i think chas nails it for the most part... quite fascinating.. thanks!

@69 lulu..

thanks for those stats on car sales in the various countries.. if i was to say what cars i see most chinese in vancouver area driving it is hands down - mercedes and bmws.... the usa and japanese makes just don't cut it with the wealthy chinese in the lower mainland area.... maybe it will change, and maybe my viewpoint is skewed, but that is what i see for the most part........ car as status symbol.... these folks are more into status symbols it seems to me, although mercedes and bmws are good reliable cars too! just overpriced is my take... works for those looking for a status symbol to drive around in...

Posted by: james | Feb 9 2021 5:09 utc | 74

Yeah I cannot see this 'chip war' growing legs enough to become real for a whole range of reasons but essentially boiling down to one, if the mob at TSMC were persuaded to do the dirty on their biggest customers, in the PRC, they will have committed economic suicide, not just for their corporation but for all of Taiwan.
Amerika can imagine that they can provoke the PRC to invade Taiwan, but Beijing is gonna decline the offer and instead ramp up production on their own chip forges and do it fast for that plus any other industry the PRC has been content to let grow in Taiwan.
Simultaneous with that if amerikan chip manufacturing software corps along with dutch chip manufacturing hardware are prohibited from trading with China then they too will be driven out of business.

Despite what amerikan propaganda claims to be the case, China has been staunch on policing industrial piracy for the last decade and a half, the moment that China was cut out of vital markets by short sighted amerikan sieges, China will do as they have promised to do if unjustly sanctioned, that is reverse engineer both hardware & software that is sanctioned, then make it themselves.

Initially the so-called pirated tech would only be sold within China's domestic economy, but as soon as engineers improve the tech past dutch & amerikan products, they will put it on sale to all-comers at a really competitive price, then do an amerika, that is tie any disputes up in court for so long that it takes decades to resolve.

I don't reckon it will come to that, Taiwanese businessmen are greedy little fucks so they won't defer to stupid government directives in the first place.

For me the nation that Taiwan currently most resembles is Occupied Palestine, han Chinese have no business being in Taiwan whether under the auspices of the former KMT or the PRC.
Since han began arriving in numbers post the revolution in China, the indigenous population have been treated like absolute shit and that act, just like the acts of zionists in Palestine must deny Han any citizenship rights.

Posted by: Debsisdead | Feb 9 2021 5:16 utc | 75

Canadian Cents |@27

Without 113.6-115.2 tons gold that Kuomingtang ROC took away from mainland China and lots of well educated mainland Chinese, like TSMC's founder, Taiwan could Not be what it is today.

Chiang Kai-Shek took away not only the the gold, silver, US$ from mainland Central Bank but also 700,000 pieces of ancient Chinese imperial artifacts and artworks.

The collection encompasses 8,000 years of history of Chinese art from the Neolithic age to the modern. Most of the collection are high quality pieces collected by China's emperors.

They are in Taipei National Palace Museum, through which Taiwan has been making tons of money with tourists.

Yet, they now claim they are not Chinese.

Posted by: lulu | Feb 9 2021 5:25 utc | 76

Contiune @75

Taiwan not only got mainland China's gold, imperial artifacts and artworks, but also highly educated people from top Chinese university, books and documents. average of 50 or 60 planes flew daily between Taiwan and China between August 1948 and December 1949.


Institute of History and Philology director Fu Ssu-nien spearheaded a rush to persuade scholars to flee to Taiwan, as well as bringing books and documents.Institutions and colleges like Academia Sinica, National Palace Museum, National Tsing Hua University, National Chiao Tung University, Soochow University, Fu Jen Catholic University and St. Ignatius High School were re-established in Taiwan.

When some of you have chance to visit Taipei National Palace Museum, take a good look of the three of the most famous artifacts that were looted from mainland China: the Meat-shaped Stone, the Jadeite Cabbage, and the Mao Gong Ding.

Posted by: lulu | Feb 9 2021 5:53 utc | 77

Thanks for the interesting post and comments. This fleshes out the bare-bone corporate media reports on the chip shortages.

First, the Western Empire is finished. It is a multi-polar world. The corporate financial global aristocracy made a huge fatal mistake when taking power in the 1980s. Out of hubris and stupidity; they trashed democratic government and western workers. They ignored history. As a result, the US federal government has failed. Over 600,000 Americans will die by this Spring. Mail delivery collapsed last month. Vaccines alone and the exploitive for-profit healthcare system cannot control the coronavirus pandemic.

COVID-19 killed just-in-time logistics in the infected regions of the world. Global monopoly manufacturing is inherently unstable and unsustainable. In a time of plague, the one thing that should be border free are computer chips. They are very light weight, can be flown easily across oceans, and are very value added. Someone is shorting the supply. Why this is not being discussed in the West must be because at a very basic level this is about how the global system is malfunctioning. The solution requires planning to decide what is required for the survival of Homo sapiens on Earth.

The USA has severe problems ahead. The most important is staying united and avoiding a civil or world war. This requires controlling the virus, an end to the economic depression and restoring democracy. The top 10% Democrats cannot box out the working class and declare them as secessionist Untermenschen and expect to stay in power.

Posted by: VietnamVet | Feb 9 2021 6:19 utc | 78

On record from Taiwan Legislative Yuan Files: Tsai Ing-wen said her self "I am Chinese"

What she said in this video clip:"我是台湾人,是没有错;我是中国人, 因为我念中国书长大,我受的是中国式教育"(I am Taiwanese, no doubt about that; I am Chinese because I grew up reading Chinese books and got Chinese education.)

By the way, how many of those who support Taiwan Independent and say Taiwan is not China know the official name of Taiwan is "Republic of China"?

Before Oct. 25, 1971 UN General Assembly passed Resolution 2758 Taiwan's ROC occupied the UN seat as the sole representative of China

Posted by: lulu | Feb 9 2021 6:24 utc | 79

Posted by: Debsisdead | Feb 9 2021 5:16 utc | 74

Han Chinese (or subgroup Hakka to be exact) are already colonizing the Island since early Qing Dynasty. This fact is actually the root cause that shaped the Taiwan politic today between Wenshengren (mainlander who come with Chiang) and Benshengren (people of the this province aka Taiwan-born Han Chinese). So Han Chinese in Taiwan isn't exactly new thing as they are occupied for hundred of years.

I wouldn't deny that the aborigines being treated like absolute shit though. Especially during Chiang Kai-sek. People bitch how PRC's teaching Mandarin to its minority populace is cultural genocide but turned blind eye when Chiang Kai-sek forced people to use Mandarin and put hefty fine if you're speaking in dialects.

Posted by: Hangar | Feb 9 2021 7:00 utc | 80

Australian company Archer Materials [AXE] has been working on a novel quantum chip that operates at room temperature and is small enough to be used in hand held gadgets. The technology involves graphene printed circuits. Archer has had a breakthrough with a Japanese patent approval and several patents pending from major countries:

If anyone can scale up production for this significant development it is Japan. China and South Korea will not be far behind.

Archer has significant graphite resources to convert into graphene, an amazing material. EV batteries use ten times more graphite than lithium.

Posted by: Paul | Feb 9 2021 7:09 utc | 81

There exists at present no "country" (You want to write "State" like in German "Staat", but have succumbed to the Anglo-Americanistic misnomer "country") when You write thus, mister b:
"The current government of Taiwan(...)"
For the current government of Táiwan has no military and no diplomatic relationships.
Táiwan is presently a province in The Republic of China, which also clames soveeignity over Tibet, Manchuria, Shànghâi, Húnán and much else, but only presently rule over the province of Táiwan and a few much smaller islands on the Fújiàn coast and a few islets in the South China Sea that they formally regard as part of their (lost) Guǎndōng(or Kwang-tung).
By calling the state with what is just a province name, You unvittingly adhere to and support the notion of "two countries"/"two states" or "two (separate) nations" -- Please reconsider Your misnomers!

Posted by: Tollef Ås | Feb 9 2021 8:11 utc | 82

Debsisdead @ 74

Is it a new trend to portray Han Chinese as Zionist by the liberal Left and as Jew-of-East" by the right wing?

Han (Chinese) immigration from mainland China began in the 17th century.

Taiwan Demographics, Han Chinese came to Taiwan way earlier than "post the revolution in China" than you claim.

... over 95% of the population is Han Chinese, of which the majority includes descendants of early Han Chinese immigrants who arrived in Taiwan in large numbers starting in the 18th century.

These Han Chinese descendants are calling themselves Taiwanese.

Posted by: lulu | Feb 9 2021 8:55 utc | 83

You know that China officially recognizes Taiwanese aborigines as one of China's 56 ethnicities.

They can enjoy all sorts of preferential policies like other mainland minorities (Uyghurs, Tibetans, Hui Muslim, Zhuang, Mongols,etc.).

For example, they can enter top Chinese universities with much lower University Entrance Exams scores than Han Chinese students.

Queen of Mandopop 张惠妹 (aMEI) is Taiwanese aborigine. She sold more than 50M records and has hundreds of millions fans both in Taiwan and mainland China.

One of her most popular song 听海(Listen To The Sea).

Posted by: lulu | Feb 9 2021 9:00 utc | 84

@DontBelieveEitherPr. | Feb 8 2021 19:11 utc | 10

In short: [the chip embargo] is a massively effective weapon against china.

The chip blockagde isn't that much of a weapon. The US (and Taiwanese) advantage over China is brief, as China's semiconductor technology is improving rapidly. In a year or two, when China fully catches up, nearly all of its microchip needs will be met by local sources, meaning that US semiconductor manufacturers will be basically locked out. This will matter, as China constitutes 60% of the global semiconductor market. So the US's blockade will start to hurt the US greatly, not China, in a year or two. Not much of a weapon, is it?

I am not joking when I say that China is accelerating in the semiconductor manufacturing race. Two years ago, China was stuck at 28 nanometers. Now it is mass producing 14 nm chips. A move to almost 7 nm is nearly done. In a year or two, China will be making true 7 nm and perhaps even 5 nm chips, the leading edge.

(In the microchip business, the smaller the feature size the better -- more speed, lower power and less heat.)

China is advancing on a broad front, not merely promoting a few symbolic champions. The whole technology stack will soon be local, thus completely immune to any further interference from the US. Achieving this will take enormous effort, of course, but China has the resources to do it -- and thanks to US sanctions, a furious motivation to do it. When China's $200 billion semiconductor market is supplied entirely by the country's internal sources, the effect on US semiconductor manufacturers will be catastrophic. What will happen to a typical US firm when it suddenly and permanently loses 60% of its market?

So I say that the chip blockade is not so much a weapon against China as it is a delayed demolition of American high technology. Better yet, from China's point of view, the US will have done it to itself.

Posted by: Cyril | Feb 9 2021 9:26 utc | 85

@Cyril | Feb 9 2021 9:26 utc | 83

China's $200 billion semiconductor market

Make that "China's $200 billion per year semiconductor market".

Posted by: Cyril | Feb 9 2021 9:36 utc | 86

I visited and explored Hong Kong in 2018. I thoroughly enjoyed this amazing experience, what a great well managed place it is. Educated Chinese, in HK and China speak better English than some provincial native born Anglo descendants in the far flung provinces. At least I can understand ever word they say.

One educated HK woman told me she wanted the British to take over again and she also wanted HK to be independent. Fat chance. We don't need the CIA or the Atlantic Council to send agents to find these people and send them 'social media' messages for their contrived and self serving colour coded revolutions. HK is not the middle east but the Yinnon Doctrine of divide and rule still applies. The rise of China worries these Anglo/ Zionist types, they fret about their loss of power to control the narrative with their semantics.

China remembers the hundred years of humiliations, incidentally, inflicted by the same coalition of countries now creating naval and other provocations in surrounding areas and they are at it again.

Taiwan will eventually return to the motherland, more through the application of the traditional Chinese propensity towards prosperity rather than a shit fight over outdated ideology.

The US has long proven itself as an unreliable ally, except for the one supreme foreign policy objective of successive corrupt US administrations. The thief gets to keep the stolen property in the middle east.

I look forward to the end of this hubris, which is always fatal.

Posted by: Paul | Feb 9 2021 9:51 utc | 87

Thanks to all on the various data points.

I too agree the threat of war is still kinda remote, there's little on the ground here that suggest an armed unification is required. However, this is not to say China could not be provoked to make good on its promise.

Note the difference between a threat and a promise. Something the west was never able to differentiate. Just ask the Russians.

Taiwan is a US contract shop masquerading as a wannabe country. Its success simply a product of stuffing performing kids thru western universities and coupling that with a compliant/motivated and relatively low pay domestic labour force encouraged by the financial and industrial elites to globalize.

It was the same story with Japan (post ww2) and South Korea (post 38th //).. Taiwan (post cultural revolution) was just late to the party but the path was the same, there's no miracle there. The same have been happening with China for the last 30 years since mainland Chinese kids were able to study abroad en masse. First it was just the spawn of the rich and powerful but the wave in the last 10-15 years have been the real deal.

Upon their return it supercharged china's domestic development in a historic scale. Its results are here for all to see and academic self sufficuency is by in large well past the inflection point for outside interference.

Still there are sectors which are off limits to Chinese students and they are reflected in what's lacking in china's industrial machine today e.g. Cutting edge material science, semis and jet propulsion. However they too will be conquered with the tsunami of people, state focus and private investments.

There has been an issue of the creme de la creme not returning after their studies but US is now doing a great job for China.

Aside - Its nothing new, look up H.S.Tsien

There's also a problem however with people returning from their time overseas that could not reconcile their mere few years of experience aboard with realities of their homeland, Choosing to see only what they wanted to see (which we all suffer from) and the grass is always greener in the west for them.

They carry a sense of entitlement and an attitude like they've seen the light. Cultural and political development are simple binary concepts a-la Hollywood for them. They are unable to see all people as people, with largely the same hopes, fears, waking up only wanting a better day then yesterday. They literally want their own country to implode and remake it in another country's image no matter what the suffering, gradual and indigenous political evolutions be dammed. Navalnys of the world.

I should know, i was once just like that.

Posted by: A.L. | Feb 9 2021 10:35 utc | 88

nice article

Posted by: David | Feb 9 2021 11:35 utc | 89

In possibly related news, Andrei Martyanov reports that China has offered Russia full-blown military alliance:

"Nikolai Vavilov (in Russian) states that this time around China is offering full-blown military alliance to Russia."

If there is a war between China and the U.S. over Taiwan, the Chinese know that their chances for victory are much higher with full Russian support. The Russian anti-air defence systems, planes, submarines and missiles are better and in some cases much better than their Chinese counterparts. Russia has also many more nuclear warheads than China.

But Russian military support for China would likely mean that the U.S. would attack the Russian forces in Syria and tell the Ukrainians to attack Crimea. This could escalate to World War Three.....

Posted by: Philipp | Feb 9 2021 11:39 utc | 90

@ Posted by: Debsisdead | Feb 9 2021 5:16 utc | 75

Chiang Kai-shek was an open and unashamed Han supremacist. Everybody knew what was coming if he was victorious and "re-unified" China. The Americans have no excuse to claim they didn't know when they supported him against the Communists.

Indeed, it is because of Chiang's racial extermination policy that the Autonomous Regions exist today in the PRC: it was a promise given by the Communists to the ethnic minorities in exchange to fighting the Civil War on their side.

That's why the ethnic minorities in China are a completely different case from the native Americans in North America: in the PRC, they de facto enjoy full citizenship status, as equals to the Han, because they fought the war for their independence and therefore have the right of conquest. They form their own governments, those are true autonomous regions (85%-90% of the governments of Tibet and Xinjiang are Tibetan/Uyghur) and they can be members of the CPC like any other Chinese. The native Americans live like vagrants on tiny portions of land given by mercy by the Anglo-Saxons, their status resembling more that of an endangered species.

Posted by: vk | Feb 9 2021 12:11 utc | 91

Posted by: Philipp | Feb 9 2021 11:39 utc | 90

But Russian military support for China would likely mean that the U.S. would attack the Russian forces in Syria and tell the Ukrainians to attack Crimea. This could escalate to World War Three.....

Only if they want to expand their defeat to multiple fronts and trigger outcomes they have even less control over.

The computing power required to game out the results of those moves would be far beyond what they're currently capable of.

I think the professionals at the pentagon know where the limits are despite the rhetoric coming from the political establishment.

Though, any kind of lunacy is possible I suppose...

Posted by: Arch Bungle | Feb 9 2021 12:14 utc | 92

What is never clearly explained anywhere is why 7nm is soo important that we cannot continue to use any 10nm chips, produced in existing fabs outside Taiwan.

To me as an engineer, the fuss seems much exaggerated. Especially as AI, outside from rather dumb ML, is completely lacking the promised capabilities, so far. Progress will be made [in AI] by better algorithms, not by 10x faster chips.

Posted by: michael | Feb 9 2021 12:28 utc | 93

Taiwan doesn't belong to the government in Beijing; it belongs to the people residing there. And if the majority of those people don't wish to be ruled by the CCP, then it's their right to go their own way.

Bit like Crimea and Ukraine...

Posted by: Observer | Feb 9 2021 12:37 utc | 94

Follow up to comment no. 60

Some interesting links regarding Chinese response to its Semiconductor “bottleneck”
(3 dec 2019)
“More than 3,000 semiconductor engineers have departed Taiwan for positions at mainland companies, the island's Business Weekly reports. Analysts at the Taiwan Institute of Economic Research say this figure appears to be accurate. That amounts to nearly one-tenth of Taiwan's roughly 40,000 engineers involved in semiconductor research and development.”
The trend is not new. Richard Chang moved to the mainland in 2000 after his Taiwanese business was acquired by Taiwan Semiconductor Manufacturing Co., the world's leading contract chipmaker. Chang brought several hundred employees and launched Semiconductor Manufacturing International Corp. in Shanghai.
(SEPTEMBER 4, 2018)
China lures chip talent from Taiwan with fat salaries, perks
“Attracting such talent from Taiwan has become a key part of an effort by China to put the industry into overdrive and reduce the country’s dependence on overseas firms for the prized chips that power everything from smartphones to military satellites.
That drive, which started in 2014, intensified this year as U.S.-China trade tensions escalated, according to recruiters and industry insiders, exposing what China feels is an over-reliance on foreign-made chips.”

it's a good idea to be aware of the fact that the Chinese have been
looking as to which way the wind has/may been turning for several years now.

pity the US didn't do the same (when they started outsourcing their entire industrial capacity 30 years ago).

be prepared.

Posted by: chris m | Feb 9 2021 12:46 utc | 95

Posted by: Jason | Feb 8 2021 23:57 utc | 51

At least a third of the military is anti-Biden to begin with, and although that third tends to be fairly racist and anti-chinese, how willing will they be to go die for the Biden Administration?

I believe it is much easier to sell an inherently unattractive product when consumers are basing their reactions on purely sectarian automatism rather than where their personal interests may lie.

How do you suppose the portion of the population you speak of would react if the predominant noise they were subjected to was "Oh boy, Biden is such a CCP appeaser! We always suspected he would be soft on the CCP, look at him. Hey Xi-den, if you like CCP so much, why don't you marry them. Haha. Seriously, time to get tough already."

Posted by: robin | Feb 9 2021 12:48 utc | 96

KMT are gangsters. That is all they have ever been. They will behave like gangsters. When the time comes they will run. #60 and #94 above are early warnings of that. The most talented and valuable have figured out where their future is and where their loyalty is.

When you see an exodus of the old guard beginning China will follow shortly. There will be exactly zero resistance. Business as usual will continue.

Posted by: oldhippie | Feb 9 2021 13:05 utc | 97

In any war between the USA and China, the only winners will be those who stay put of it, especially Russia & EU if they can dodge the war. It will be quick too. Zillions of missiles flying back & forth.

On the other hand, the USA has no chance at all against China and Russia together. Iran is likely to help out too in that scenario.

MAD is MAD. The dipshits at the Pentagon have been dodging that fact for decades because it means they have no job.

Posted by: Bemildred | Feb 9 2021 13:06 utc | 98

Posted by: Observer | Feb 9 2021 12:37 utc | 93

Taiwan doesn't belong to the government in Beijing; it belongs to the people residing there.

Do you apply that same standard to the indigineous tribes with respect to the ruling Han colonizers of Taiwan?

Or is your position in favour of Han privilege?

I think the native Ami, Atayal, Paiwan, Bunun, Puyuma, Rukai, Tsou, Saisiyat, Tao, Thao, Kavalan, Taroko and Sakizaya deserve a say in the matter...

Posted by: Arch Bungle | Feb 9 2021 13:07 utc | 99

@ Posted by: chris m | Feb 9 2021 12:46 utc | 94

Just to explain the situation: Taiwanese people are automatic full-fledged Chinese citizens. They don't even need to renounce their so-called "Taiwanese passport" in order to have a Chinese passport. All they have to do is to cross he strait (which is bridged). There's absolutely zero bureaucracy, no need for any extra documentation; the Mainland simply ignores the existence of the Taiwanese government, and treats its documents as if they were from one of its provinces.

Posted by: vk | Feb 9 2021 13:22 utc | 100

next page »

The comments to this entry are closed.