Collapse of the Semiconductor Industry
Peter Zeihan on chip foundry concerns.
This section is nominally about the collision of geopolitics and cyberconflict. What got me going on this was Peter Zeihan’s words of wisdom on chip manufacturing.
And semiconductors are the crown jewel of supply chain vulnerability. Have a listen.
Our most potent GPUs are exclusively Nvidia chip designs produced in Taiwan Semiconductor Manufacturing Company’s foundries. The measure of performance in this area is feature size. When I was a college sophomore there was excitement in the air … because the 300,000 transistor Motorola 68020s we were learning to program via assembly language were about to be eclipsed by “sub-micron processes” - features under 1,000 nanometers in size. Today TSMC is shipping 7nm products and I’ve seen articles about their 4nm stuff, as well as Intel nearing readiness with a 2nm process.
There’s a LOT of focus on what would happen if China takes Taiwan, specifically due to TSMC. This is silly for a number of reasons:
Chips are not elemental copper coming raw out of the ground; if even one input is sanctioned the entire production line is sanctioned.
TSMC is ONLY a chip foundry operator, the intellectual property regarding what to do with those 7nm features is held by companies like Nvidia.
TSMC didn’t get where they are by being blind to strategic trends, so they’ve duplicated facilities in Japan.
If Taiwan does fall China will have in TSMC a Humpty Dumpty they can never reassemble and Intel will promptly vault to the #1 manufacturer slot.
So that’s that. Every day that passes this concern becomes less of an issue. The vendor that faces an existential threat isn’t TSMC, it’s … Apple. Their regional supply chain is centered on China.
As we recently learned via China In Freefall, they’ve got a housing problem that is an order of magnitude worse than what brought our subprime crisis in 2008 and much less diversity in investment options. And if you want to write off Zeihan because he’s got a ponytail that’s fine … but you’ll need to explain why Chinese companies are raising Maoist militias. You could argue this is about Taiwan, but a much more certain problem closer to home is a better fit.
Conclusion:
I installed my first network thirty six years ago. The last non-computer job I had was thirty eight years ago. If not for my ex-wife’s misfortunes and my Lyme misadventure I’d be hunting for a low key work activity and self-describing as semi-retired. Instead I am looking at Zeihan’s work and with each passing day I’m glad I’ve learned to do other things besides move packets.
I meander back and forth from avoidant, depressive ideation to grim satisfaction as I watch this stuff unfold. There’s a major inflection point for the whole world eight months from now and if you know where and how to look, there are people who know they need to get ready for hazards we’ve not faced in living memory. I need more work than I have, but for once I’m in the right place at the right time.