Do you think that the concentration of this capacity in a single place is dangerous in a relevant way? I can think of some conception of this where resilience of semiconductor supply is mostly a positive externality so no one really invests in it. Should governments be investing in diversifying supply?
To say what governments ought to do is hard. If the U.S. and China invest in diversifying supply, then the TSMC fabs become much less useful as a deterrent to a Chinese intervention and as a carrot to keep the U.S. invested in Taiwan's independence. This *is* happening, mostly due to the vulnerability in the supply chain exposed by the crisis of the past two years. There are fabs popping up in the US, Japan, S.K., and China, but none of them are quite as advanced as the work that the TSMC is doing. If they were to vanish or become inoperable, we would likely be set back by a decade or so in the computational density of our computers, especially if the expertise in human capital was also lost. It's similar to what is going on in pharmaceutical manufacturing in the wake of COVID-19. Diversification of supply would mean less reliance on trade, whether or not that will lead to more or less violence is unclear to me. On the one hand, each actor would have much less to lose if they were self sufficient in trade, but given self sufficiency, each actor could also be less easily pulled into conflicts by events on opposite sides of the world. Which of these effects outweighs the other, I can't say.
Do you think that the concentration of this capacity in a single place is dangerous in a relevant way? I can think of some conception of this where resilience of semiconductor supply is mostly a positive externality so no one really invests in it. Should governments be investing in diversifying supply?
To say what governments ought to do is hard. If the U.S. and China invest in diversifying supply, then the TSMC fabs become much less useful as a deterrent to a Chinese intervention and as a carrot to keep the U.S. invested in Taiwan's independence. This *is* happening, mostly due to the vulnerability in the supply chain exposed by the crisis of the past two years. There are fabs popping up in the US, Japan, S.K., and China, but none of them are quite as advanced as the work that the TSMC is doing. If they were to vanish or become inoperable, we would likely be set back by a decade or so in the computational density of our computers, especially if the expertise in human capital was also lost. It's similar to what is going on in pharmaceutical manufacturing in the wake of COVID-19. Diversification of supply would mean less reliance on trade, whether or not that will lead to more or less violence is unclear to me. On the one hand, each actor would have much less to lose if they were self sufficient in trade, but given self sufficiency, each actor could also be less easily pulled into conflicts by events on opposite sides of the world. Which of these effects outweighs the other, I can't say.