Posted September 08, 2022
By Ray Blanco
A Tech Renaissance is About to Unfold
Taiwan is sitting right in the center of China’s sights right now, and this precarious position poses a big threat to the global tech industry.
In July, Mark Liu, chairman of Asia’s most valuable tech company, Taiwan Semiconductor (NYSE: TSM), said that an attempt to take Taiwan by force would render its sophisticated manufacturing facilities inoperable.
In a global supply chain interplay, TSMC is dependent on the rest of the world for materials, chemicals, parts and software to operate. His comment could also be considered a thinly veiled threat to sabotage the crown of Taiwan’s tech industry in the event that force is used, leaving little of value for an invader to take.
Any attempt to do so would surely be a huge headache for the rest of the world. If we learned something from the past couple of years of COVID-19-related chip shortages, it’s how dependent we are on their availability for many of the goods we previously took for granted. Everything from new cars to gaming consoles came into short supply.
So much of what we buy relies heavily on chip content, as does our national security. During the Cold War, the U.S. was able to secure advances in chipmaking, developments that drove the country toward a technological supremacy that helped contribute to the collapse of the Soviet Union by the 1980s.
The U.S. remains a dominant player in the chips business. From Apple processors to Nvidia GPUs, a huge share of the world’s chip design business originates in the U.S. And it’s a lucrative business, meaning that despite weakness on the manufacturing side, U.S. companies accounted for 46% of last year’s $556 billion in sales. But computer bits are of little use without computer chips, and if the physical side of the business comes under threat, the entire industry tumbles.
Fortunately, the U.S. has woken up to the danger it's now facing in the face of potentially losing its supply of semiconductors. Last month, President Biden signed into law the CHIPS and Science Act. Via this legislation the U.S. is incentivizing the reshoring of lost semiconductor manufacturing capacity, securing domestic supply of critical technologies while creating high-paying jobs. The U.S. government hopes the $50 billion it has set aside in the new law will reduce reliance on vulnerable or overly concentrated production of both leading-edge and more mature chips.
This situation sets the stage for an American semiconductor renaissance that will put wind in the sails of any company with semiconductor exposure that can take advantage of the new bill.