Money talks as Chinese chip foundries lure TSMC staff with massive salaries to fix the Middle Kingdom's tech gap

More than a hundred TSMC employees have fled the world’s largest semiconductor fab, by market cap, to join smaller, less well-known Chinese chip factories after being promised much higher salaries. Chinese government-backed manufacturers, such as Quanxin Integrated Circuit Manufacturing (QXIC), and Wuhan Hongxin Semiconductor …

[Chris G]

Hardly surprising

With increasing threats and embargoes on every aspect of trade between the states and China, the Chinese are unlikely to just take it lying down.

Presumably they will try to recruit anyone who can contribute towards their technical self sufficiency as well as working with Russia who are also doing all they can to achieve relative independence in electronics.

[Anonymous Coward]

Re: Hardly surprising

The key to building TSMC/Intel/Samsung foundries is the equipment required to produce the chips - without the best, you can't compete with the top foundries.

While hiring the "best" TSMC staff away, I suspect this is more likely to be propaganda unless China has already acquired the necessary equipment (which I doubt - the queue for ASML gear is 2-3 years and I'm unsure if there are export restrictions), they will be working on 5-10 year old equipment and not producing cutting edge chips.

[Doctor Syntax]

Re: Hardly surprising

unless China has already acquired set out to make the necessary equipment

FTFY but does it feel any more reassuring than the original

[Anonymous Coward]

Re: Hardly surprising

If they have then I would suggest the publicly available information doesn't match that (i.e. the sizes of chips being released being 2-3 generations behind current TSMC/Samsung/Intel products). While lithography equipment is probably THE single most challenging part of the puzzle as ASML is the only provider (and I'm very dubious of China's ability to produce equivalent parts given that everyone else was driven out of the market by cost or an inability to make the necessary optics), you also need high quality chemicals and a workable process - the chances of being able to get all of the parts to reproduce the TSMC process from scratch are likely to be low as it will need to be re-engineered for local manufacturing conditions.

The economics of manufacturing cutting edge chips makes keeping this secret difficult - if you can only use it for secret internal chip production for national security etc, the effect on the larger market is close to zero. And as soon as it has an impact on the market, it is no longer secret.

If we see China producing chips equivalent to TSMC 7nm within 5 years then I'm wrong. I would expect it to be closer to 10 years when current refurbished equipment hits the second hand market. i.e. the status quo

[hoola]

Re: Hardly surprising

But that is exactly how they have got to where they are. Unlike the West they take the long view and achieve what is needed by not giving up. There culture has not evolved round short-term money and a quick buck. So what it it is the previous generation of chips, as long as they work that is what matters.

Also one has to look at military hardware. At the end of the day you can have the most expensive technologically advanced equipment there is however these days it appears to be ever more unreliable needing perfect conditions to work. The really whammy comes when it does break you are totally knackered because nothing works. At that point whoever has the most working stuff can do the most damage. Having the best does not necessarily equate to prevailing.

[Anonymous Coward]

Re: Hardly surprising

"So what it it is the previous generation of chips, as long as they work that is what matters."

To make my point a little clearer (and why I think China will struggle to compete with bleeding edge processes in the next 5 years) is the difficulty of creating that level.

If you look at volume chip manufacturing, you see a bleeding edge where costs are significant but profits are enormous. Step back one generation and you significantly increase volumes but the profits are much less. Take another step back and generally equipment and plant has paid for itself and it is getting to the point where you can't justify on-going maintenance because the running costs/efficiency barely covers the revenue you receive. Beyond that it tends to be either custom foundries or development.

Getting equipment for bleeding edge is basically impossible (long lead times and huge competition for equipment from the big 3), previous generation equipment used to be available as refurbished/second-hand but is now largely used by the big manufacturers looking to expand their product ranges (i.e. flash/memory) or the second tier manufacturers.

Can China make their own equipment? Eventually, given time, but they need to develop A LOT of supporting industries around very high purity chemical processing (generally only Japan and US doing this at present), very high quality optics (generally only Germany and Japan providing this), high precision steppers (US/Germany/South Korea/Japan) etc.

If we compare semiconductors to other manufacturing processes that have moved to China over time, China tends to take the volume market before taking over the more specialist areas. When China start driving American/South Korean/Japanese memory manufacturers out of business then I will start to believe China can compete. The reality is American/South Korean/Japanese memory manufacturers are struggling/leaving the industry because the big 3 manufacturers are increasing their market share.

Will China want to spend US$20bn a fab for 10+ fabs to possibly be competitive to Intel/Samsung/TSMC in the next 5 years? Assuming they can get a leading edge manufacturing process from that investment - many others have tried and failed.

[Anonymous Coward]

Re: Hardly surprising

a/c the problem here is the 'bleeding edge' isn't the USA, its the Taiwanese, Koreans and Europeans.

The game here is trying to leverage US Applied Materials chip making kit into a secondary block on chips made using Applied Materials kit. As if Applied Materials kit is the bleeding edge. Intel use Applied Materials kit and their 7nm is pushed back to 2022. So much for US tech.

It's easier for a fab to ditch Applied Materials as a supplier than China as a customer. One pays the bills, the other is overhead.

[Anonymous Coward]

Re: Hardly surprising

Late but...

The bleeding edge is TSMC/Samsung/Intel - as Intel is spread across the US/Ireland/Israel/China its hard to put them in one region. Intel may not have the greatest 10nm process but they are still investing and have the revenue/fabs/investment to play the game. Their fab investments are in the US$100's of millions.

Then we have the second tier fabs that are largely specialist (Global Foundries/Toshiba/UMC/STM), memory only (Micron/Nanya/SK Hynix) or a mixture of the two, usually through acquisition. This list isn't exhaustive but they generally have between US$1bn-US$10bn invested in fabs.

The Chinese fabs fit into the third tier with sub-US$1bn of fab infrastructure.

The big three tend to take almost all premium work and most of the high margin mid tier work and are generally increasing the size of their markets. Mid tier are being eaten from above by the big 3 and below on price by older gen parts that are sufficient for many tasks.

China is driving the low end - they don't have any real impact on the premium end of the market other than via consumption - consumption that is already constrained by capacity.

Would US sanctions hit China? China likely has 6+ months of parts to minimise any short term impact but the medium term impact would be significant as bit Chinese manufacturers would struggle to replace premium parts for smart phones and telco infrastructure without TSMC/Samsung.

Longer term, China would catch up enough (I'm not sure we will see much improvement past 2 gens of EUV and 12-16nm is good enough for most consumer requirements if you can keep other costs to a minimum) but that is likely in 5-10 years away.

How would it impact the semiconductor market in general? Unless China significantly increases their investment AND are successful, I'm not sure it would impact significantly - there is already huge pressure on companies and the existing 3 premium manufacturers are finding it hard to sustain their investment without destroying the mid-tier or one of them dropping out (i.e. as happened to Global Foundries). Which will likely happen regardless of political intervention.

Sanctions will impact other markets (i.e. 5G) but there is more direct intervention happening there anyway in the high revenue markets. For other markets (i.e. x86 CPU's) I suspect China will be able to bypass most restrictions by buying grey market chips until a political solution was found or other alternatives were sufficient (i.e. a home grown RISC-V server chip @12-16nm).

[ChrisIsAlreadyTaken]

Re: Hardly surprising

193nm immersion lithography should be sufficient for China for quite a while as the cost per transistor bottomed out at the 32/28nm node.

The cool kids are at 7nm, but 90% of the market is still using single patterning and that's not going to change any time soon.

[Anonymous Coward]

Re: Hardly surprising

"193nm immersion lithography should be sufficient for China for quite a while as the cost per transistor bottomed out at the 32/28nm node."

They are beyond this already - they are able to produce chips in the 28nm/32nm range at a similar level to over countries, but this is using equivalent equipment. ie. refurbished. When they try to produce smaller processes, things don't go as well - the rumoured 16nm process is equivalent to Intel 22nm or TSMC's cancelled 20nm processes.

The Chinese need fast CPU's and 20nm provides about 50% of the performance of low power 7nm chips (not the high performance processes used for AMD CPU's) at much higher power usage. It's OK for research but won't satisfy Chinese manufacturers demands if they want to export competitive products.

[Anonymous Coward]

Re: Hardly surprising

@"The key to building TSMC/Intel/Samsung foundries is the equipment required to produce the chips - without the best, you can't compete with the top foundries."

Good luck with that.

@" the queue for ASML gear is 2-3 years"

And who do you think makes up that queue? Here are ASML's locations around the world:

https://www.asml.com/en/company/about-asml/locations

Hong Kong, Shenzen, Beijing, Shanghai....

Similarly Oxford Instruments, do you want to buy Oxford Instruments chip making kit? They even have an online Chinese store to make it easy:

http://www.51haocai.cn/

Look, you imagine they cannot buy the kit and set up their own fab lines in short time. This is irrelevant, because Trump hasn't sanction China, he's sanctioned just Huawei. Huawei can simply source their chips from another Chinese maker, who in turn can continue to order from TSMC in Taiwan, as Huawei use to.

Any special tech in Huawei, well that can be sold to another maker with a flick of the pen. So in the mid term they'll just continue churning out devices.

We'll see in September, I'm not expecting any major change here.

Well other than to Applied Materials kit sales. Tainted.

[Anonymous Coward]

Re: Hardly surprising

"Here are ASML's locations around the world:

https://www.asml.com/en/company/about-asml/locations"

Do they have manufacturing facilities in all of these locations? The key DUV/EUV facilities that I am aware of are based in the Netherlands, US and Taiwan.

"Huawei can simply source their chips from another Chinese maker"

Which Chinese manufacturers? The best Chinese manufacturers may call their processes 16nm to match TSMC but they are realistically a generation behind that. It's hard to build leading edge chips on older processes, just ask Intel with their range of 14nm products.

I'm deliberately avoiding political issues as getting a new fab working takes 3-4 years which means manufacturing facilities coming on-line now pre-date current political situations. While Trump will have an impact, we are likely to see that impact in 2-3 years as fabs are delayed or not started with the only current impact being harder to see as inventories and alternative suppliers can minimise short-term impact.

[Anonymous Coward]

Re: Hardly surprising

You miss the point, the sanction isn't "sell to Huawei" it's "sell kit to Huawei that's using US tech", they don't need to manufacture in China, they just need to sell their non-US kit to China. Something they are doing.

Neither do Huawei need to develop in China, they can open an office next door to TSMC if they want.

"Which Chinese manufacturers? The best Chinese manufacturers may call their processes 16nm to match TSMC but they are realistically a generation behind that. "

Uncle Chans chiporium, you miss the point again, TSMC can freely manufacture for other Chinese companies, just not Huawei. And Uncle Chan can buy Huawei's design and place that order.

"as getting a new fab working takes 3-4 years which means manufacturing facilities coming on-line now pre-date current political situations."

None of that is necessary for Huawei's business to continue.

If Trump wants to push this, good luck there. He is trying to pick limited fights he thinks he can win, but so far its not gone well for him, and I don't see that changing anytime soon. Indeed how essential is the limited US tech actually? How essential was their maize?

You shouldn't have to sell these sanctions by talking them up, if they had substance you wouldn't need to.

[Anonymous Coward]

Re: Hardly surprising

Huawei (and almost all the other Chinese chip designers) buy their chips from TSMC. Take away TSMC and what do they have? That is the impact of sanctions.

My claim isn't about sanctions - they may or may not happen. My claim is about the current and likely future state of Chinese semiconductor manufacturing. If sanctions do happen, 100 or so TSMC experts won't fill the gap. They will be able to help China make progress and potentially address their existing process issues but they are unlikely to help China leapfrog 5 years.

[The Man Who Fell To Earth]

Re: Hardly surprising

In the entire history of the human race, technological superiority has always been temporary. There is no reason to believe that will ever end.

[Anonymous Coward]

Re: Hardly surprising

Yes, but in many ways it's better that instead of making easy money selling stuff abroad, it's now forced to invest their money to build its own chips while getting less money from exports.

Meanwhile anybody who will accept those offers, will find that in Hotel Shenzen is easy to check in, and will be far more difficult to check out... I won't be surprised if they will be sent to some "forbidden city" and never allowed to leave - just like USSR did for its most advanced programs.

USSR failed exactly because it couldn't match Western technology - and but stealing more of it, Putin's Russia won't be more effective than its predecessor. China may be more effective, but it was really time to transfer technology to them while they show they have no will to become more democratic.

[Jon 37]

Re: Hardly surprising

I seriously doubt they'd stop anyone from leaving. They're smart, and that would be a dumb thing to do.

They want people with knowledge and experience to come to China and teach Chinese people that knowledge, so they can use that knowledge to build products for both the local market and exports. If you stop people from leaving, people will find out and the flow of knowledge will be reduced.

The foreigners (i.e. non-Chinese) probably won't be allowed to take part in any programmes aimed at putting Chinese technology ahead of foreign technology. They're just there to improve Chinese technology so it equals foreign technology, and to teach the Chinese people so the Chinese can make their own advancements later.

Since the foreigners wouldn't know anything more advanced than foreign technology, there's no reason to keep them.

[amanfromMars 1]

Re: Hardly surprising whenever definitely not stupid

The foreigners (i.e. non-Chinese) probably won't be allowed to take part in any programmes aimed at putting Chinese technology ahead of foreign technology. They're just there to improve Chinese technology so it equals foreign technology, and to teach the Chinese people so the Chinese can make their own advancements later. ..... Jon 37

Foreign programs, and their prime driver programmers aka systems leading masterminds, will surely be not only allowed, but also enthusiastically encouraged and gratefully extremely well rewarded, whenever specifically designed and continually designing to both put and keep China ahead in advancing technology realms.

Anything lesser would one have not unreasonably concluding a certain self-destructive madness at play in vital leading components/entities representative of Chinese entrepreneurship and industry, and the chances and likelihood of that being a reality to be exploited and expanded upon are considerably more than just bleak and non-existent, methinks.

[sanmigueelbeer]

More than a hundred TSMC employees have fled the world’s largest semiconductor fab

We need your talent but, most importantly, commercial-in-confidence technical blueprints/documents in USB thumb drives -- the more, the "merrier".

Someone nicked off my jacket.

[martinusher]

Routine in Silicon Valley but then we're the US, the Good Guys, so we're allowed to do this sort of thing.

[CheesyTheClown]

Nonsense

For the most part, the knowledge required to not only produce current generation and the knowledge to move forward is what is most interesting.

There is little value in hiring for blueprints. The worst possible thing that could happen to Huawei and China as a whole would be getting caught producing exactly the same technology verbatim.

There is value however in hiring as many people as possible that know how to innovate in semiconductor technology.

Huawei and others are running out of chips, but they're not as desperate as you'd think. They're more than smart enough to have contingency plans in place. They have time to catch up. It's far better to get it done right rather than to get it done.

The problem of course is that by China doing all of this, it will seriously impact the Taiwanese and American semiconductor market. When China is finally able to produce 7nm using Chinese developed technology, they can start undercutting costs for fabrication.

Where the US and TSMC will build a handful of fabs for each generation, China will focus on scale. And once China catches up, they'll target becoming a leader instead.

Trump focused entirely on winning the battle. But he has absolutely no plans in place for defending in the war. History shows that every time trade wars have tried his tactics, it doesn't just backfire, but it explodes. The issue now is whether China can do it before Trump leaves office in 2024. If they can accelerate development and start eating away at the semiconductor market in the next 4.25 years, Trump's legacy will be that he completely destroyed the entire semiconductor market for the US and US allies.

[tip pc]

Re: Nonsense

You think Trump will get 4 more years?

[Anonymous Coward]

Re: Nonsense

You think he won't ?!

[MJI]

Re: Nonsense

He is crooked so I expect that the huge amount of votes his rivals get will again be translated into him winning.

Look what he is doing to their equivalent of RM!

[jmch]

Re: Nonsense

I fully expect full covid lockdowns to hamper voting, further post office budget cuts to hamper postal voting, and the scaremongering, outright lies, and Russian help on Facebook to be cranked up to 11. And even if Trump loses, he will claim fraud and not concede (he already said in run-up to 2016 that he might not concede defeat depending on circumstances, and, even in electoral-college-only victory claimed he was a victim of voting fraud)

Trump is a clinical narcissist, nothing is ever his fault, and in his head he always wins. His losing the 2020 election (as I believe he will) is going to result in the mother of all meltdowns

[Anonymous Coward]

Re: Nonsense

Why would he restrict it to 4 years?

Can you imagine any scenario where Americans are allowed to vote freely in November?

Look at the Kentucky, normally 3700 polling stations cut to just 200. For one city alone, there is *one*, and it has capacity for barely 10% of that cities voters.

Mail-in, 650 sorting machines being removed and destroyed from major urban centers, i.e. Democrat and moderate-Republican voting centers (they only need the KKK Republican fringe, Dems are controlled with Gerrymandering, that leaves *moderate* conservatives and middle ground voters to lock out now).

So, if you were a wannabe dictator and go for the full coup, why would you limit yourself to only 4 years?

What makes you think that somehow Republicans would ever give up power. They'll have the Supreme Court fully Kavanaugh'ed then, they can define laws that let them choose who can stand and who can vote to ensure perpetual power.

See Putin offering Alexander Lukashenko of Belarus, 200,000 soldiers to secure him in power?

Do you imagine Republicans would turn him down in a similar situation?

They didn't turn down the money, Google [Concord Management and Consulting] or [Maria Butina NRA]

They didn't turn down the propaganda, Google [One America Network Sputnik]

They didn't turn down the Russian attack packages, Google [devin nunes lev parnas]

Yet somehow you think it would *only* be 4 more years???

[Flywheel]

Re: Nonsense

He's looking to be another Putin/Xi and be President For Life. I don't think he's got what it takes, but hey, strange things happen in elections.

[Duncan Macdonald]

Hopefully 2020 not 2024

I do not want the USA to collapse during my lifetime and I am not sure that it could survive another 4 years of the orange turnip.

[sanmigueelbeer]

Re: Hopefully 2020 not 2024

I am not sure that it could survive another 4 years of the orange turnip.

Joke is on you. Americans can't/won't get rid of him that easily. Imminent announcement: Trump is going to demand US Treasury Dept to have his face on the soon-to-be-released $9 note.

Seriously, I've never seen a US President "hell bent" in trying to get himself re-elected by playing "dirty".

Trump has taken the term "by hook or by crook" to a whole new (low) level.

[khjohansen]

Re: Hopefully 2020 not 2024

"... soon-to-be-released $3 bill" (There, FTFY)

[Anonymous Coward]

Re: Hopefully 2020 not 2024

Not worried about Trump winning so much as the ground rules it has set for a truly evil fsck next time

A Miller presidency, followed by the army top brass being directly appointed then a well stocked USSC deciding term limits are unconstitutional

[amanfromMars 1]

Malign Invested Third Party Interests .... Dirty RATs

Seriously, I've never seen a US President "hell bent" in trying to get himself re-elected by playing "dirty". ..... sanmigueelbeer

sanmigueelbeer,

If you want to know why and how everyone plays dirty nowadays, try to find Shadowgate...Millie Weaver's Documentary, which in some places on trying to display contents returns ...... This video has been removed for violating YouTube’s policy on hate speech/Terms of Service

Others though have it presently available for viewing on https://www.bitchute.com/video/DS7CN67XL1lb/ and also on https://youtu.be/IpmVNQ2DVY4

And it is quite a remarkably difficult stretch to justify its removal because of hate speech rather than just admitting it is highly embarrassing and potentially freedom threatening to more than just a select chosen few.

Its first few minutes outline what President Trump has been fighting against and since probably before he was even a kid too.

And it doesn't take too much imagine to conjure up a picture of what is arraigned against and being opposed by the likes of a China/Russia/Syria/North Korea/UKGBNI etc etc etc. ..... which be any number of Dirty Remote ACTive Trojans struggling for credibility whilst forced to rely on deceit and stolen information for news of the future. And that's about as far from ideal as one gets before one spills over into the embrace of criminality and sedition.

[Jellied Eel]

Re: Long stretches

And it is quite a remarkably difficult stretch to justify its removal because of hate speech rather than just admitting it is highly embarrassing and potentially freedom threatening to more than just a select chosen few.

I watched it. I suspect it's removal might be down to some of the people named in the movie may be litigating against the producers. It mostly seemed to rely on annecdotes from two 'whistleblowers' and didn't seem to present evidence of actual wrongdoing. By that I mean illegal stuff. Shady AF, but that's modern politics.

What it did present is something many of us should already be aware of, ie revolving doors between US public & private sector, outsourcing and big data. That's hardly news. Public sector entities are restricted in what data they may collect & how they process it.. Private sector companies are not, so hardly suprising many of those hoover up every scrap of data they can find and slap some analytics on top.. Then sell services to public sector entities who might not be allowed to collect & collate the same info. NSA spies shocker! Google & Facebook spy, that's just their business model.

But such is politics. Trump's doing the trade war thing to try and force US enterprises to bring their tech back home. Probably too little too late given thanks to offshoring, there's been a lot of knowledge transfer from the US to China. By banning import/export, it'll leave US companies scrambling for new suppliers, or scrambling to relocate manufacturing to !China.. Which has been happening, ie places like Vietnam & Myanmar attracting inward investment in exchange for cheap land, labor and perhaps a lighter regulatory environment.

But WWBD? Biden's been... quiet so far given the election's not far away. What China will do is blindingly obvious, ie accelerate it's own industry so it's not reliant on or vulnerable to sanctions & trade spats.. And perhaps then will start restricting supplies to the US. So in less than a decade, it'll have <10nm fab capability, possibly a lower cost base and US/Western companies may find themselves on the wrong side of a cold war.

[Nifty]

Re: Nonsense

If aggressive trade tactics result in failure, why was China having so much success with them? Until now of course.

[DS999]

More blowback from Trump's epic mishandling of foreign affairs

Playing right into Putin's hands, as per usual.

[martinusher]

Re: More blowback from Trump's epic mishandling of foreign affairs

I suspect that the Russians have merely two interests in the US at the moment. One is countering whatever BS is being thrown at them this week by the US and its 'allies'. The other is an overwhelming national sense of Schadenfreude (for all I know there may be a Russian term that means the same thing).

[Anonymous Coward]

Re: More blowback from Trump's epic mishandling of foreign affairs

According to Google translate it's злорадство ("zloradstvo"). Any Russian spies willing to confirm?

:)

[Charlie Clark]

Re: More blowback from Trump's epic mishandling of foreign affairs

Russia's main aim is to weaken US foreign policy in its sphere of influence or the "near abroad" as it's officialy known, which is mainly the former members of the Soviet Union and, to a lesser extent, the Warsaw Pact. It's also keen on anything which reduces shale oil and gas production, which pushes international prices below Russian costs.

While Russia is involved in all manner of dirty tricks campaigns, including of course assasination. Indeed the scale of these is routinely underrated – these are usually related to particular interests of the members of the ruling kleptocracy – its overall threat is often overstated. If Russia seriously thought it could hold Ukraine, it would have invaded long ago. As it stands, it's struggling to prop up Crimea and some of its own regions are getting restless because there is not enough money to go around.

[Anonymous Coward]

Re: More blowback from Trump's epic mishandling of foreign affairs

Ultimately, the population of Russia is only 150 million or so. They could take on Germany or France... but probably not Germany and France.

Basically they are the country version of me trolling on ElReg.

[Yet Another Anonymous coward]

Re: More blowback from Trump's epic mishandling of foreign affairs

Ultimately, the population of Germany(1939) was only 65 million, they could take on Britain or France but not Britain and France

[Jellied Eel]

Re: More blowback from Trump's epic mishandling of foreign affairs

If Russia seriously thought it could hold Ukraine, it would have invaded long ago. As it stands, it's struggling to prop up Crimea and some of its own regions are getting restless because there is not enough money to go around.

Why would Russia want all of Ukraine? Crimea made sense for it's history and bases, rest of Ukraine, less so. It used to sell lots of agricultural products to Russia, now, it doesn't. And can't sell food to the EU because quotas. Russia invested in it's own agriculture and manufacturing, so doesn't need Ukrainian exports. But such are the joys of Empires. Post-USSR, Russia no longer needed to bankroll it's vassels, and that largely became the EU's cost.

[Anonymous Coward]

Re: More blowback from Trump's epic mishandling of foreign affairs

Russia is the master of bullshit, they've been trained to throw it around since they 1917. Being a continuous failure as a nation and a state doesn't deter them, instead they keep on throwing bullshit at themselves too, and thereby keep on being a failure.

[Doctor Syntax]

Re: More blowback from Trump's epic mishandling of foreign affairs

I'm not sure. They might be worrying on their own account at what Trump's been setting afoot in China.

[MJI]

Re: More blowback from Trump's epic mishandling of foreign affairs

I have always thought that if Putin was really friendly with Europe and US he would have a lot of friends.

I would love to visit (esp St. Petersburg).

Instead he wants to piss everyone else off.

[Anonymous Coward]

Re: More blowback from Trump's epic mishandling of foreign affairs

You're looking in the wrong direction.

This is China flexing their muscles rather than the US.

Taiwan residents have divided loyalties towards China - some see themselves as a Chinese province (the view encouraged by China) and others see themselves as an independent, modern country. I suspect this is the former group returning home.

[Anonymous Coward]

This is getting serious

If the Chinese successfully attract TSMC’s key staff, then the expertise will have moved from Taiwan to the mainland. What this will mean, in time, is that China will come to dominate the silicon process industry, and then we’ll all be beholden to China for the best CPUs. And China can then invade Taiwan.

The USA as a whole has really screwed this up; Intel for screwing around with their own talent retention strategy (“Fire them”), the US gov for not paying attention to what was going on in Intel and it’s failure to properly engage with Taiwan / TSMC diplomatically and commercially at the first hint that Intel had got into trouble. I’m not quite sure that this is what MAGA is supposed to be...

If you decide that a technology is of strategic importance, you can’t leave it up to the markets to provide that technology. As a government you have to play an active part in the maintenance of that technological edge.

[Anonymous Coward]

Re: This is getting serious

It's difficult to explain to the more intellectually challenged MAGA the difference between nice gooks (ROC) taking "Our Jobs" and bad gooks (PRC) taking "Our Jobs"

It's a bit like explaining to them that you are invading Iraq to defeat Saudi born 9/11 terrorists operating from Afghanistan

[Jellied Eel]

Re: This is getting serious

If the Chinese successfully attract TSMC’s key staff, then the expertise will have moved from Taiwan to the mainland. What this will mean, in time, is that China will come to dominate the silicon process industry, and then we’ll all be beholden to China for the best CPUs. And China can then invade Taiwan.

As China's expertise grows, it'll compete more agressively with Taiwan. Taiwan's economy will then contract and implode, and China won't need to invade, just invite them back into the family. That's already happening, ie Taiwan's economic growth increasing the cost of doing business there, so customers looking to do business elsewhere.

[Anonymous Coward]

The Chinese will ramp up these tactics just as the U$A ramps up it's debt.

[Jason Bloomberg]

MAGA

I imagine, if I were Chinese, I might be inclined to declare of Trump; Best. President. Ever.

Same too if I were any country dependent on American technology facing the economic terrorism daily emanating from the White House, threatening that I will be crushed out of existence unless I make myself subservient to US interests.

In seeking to ensure American Supremacism, Trump is pretty much destroying it.

As someone entirely happy with him doing that; Best. President. Ever.

[StrangerHereMyself]

Won't work

This won't help them if they can't get their hands on the high-tech wafer machines from ASML. They'll only be able to make outdated parts at best.

[Jon 37]

Re: Won't work

They'll make their own machines eventually.

Might take time, but China has been slowly bringing itself up the tech ladder from a supplier of crappy cheap plastic toys, to a major manufacturing country supplying everything from cheap plastic toys to high-tech mobile phones, PCs, and other gadgets.

This is important to them, so they'll get there. And they're fairly ruthless about things they consider strategically important, with a history of using spies or hacking to get what they want.

Ironically, preventing them from buying the machines they need just makes it more urgent for them to manufacture them domestically.

[Yet Another Anonymous coward]

Re: Won't work

The USA should send in secret crack squads of management consultants.

Then within a few years their most brilliant students will all be competing to get degrees in PPE, the companies will all be run by the idiot sons of the current bosses, leaving their scientists and engineers to be underpaid and ignored.

All we need is to teach them to play golf and we can totally destroy chinese industry.

[StrangerHereMyself]

Re: Won't work

Agreed, but without espionage they won't succeed.

The Western intelligence agencies are sure to keep an open eye for any spying activity at ASML. Everyone knows ASML is the KEY to putting down China's ambitions to become a world-player in high-tech.

[John Savard]

Puzzled

It's hard for me to understand why people would think that any amount of money, however large, is enough to make it worth moving to a country that isn't free.

[Anonymous Coward]

Re: Puzzled

But plenty have moved to Silicon Valley over the years ...

[CrackedNoggin]

Re: Puzzled

Personnel flow between Taiwan and China is already huge. Many if not most Taiwanese tech companies already have one foot in China. Business is business. Even when they don't like CCP. I'm trying to moralize here - just explain.

[Richard Boyce]

Experience

China has a huge population so no shortage of talent. What it lacks is perhaps experience and a training pipeline. China will want people who can build or enhance that pipeline. After that, the people being hired will be less valuable, especially as Taiwan may not be keen to employ them again. Maybe the deals will appeal to older people who are thinking about a comfortable retirement in a few years.

[Anonymous Coward]

...but no discussion of a somewhat bigger picture.....

Link: https://www.cnbc.com/2020/07/27/tsmc-shares-jump-as-intel-faces-next-generation-chip-delays.html

*

So....no mention that Intel has screwed up TWO generations of chip fabrication downsizing.

*

Or that Intel might be buying chips from TSMC in the very near future.

*

So it isn't only the Chinese who want to catch up with TSMC.....those American "world leading companies" also need to catch up.

*

How long before the west becomes COMPLETELY beholden to Chinese technology companies? The Huawei 5G shambles is just the start!

*

The reason: the western taste for "the cheapest supplier" has hollowed out western knowledge and western technology (poster child - Apple). And even now western universities are dependent on Chinese students. All this Chinese power is the direct fault of westren choices about "cost". Just wait -- "the lowest cost supplier" is getting set to raise prices substantially, and there's NOTHING anyone can do to stop it! Forty years of neglect of industrial policy coming home to roost!

[Anonymous Coward]

Re: ...but no discussion of a somewhat bigger picture.....

"So....no mention that Intel has screwed up TWO generations of chip fabrication downsizing."

Intel's only screwed up one generation - 10nm. 7nm isn't screwed up yet. Admittedly Intel has failed at 10nm when they used inferior equipment to TSMC and now the same or better equipment but that's been about an unwillingness to accept they have failed or tell the market that 10nm is unworkable as Intel knows what that means to their long term plans.

"Or that Intel might be buying chips from TSMC in the very near future."

Ignoring that Intel/Altera have been a large customer for TSMC for some time, the real story is that 10nm is dead and TSMC will be used to fill that void until Intel have in-house next-gen (n) and previous gen (n+1) processes. i.e. this isn't a short term deal that Intel walk away from in a year or two.

"How long before the west becomes COMPLETELY beholden to Chinese technology companies? The Huawei 5G shambles is just the start!"

This was always the real security issue with Huawei - whether the west would be left with an alternative.

[Anonymous Coward]

This year was absolutely the worst possible time to clash with China. Of course they were never going to take the trade threats lying down. Now while the West suffers a stagnating economy, COVID fallout and a breakdown of the democratic process thanks to rumours of Russian interference, China is kicking things up a notch during a time their vast capital will hurt us the most. Its almost like certain "leaders" never thought it through. Did their game plan actually involve any strategy or was their intention just to see the west burn?

[Anonymous Coward]

Definitely the latter.

[Snowy]

Just remember

From the chinese point of view TSMC is chinese company as the chinese consider taiwan to be part of china.

[A.P. Veening]

Re: Just remember

Taiwan considers itself to be part of China, with the legitimate government in Tai Peh and some communist insurgents in Bei Jing.

[Duncan Macdonald]

Re: Just remember

Given the trading relationships and the Taiwanese investments in China and the huge tourist travel between China and Taiwan, it would seem that Taiwan acts to a large extent as part of China (economically if not actually ruled by China).

[Proton_badger]

Interesting

It seems like SMIC is further than I thought. It may or may not be a great 14nm node but it has entered mass production and there are a lot of chips being made on these slightly older processes, fabs does not exist solely for cutting edge flagship smartphones. However the fact that China have a successful 14nm FinFET production is proof that they can make things happen and will continue to do so.

[vtcodger]

Re: Interesting

Hmmm. I'm sure that 90% or more of tech headlines are about cutting edge technology. But what percentage of actual semiconductor sales and profits go to products that are a generation or three behind the cutting edge? My suspicion is most. But this isn't my area of expertise.

I do happen to know that the US military, historically has somewhat favored older technologies in weapons systems that are actually going to be deployed. Why? Greater reliability. Or so I was told.

[Anonymous Coward]

Re: Interesting

By revenue, approximately 1/3 ($25bn) of the revenue is in leading edge processes, another 1/3 in the next two generations and the final third of revenue in everything else. Note that this is revenue per wafer rather than revenue per finished product.

By volume, thats likely to be 5% of total wafer area in leading edge, 35% in the middle and 60% in the rest. Educated guesses - I can't find anything that gives a more accurate breakdown.

If you can get new processes up early, you pay for your fabs, make large profits and squeeze your smaller competitors out of the mid-market. If you fail, you have very large investments with very little ROI.

And the military (US or otherwise) have favoured older process tech as it is more resistant to interference.

[CrackedNoggin]

The current US admins strategy is to hit everything with a hammer while not taking realistic long term steps to boost supply security in N.A. What the US should be doing is offering incentives to TMSC to build plants in Mexico or on the border. BTW 40 cents of every US dollar going to Mexico is then spent on US imports, compared to about for US dollars going to China.

The US status quo is so short-term focused on the consumer businesses (advertising and consumer sales) that US manf exports have little to no lobbying punch, and that's a vicious circle. To be fair, Trump just accelerated the trend bringing the endpoint closer by a decade or two.

[Anonymous Coward]

Hopefully all the noise about replacing Windows with Linux in government organisations will lead to something this time. Linux on Desktop is fine but needs a big investment in high-quality software and this is small change for the Chinese government.

[Anonymous Coward]

It's not going to happen tbh.