China is SCARED of TAIWAN | Abhi and Niyu

In today's world, the tiny semiconductor chips powering our phones, cars, and even fighter jets are more important than oil was in the last century. Taiwan Semiconductor Manufacturing Company, or TSMC, holds a near-monopoly on producing the most advanced chips, making it a linchpin in global geopolitics and a key factor in potential conflicts.

The Power of the Chip

Think about it: almost every electronic device you use relies on these minuscule components. From your smartphone to advanced military equipment like F-35 fighter jets, these chips are the brains. TSMC's dominance is staggering; they produce about 60% of the world's semiconductors and a massive 90% of the cutting-edge, advanced chips. This level of control means TSMC is not just a company; it's a strategic asset that influences global power dynamics.

Key Takeaways

• TSMC produces 60% of the world's semiconductors and 90% of advanced chips.
• These chips are vital for everything from consumer electronics to military hardware.
• China's inability to produce advanced chips is a significant geopolitical weakness.
• The US is investing heavily to boost domestic chip manufacturing.
• Taiwan's strategic importance is tied directly to TSMC's capabilities.

How Chips Are Made: A Delicate Process

Creating these advanced chips is an incredibly complex and precise undertaking. It all starts with a silicon wafer, a thin sheet of pure silicon. This wafer is so delicate and must be kept so clean that even a speck of dust or a single hair can ruin an entire batch, costing millions of dollars. Engineers use a process called photolithography, employing special light and chemicals to etch intricate circuit patterns onto the wafer. This process is repeated for multiple layers, much like building a cake, with each layer adding complexity. Finally, metallization connects all the tiny transistors. The entire process can take several months to complete.

China's Chip War Struggles

Despite being known as the "world's factory," China faces significant hurdles in the semiconductor race. While they have companies like SMIC, they lag behind TSMC. SMIC can produce 7-nanometer chips, whereas TSMC is already working on 3-nanometer chips. This difference translates to a 15-20% speed advantage for the more advanced chips, which is critical in areas like drone technology and military applications.

America has actively worked to keep China from accessing advanced chip-making technology. A key piece of this strategy involves the Dutch company ASML, which holds a monopoly on the essential EUV lithography machines needed for advanced chip production. In 2020, the US reportedly pressured ASML not to sell these multi-billion dollar machines to China, effectively blocking their ability to produce the most sophisticated chips.

The Vision Behind TSMC

The story of TSMC's rise is fascinating and rooted in the vision of its founder, Morris Chang. Born in China and educated at top US universities like Harvard and MIT, Chang worked at Texas Instruments. He noticed that while chip design was complex, manufacturing was even more so. He proposed outsourcing chip manufacturing to specialized companies, a concept that wasn't widely accepted by US tech firms at the time.

In the 1980s, Chang moved to Taiwan, where the government offered him significant support to build a semiconductor industry. Taiwan's strategy wasn't just about innovation; it was about creating the world's best chip manufacturing facility. This focus on process perfection and creating an ultra-clean environment, akin to military discipline for its engineers, allowed TSMC to achieve its dominant position. Even the potential for earthquakes in Taiwan is managed with extreme preparedness, with engineers ready to return to work almost immediately.

TSMC: A Deterrent and a Risk

TSMC's critical role in the global supply chain makes Taiwan a strategic linchpin. The company is so important that it's often referred to as Taiwan's "sacred mountain." Its chips are vital for American military technology, and the US is keen to ensure a stable supply. This is why the US is investing billions in bringing chip manufacturing back to American soil, with TSMC itself investing in facilities in Arizona.

The fear for the US is what happens if China were to take control of Taiwan. In such a scenario, the US might even consider destroying TSMC's facilities to prevent the advanced technology from falling into Chinese hands. This highlights the precarious balance of power and the immense strategic value of TSMC. The company is a hen laying golden eggs, capable of both preventing and potentially triggering conflict.