The USA is becoming more isolationist - it is nearly oil-independent, so it's signalling pulling out of the middle east (deals with Iran etc).
But it is not silicon-independent.
So S Korea and Taiwan are totally dependent on massive US troop deployments (25,000 !! US troops by the DMZ, a whole fleet patrolling the straits by Taiwan).
Ensuring chips flow in their country is a matter of national security - so the price is probably low.
This has never been how it works.
Oil is a global commodity. Even if the US produced as much as it consumes, if something happened in the middle east, the global price would go up. Because when the price went up in Europe or Asia, American oil producers would sell to the highest bidder, which would force American consumers to bid higher.
The real path to "independence" is to stop consuming oil, i.e. the electrification of transportation and heating. Which is starting but nowhere near finished.
Because electricity generated from solar/wind/nuclear/hydro is not a global commodity. Nothing that happens in Iran is going to change the cost of power generated at Hoover Dam.
https://www.investopedia.com/terms/l/law-one-price.asp https://en.wikipedia.org/wiki/Law_of_one_price https://corporatefinanceinstitute.com/resources/knowledge/ec...
This has been well established in mainstream energy economics for ~50 years. Other disciplines seem to have trouble grokking the arguments. But ask any professional trader and they'll go with the economists on this one.
It wasn't even legal to export oil until 2015! https://www.gao.gov/products/gao-21-118#:~:text=With%20U.S.%....
But if WW III starts with say China taking Taiwan and getting into stuff in the pacific, and Russia invading easter european countries, and maybe some other stuff... If the US were to fully engage in some kind of global conflict, they could ban oil exports and not have a supply problem.
This is the kind of thinking the military engages in to ensure their own supply chains won't be distrupted in a war. The ability to operate independently is important even if it's never used.
https://www.pillsburylaw.com/en/news-and-insights/us-repeals...
Also, several oil-producing nations have off-market domestic pricing for refined petroleum that is favorable versus the international spot price. Such prices won't naturally change when, say, the Strait of Hormuz closes. The IMF has been trying to force free-market pricing, as was the cause of the Ecuador protests in 2019.
So it translates into a strategic issue, and, there will be direct involvement by the US if things get bad.
The US I think will stay in S. Korea until the situation changes, it's better to have chips, but that's not necessary.
Yes, I believe those countries would prefer if we stayed. Japan and S. Korea are particularly close to China and prefer we’re around to tamp down Chinese aggression. Germany is hoping we don’t withdraw our troops: https://m.dw.com/en/germany-welcomes-bid-to-halt-us-troop-wi...
Edit: This may offend some Europeans, but I think the world is better off with the US having bases in Europe and as a NATO member. Internecine squabbles in Europe don’t have a good track record over the past 100 or so years. One might even say the bases should be located where the trouble seems to start.
> German Chancellor opposes US troop withdrawal plan
https://www.aa.com.tr/en/europe/german-chancellor-opposes-us...
Without having a powerful army, Europe is just an order from being invaded by Russia.
I wouldn't want to bet my freedom on that.
You are probably not in the majority there.
Do you want the Russians grabbing larger of E. Europe and seeing how far they can go with it?
At the end of the cold war it seemed as though maybe NATO might be past it's usefulness, but after a resurgent Russia, it seems more like it's going to take another 70-100 years probably.
Also, the 'rest of the world' is a more chaotic place, and it bodes well for Europeans to be playing well with American forces.
North Africa is a hot-spot and Europe (except UK/France in very limited form) doesn't have the ability to project power, even in the Libya intervention, it was backed by US AWACS, drones, and organization. It was kind of a folly, but there's no doubt that those interventions could be much more necessary in the future.
Politicians know this and there's no real popular urgency for the Americans to leave.
Both Norway and Sweden, the later a non-NATO country, are going more coordination with the Americans, not less.
Such will be the situation for a few decades.
If Germany ordered US troops out, they would leave. Even Iraq, barely a functioning country, did this, and the US left. But Germany, Japan and South Korea have not asked.
And you might say, "well, the US is functionally bribing them with the economic boost of stationing troops there". And... OK? That's the tradeoff. Germany is a wealthy country, and the populace can vote and make choices themselves.
Like as if it wasn't for the entire century. USA has ennormous, and largely unexplored oil reserves.
Additionally, the US won't ever need to touch these again if it manages to reduce its reliance on fossil fuels.
If chip production was just a matter of money, both China and the U.S. would rule the roost. The real bottleneck is talented and loyal engineers.
- How much military spending is really what other Western countries would call welfare - not only do you pay the US recruits, they get pensions, they and their families get healthcare etc etc.
- The payback of being the worlds only superpower has been enormous anyway. This is probably a marginal cost.
- It's not entirely clear that building a fab is like dropping a supermarket into place. Whilst in operation they are lights out I sincerely doubt they can be easily replicated - at the very least you will need to just kidnap the whole middle management layer of TSMC and move them to Texas. Which is more or less the current negotiations:-)
In short, yeah the US (and EU) should spend a fortune to build out their own internal chip capacity. Just as we should have done it for oil or electric batteries or ... but we just don't. China however has. Something democracy is good at. Somethings it ain't.
We should fix that :-)
There are more people sitting in offices there than on the floor.
I fact there is a huge oversupply of semiconductor engineers globally because of fabs becoming less, and less labour intensive.
Companies take a big effort to reduce the number of people on the floor futher, but now not so much for labour cost readon, but security. The chance of somebody who shouldn't really be on the floor acidentally pressing the wrong button, and sending $10M worth of wafers down the drain is the risk they don't want to take.
Very large parts of it is protecting democracy. Whether you believe that's worth protecting is a different question, but it's left over from cold war & proxy wars against Russia in both Vietnam and Korea.
This is still once way the US exerts its presence against China. Maybe futile, but it is more than just "cheap labor".
Culturally their are similar, speak the same language. Mainland is Taiwan's biggest trading partner. & before the Japs was Chinese territory. and China has an iron will to bring Taiwan into the fold. What would the US gain again from making Taiwan it's territory - war and more debt.
Chip fabs can easily be built in the US on a 3 year timeline. Whereas that same 3 year timeline, maybe the PRC would've taken Taiwan.
The way we work and learn has changed, and it doesn't look like a reversion to pre-telework habits will ever fully occur. Several companies (including Salesforce, Twitter, Square, and Spotify) have said that telework will be a significant part of their post-pandemic reality.
Meanwhile, electric vehicles are slowly but surely taking market share from internal combustion engines that use less than a third as much silicon.
It feels like demand creation to me, and that means we ought to treat the prior capex roadmap for the industry as insufficient.
Even in the absence of demand creation, fab concentration in Taiwan is increasingly a liability in a world where Chinese economic hegemony is growing. One way to mitigate future perturbations that may result from military conflict, natural disasters, or other interruptions in Taiwan's fabs would be to build greater capacity outside of Taiwan.
there will be lasting change to to our lives and lives of people in our oribt. I don't think we appreciate that vast majority of the workforce (in transport, hospitality, retail, manufacturing) is not changing at all.
And the continued move within the enterprise towards using cloud computing and SaaS products.
No matter which way you look there is an increasing demand for silicon.
For the supply-demand feedback loop to work smoothly, you want the supply to be incremental and quick-to-respond to demand changes. The semiconductor fab is anything but. There are many other reasons for this https://www.forbes.com/sites/jimhandy/2014/05/28/the-3-reaso... but I think the critical reason is that when there's a supply shortage, there's naturally a race among suppliers to build more capacity as soon as they can, so that they can sell more, but the inherent time delay (measured in years) in building up the extra supply combined with the fact that a single new fab gets bigger and more expensive lead to inevitable oversupply, which causes the price drop, which reduces the amount of money to invest for the next cycle, which leads to undersupply a few years later, and rinse/repeat.
The pandemic created one of the biggest demand spikes for semiconductor ever, and combined with the nationalistic stance on building own supply in each country, I suspect this spike will have a ripple effect for the next few years.
Huawei doesn't have much of a future outside of China and the increasing distrust towards CPP doesn't look like changing this anytime soon.
So why would you want to help them out instead of trying to win business from US/EU companies who are desperately looking to diversify.
Furthermore, Huawei isn't the only Chinese party that needs advanced chips. Other Chinese phone makers such as Oppo and Xiaomi aren't banned. But they have become wary of US dependence and are seeking to decouple their semiconductor supply chain from the US. To them, while Korean suppliers are more risky than Chinese suppliers (which still need time to catch up), it's still less risky than TSMC.
Tell it to every US ally trying its hardeest to play the situation
[1] https://www.anandtech.com/show/15061/samsung-to-cease-custom...
Samsung still makes CPUs, they just use licensed ARM cores.
