Thread by @gpenacosta

Taiwan, Semiconductors and the Geopolitical Tech War

The market value of the global semiconductor industry has recently overcome the global energy sector. The market is telling us that chips are more important than oil.

Chips are the commodity of the future.

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At the end of 2019, the market value of Taiwan's TSMC was $200b, while Intel was $350 billion. Today, TSMC is at $570 billion, while Intel has dropped to $260 billion.

Why?

Last summer, TSMC came out and said they can now make 7nm chips and will make 3nm chips in 2023.

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Whereas Intel said they won’t be able to make 7nm chips until 2021. So in 2020, we witnessed the passing of the technological baton from Intel to TSMC. The leadership in the semiconductor industry now belongs to Taiwan.

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#Taiwan #semiconductor #intel #TSMC $INTC $TSM

Why does it matter?

It matters because we should think of Taiwan the way we used to think of Saudi Arabia. But now this is a territory claimed by China. TSMC makes half of the world's chips. Semiconductors have become a geopolitical weapon in the US-China tech battleground.

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This tech-geopolitical tension brought, for instance, the US restriction that pushed TSMC to cut ties with their 2nd largest customer, Huawei. For a similar reason, Apple could further move its manufacturing out of China.

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China is ramping up its chips foundry with SMIC and TSMC will build a fab in Arizona, but both countries strongly depend on Taiwan's supply chain. All this could amplify China's political claims over Taiwan and escalate the tech weaponization. Interesting to see how it'll unfold.