If China does take over Taiwan, it would be a disaster for all; hopefully Chinese President Xi Jinping (習近平) realizes that.
Taiwan’s semiconductor industry is focusing on microchip wafer fabs, starting from buying raw wafers to diffusion, photolithography, implantation, etching, and physical and chemical vapor deposition, before reaching the finished wafers — the front end of the process.
Taiwan also excels in packaging and testing, commonly known as the process’ back end. The whole process takes one-and-a-half to five months, commonly known as cycle time.
Although Taiwan ranks first in process integration in the world, the equipment used comes almost entirely from foreign companies: Applied Materials, Lam Research and KLA in the US; Hitachi, Toshiba, SECO, Sumitomo and Advantest in Japan; and ASML in the Netherlands — not to mention software from the US, such as programs from Synopsis and Cadence.
The most recent success in China by reverse engineering was only achieved with equipment from Applied Materials. As long as equipment imports are blocked, the Chinese semiconductor industry would be guaranteed to lag behind, because just reverse engineering will not do.
Some experts in the field have pinpointed this as the most critical and an almost insurmountable challenge for the Chinese semiconductor industry.
If its chip industry were to take over Taiwan’s facilities without equipment imports from the US, Japan and the Netherlands, Taiwan’s industry would shut down. Ironically, a shutdown of Taiwan’s chip industry would cause worldwide panic.
To avoid a chip shortage caused by a crisis in the Taiwan Strait, paired with the uncertain situation in North and South Korea, customers would inevitably force Taiwan Semiconductor Manufacturing Co (TSMC) to move abroad.
It takes billions of New Taiwan dollars to build and start operating a semiconductor fab. The US has the ability to create new technologies and design software, but has lost the ability to manufacture them.
TSMC was not built in a day. The US has many geniuses, but not enough engineers. Most US students do not like science, mathematics or engineering.
Even in my doctoral program in political science, most of the students and even professors did not have the mathematical skills to compete against my old classmates in a Taiwanese law school. Deplorable and sad.
TSMC has complained that the US does not have enough engineers with the necessary skills and experience. Nearly 80 percent of TSMC employees’ compensation comes from year-end bonuses based on the company’s profit. Can a US company allow that? Because of this, no matter how many employees China recruits from TSMC, it seldom fully utilizes them.
You might ask why the Chinese government has not subsidized the industry? It did, but if the compensation, no matter how high, is not aligned with the company’s and each employee’s performance, it would never be motivating enough for high-tech people. Throwing money on it would not help.
China will not invade Taiwan this year or next. Nor in 2023 or 2024, for that matter. A better strategy for Beijing is to ratchet up its rhetoric, and try to intimidate or pressure Taiwan in other ways.
Ironically, and from the perspective of realism in international relations, what if the US becomes self-sufficient in chips so that it and South Korea might want Taiwan to be taken over? It would cut down on the competition.
This is a complicated world, indeed.
Simon Tang is an adjunct professor of political science at California State University, Fullerton.
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