To think that other countries should also be able to make semi-conductors, not just Taiwan

[MargoLivebetter]

I know very little about technology manufacturing, but I have to wonder how we have got into a situation where Taiwan produces 90% of the world's semi-conductors? How has this happened? Why aren't other countries pulling their industrial and technological fingers out and making some of their own?

I am a bit of a tech dumbo, so please explain to me as you would to a primary school child.

is that true?

68% advanced chips and 44% of mature chips made in Taiwan ?

Why does China have such a hold on lithium ? Why do we allow it to happen ?

because it costs to invest and we don’t like that - we want money NOW not in 20 years time

Apparently, it is true @brownbootsandhats ! I agree that there is an investment cost involved, but isn't it better to invest now than be absolutely fucked when China decides it does want Taiwan afterall?

It is on the face of it surprising that this situation has been allowed to develop. The machines used to make the tiniest of them is actually Dutch (ASML) - it’s truly astonishing technology.
I suppose a lot of it comes down to money and who is willing and able to fund what.

It's a bit more nuanced than that. Taiwan produces the vast bulk of the more advanced processors. South Korea dominates the memory market. China's putting a lot of effort into building up its own manufacturing capabilities but isn't there yet for the more advanced stuff. The US, Europe, other countries in the far east do some.

Semiconductor manufacturing, particularly for the really advanced/high-density stuff, is a difficult industry. The start-up costs are staggering and it takes years to develop and fine-tune the production process and skilled operators to be able to reliably produce working chips. It also uses a lot of very dangerous chemicals which come out as hazardous waste as well as needing a lot of power and water.

That being said, advanced processor chip design is largely a US thing although there is a big UK influence with the ARM chips that are in all smartphones, newer Apple Macs, and pretty much all smart devices. China's trying to build up this capability but it can't yet compete with the best of the west. The design and manufacture of the machines that make the chips is dominated by Europe.

The level of sophistication in manufacturing semi conductors is incredible. Other countries can’t just set up factories and start churning them out. Autarky is impossible!

Sleepwalking into this. And climate change. And Putin. And young people utterly betrayed by capitalism. Etc etc.
In step the populists. So here we are: populists coming to power everywhere, protests everywhere, resources running out and guarded by those who have them and climate now biting hard.
Sleepwalking, fingers in ears, and politicians too scared to tell the truth.

We knew about climate change 100 years ago.
We ignored everything we knew about Putin.
And we ignored what we knew about China.
Etc.

Taiwan has the exsperience, knowledge and the skilled people to do it.

And the other barrier to entering this market is the cost. It's not like building a factory to make sandwiches. Building a plant to fabricate semi-conductors requires billions of dollars of investment.

From what I can tell so far, it is money, expertise, raw materials required. I do appreciate that this is not going to be quick, easy or cheap - but is it not essential?

I sort of feel that we need to be more self-sufficient and food and tech production should be fairly high priorities. 😬

@MargoLivebetter how much as a household would you be prepared to pay, say a year, to become self-sufficient in these things?

the government invests millions in semiconductor R&D. You just didn’t know

here’s just one example https://www.ukri.org/news/11-5m-to-improve-semiconductor-manufacturing-and-supply-chains/

heres another £897m https://www.ukri.org/opportunity/semiconductor-technology-for-ict-innovation-and-knowledge-centre/

OK, let's say someone waves a magic wand and tomorrow we've got a major chip foundry up and running just outside Birmingham. We are now self-sufficient in chip manufacturing. Except that foundry would also need:

Very high quality silicon
A vast range of toxic and non-toxic chemicals
Large quantities of ultra-pure water
Gold
Aluminium
Copper
Plastics
etc

If we're not self-sufficient in all those then just having the chip foundry isn't enough. We'd still be dependent on a global supply chain.

https://www.gov.uk/government/publications/semiconductor-sector-study/semiconductor-sector-study

we literally have a national semiconductor strategy

https://www.gov.uk/government/publications/national-semiconductor-strategy

@frozendaisy I honestly don't know. I expect I would have different priorities to other people. I can't really answer that question, because it would depend on what else we were spending money on. What do you think each household would need to spend to get investment in food and tech self-sufficiency?

@DeathBanana I'm sure we do, but we still don't manufacture them and if Taiwan went down in some way, we'd be in all sorts of trouble, along with most other countries.

@JeffLebowski yes, agree there are definitely global supply chain implications. I guess that is why cutting ourselves off from our European supply chain neighbours made no sense to me!

they even thought about rare earth elements

https://www.gov.uk/government/collections/funding-for-uk-critical-minerals-projects

https://iuk-business-connect.org.uk/wp-content/uploads/2025/07/IUK-Climate-Circular-Economy-Report-TW-D4-compressed.pdf

Who is implementing the policy recommendations, given that Labour came into power after this report was published?

It’s not a policy. The government (whichever, it doesn’t matter) has always and will always designate a percentage of GDP to research and development. Fortunately the organisation responsible for managing the bulk of those funds is established under the

Ed Conway on Sky is good for this stuff. I think one of his books, material world or trade world explains it. I love supply chain geekery.

@DeathBanana I do not doubt that Government's commit to R&D spending. However, do we know what percentage of the current R&D spending is going towards the manufacture of semi-conductors?

The 2023 Semi-conductor paper you pointed me to, gives a very broad policy recommendation as a conclusion:

"The view from the UK stakeholders consulted is that the UK should continue to build strategic international relationships that can help further lever UK strengths in R&D, Design and IP. This will require continued and globally commensurate investment in leading-edge technology and talent.
There is broad consensus among strategic stakeholders that the UK should focus on leveraging its strengths in R&D, Design and IP, and that the UK’s manufacturing efforts should be directed towards establishing and scaling earlier stage emerging technologies and materials development.
Medium-sized semiconductor companies are a significant segment of the UK sector. Supporting these companies to scale will help to mitigate market concentration risks and address a perceived gap in scale up support."

That all sounds great, but what are the mechanisms for delivery?

Thank you @Theworldismybuffet . I shall go and listen to Ed Conway.

For my supply chain sister https://iuk-business-connect.org.uk/programme/circular-critical-materials-supply-chains/

I’m genuinely thrilled that people are interested in this stuff but before leaping to “why is no one doing anything” lots of people are.

That information is all out there for you to read. It’s all accessible. Have a google. Innovate UK, UKRI, DBIST. You might come away feeling a bit better about the world.

@MargoLivebetter well we could all just pay per household so say what 25 million houses (easy numbers) £1000 a year to get started for food and tech

Would you pay that?

More if you wanted things grown in hotter climates like tea & coffee. Bananas, oranges, salad in winter

Then we would need to cover a large area with temperature controlled greenhouses, which would need to be vertical for yields, so you happy to have them close to where you live? Cut off a lot of rolling hills views? There would be cries of “destroying heritage” blah blah

I agree we should invest in food security and that food should be more expensive to give farmers the income to invest but many think food is expensive now, so what to do? No one wants to pay for anything that initially will see negative returns. Even if it does mean a longer term plan. But would you be happy handing over £1000 a year for a decade say to build and run the infrastructure required? Or is it that people want solutions which are cheaper now (because those solutions don’t exist)

I think one of the difficult for things for populists is that they don’t want to look into all the big, carefully researched live policies, or find out which gov depts are implementing them, or ask their MPs to support them and keep them high priority because they value what they’re trying to achieve.

They just want very much to believe that no-one has ever noticed this issue, and it would be easy-peasy to sort out if we just changed governments yet again and fired the entire civil service (who have researched and written the policies they say they want, and have been tasked with implanting them even during gov changes unless a government changes or deprioritises them…)

@frozendaisy I have no romantic attachment to rolling fields! I grew up on a small farm, so am not blind to the gritty realities of actually making things happen as opposed to bucolic scenery! I would very happily hand over £1k per year to spend on making the country more food self-sufficient but that is easy for me to say, because I could afford to do that.

Hallelujah. Well said.

I'm really happy to dig and delve. Sometimes it is hard to know where to start.

However, I also know that there is a big difference between a policy and delivery. I'm sure I could find 100 policies really easily. I've already had a gander at the Semi-conductor report and also the Semi-conductor strategy referenced that @DeathBanana pointed me too.

I can see that the last Government said that they were "committing up to £200 million over the years 2023-25, and up to £1 billion in the next decade." Has the current Government also committed to this?