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.

This country very quickly realised that just digging up shit isn't where the money is. Even manufacturing stuff from other peoples dug up shit isn't that great.

Now moving that shit around the globe, and working out where it's needed, and who wants it and how they can best pay for it ....

well that is Britains legacy to the world. As David Cameron repeatedly said when he hammered one fist into his palm. We are a trading nation.

@SerendipityJane ,

I thought it was 2.7K in space, so surely cooling wouldn’t be a problem?!

But, realistically, I suspect the actual limitations are more human skills than money. I think most of the people who can do this are in Asia. Obviously anyone can be head hunted, but it is another significant barrier to entry.

Vaguely related to the thread

https://www.theregister.com/public-sector/2026/10/21/mps-urge-uk-government-to-play-venture-capitalist-with-taxpayer-funded-tech/5304212

I thought it was 2.7K in space, so surely cooling wouldn’t be a problem?!

If only it were that easy .... remember there is nothing in space to conduct heat away from a body. And radiating heat is pretty inefficient.

The US is reshoring chip production.

See Bidens CHIPS and Science Act.

Oh no. Trump wants reshoring so it must be bad. But Biden started it so it must be good. My head is hurting. Which flag should I wave.

Anyway. Chip fabs are very expensive and take a long time to build, but the US is getting there on the reshoring front.

For the UK it is a lot more difficult because it is expensive relative to our government budgets and no one wants to pay for it.

The other thing with something like chip production is that it is like oil production. It takes a long time for it to come on stream. And during that time world events can change the landscape completely.

You can see/plan for some events in the world long term. Stress in China-Taiwan relations might be one of them. But others such as the rapid development of AI soaking up chip production are harder to predict.

For example if the UK had invested £billion in high end chip production back in the early 2020s and say AI hadn't happened, extra UK capacity could simply add to a glut in the marketplace meaning the UK would make a massive loss on the investment (at least in the short term).

This is the difference between short term western capitalist thinking and Chinese thinking. Most governments in the West can't plan for longer than the next election (hence the issues we have with planning things like nuclear plants). If something can't deliver within 4-5 years it doesn't really benefit the government in power. The Chinese can take on producing that £billion fab knowing it might be at a loss in the short term, but might be profitable in the long term and allow them to dominate an industry.

Ultimately western governments/capitalism are loathe to plan for long term contingency because it is expensive and doesn't benefit them. Will this be their undoing ? Who knows ?

With the current direction this seems to be a huge error on the part of Taiwan. Trump will wave China on to invade as soon as they are up and running, in exchange for anything he needs from them at the time and eliminate Taiwan as competition. Trump won't consider any consequences, as we have seen repeatedly.

Yes, but it’s one that we all have

I apologise if I’m not understanding what you’re getting at here. Could we have done the same as Taiwan? I don’t know -geographically I don’t think we’re close enough to the raw materials.

But we didn’t, and we are here now. So the US is doing what it can. And I think within Europe, Germany is pretty much out bidding everyone for development of this.

so we play quite a small role, don’t we do the blueprints or something? And then if there was a war, everything would become useless anyway.

basically, all countries are screwed at the moment if there’s a war in the region tomorrow.

i’m interpreting your post as if you think we all should have stayed level with Taiwan, but it would’ve been a waste of resources to a large extent? And that’s why no other country has done it. Hindsight is a wonderful thing.

I blame politicians for a lot of things, but this isn’t one of them. Maybe I don’t know enough about it, but I am not aware that this is an industry we could have developed more without investing money that we may not have had?

@GasPanic isn't Taiwan a constitutional democracy?

Trump has only got 2 years left in office.

Even if the republicans get re-elected, I think the next president will be a lot different in their outlook compared to Trump.

I thought the semiconductor work was to take >5 years and started a few years ago? Trump will do whatever he can to screw the rest of the world before he goes, in the name of nationalism.

@EmeraldRoulette I suppose I am coming from a place of limited understanding. So, I had no clue what was involved in making semi-conductor chips or whether or not it was something we had already started, were looking at doing or should be doing. I was aware that Taiwan basically has a global monopoly and given their somewhat parlous situation, I wondered what contingency might be in place to mitigate against a hostile takeover of Taiwan. Although to be honest, I'm not sure who is hostile these days!

Anyhow, I am starting to get a clearer picture now of what is involved, the sums of money required etc.

Yes. But the chip production there evolved commercially and over many years. I don't think it was planned. In fact quite the opposite. And it wasn't developed against a backdrop of other countries trying to monopolise the industry in order to secure their strategic interests.

It's been going on for years since Biden. I doubt whether it will all be ready and up to scale before he leaves.

"Screwing the world in the name of nationalism" or "taking reasonable precautions to secure your own vital strategic interests".

Take your pick.

I do find it funny how Trump re-frames things when he likes; supporting Russia the terrorist state by buying oil, hating terrorist states in other parts of the world and bombing accordingly with far fewer restrictions than he puts on Ukraine, as an example.

I very much doubt he thinks through the myriad consequences. Maybe because he won't be in office in 2 years.

Is it possible that the monopoly is not as extensive as you think it is?

So for example, are you aware that the chips manufactured in Taiwan can’t function without stuff from the Netherlands I think it’s a software input.

I’m just asking because if China invade Taiwan and commandeer the physical stuff, I think the Netherlands effectively have a kill Switch.

we write a lot of of the blueprints here in the UK… I think that’s for specialist medical equipment mostly.

Is it possible that it’s less of a monopoly than you are imagining?

This has been a really interesting discussion btw, it has distracted me too much though.

@EmeraldRoulette it definitely cheers me to think that there is such great global interconnectedness that should Taiwan be subject to hostile action that the global supply of semi-conductors would not simply collapse.

I'm enjoying finding out more about it too. I haven't followed the technology sector nearly enough. And I know from my own knowledge of some other sectors that often when you know you know and you can't understand how others don't, so I'm really grateful to you and others for taking the time to engage and explain.

All politicians do that though.

I think the moves towards US protectionism really started in Trumps first term. It was seen as a vote winner by both sides after Trumps victory, although I think maybe Trumps ideas on it were pretty rudimentary.

Biden carried through protectionist policies during his term, and after that Trump pushed them further and expanded them through tariffs in his second.

I don't currently think that if the Democrats regain the presidency at the next election there will be a massive about face on these policies.

Sure there might be a few headline grabbers and changes to policy to keep the flag wavers happy and to at least fool the guillible into believing something new has happened, but the general direction of policy on this is clear (at least to me).

I agree to a point, but it will be interesting to see if they react at all when China starts to take over Asia and Russia advances into EU. I doubt many countries have much faith in them being helpful long term after Trump's time in office. It only really helps weaken any nation standing alone. The recent Starlink escapade shows why every other country would be a fool to invest in US tech, for example.

The protectionist position seems inconsistent in criticism. Especially when it’s against China. Depending on who is doing it - EU or US

Just generally that is, not your posts.

@MargoLivebetter “it definitely cheers me to think that there is such great global interconnectedness that should Taiwan be subject to hostile action that the global supply of semi-conductors would not simply collapse.”

hang on, I’m not saying that it won’t collapse in fact, I think it would, sorry!

But the thing is, China doesn’t just get to invade and take hold of all this stuff. Other nations have access to mechanisms that would make it useless. And that would then have a massive impact on China.

But all of this should be a disincentive for China to invade.

@EmeraldRoulette I think I was attempting to agree with your last sentence and expressed it poorly.

https://thecritic.co.uk/why-the-state-cant-innovate/

Also (same author) a 12 year old article (I agreed with it the) about how monopolies can drive innovation

https://www.theregister.com/on-prem/2014/10/15/theoretical-nobel-economics-explain-why-the-tech-industrys-such-a-damned-mess/1042997

It's an interesting statement.

It's hard for me to reconcile the views and often I think it is because a lot of it is politics for the sake of politics, but not actually trying to do anything different, if that makes any sense.

Brexit for me is an interesting example when viewed with respect to globalism.

For example, ultimately the EU is a protectionist organisation. All trade areas are. Some people claim Britain is being "less global and more protectionist" by leaving the EU. Yet I think it can also be claimed that Britain is actually being more global. We left a protectionist area and now trade with each country on their merits (including the EU) and not implement protectionist policies against the world outside of the EU.

There is maybe a big difference in the way protectionism is presented. In the US for example Trump uses it as a method to gain popularity and shore up the voter base. The protectionism he implements is very public, in your face and aggressive. It has to be that to get the voters on side, to make them believe he is doing things for their interests. He also has a very short timescale to make his efforts known.

Then you have say the EU who some might claim (cough) are less directly accountable to a voter base in the way they implement their particular brand of protectionism. Whether they actually have protectionist policies that are "worse" or "better" (maybe more effectual is a better description) than the US I don't know. They also have the advantage of taking things slower as they are not subject to the same electoral pressures. Maybe if the EU president was actually voted in by the public things might be different (of course the presidency would have to take on a different role then in terms of structure).

But to me they are both doing the same things, just presented in different ways through the fog of politics and with different driving pressures.

The main problem is that Taiwan already exists, and is very good at making semi-conductors.

I know nothing about semiconductor manufacturing so lets say I make widgets. I'm very good at making widgets, been doing it decades, and now have factories full of people making widgets. I've basically got a local monopoly on it.

My next door neighbour Steve thinks he'd quite like to make widgets too, as I'm doing quite well at it.

OK, his first problem is raw materials. I make my widgets from thingies and hoojimawhatsits, and I'm basically buying up all the thingies and hoojimawhatsits locally. Steve tries to horn in on my suppliers, but they're already selling pretty much everything to me, and I'm a safe bet. We've got a longstanding relationship, and they know I'm going to pay them. They'll happily sell whatever excess they have to Steve, but it's not a lot, and they'll likely charge him more for them.

Now we're on expertise. I have all the widget makers on my books. Steve has a rough idea of how to make them, but I've got all the infrastructure and skilled workers already. Steve could maybe tempt some of those workers away, but he'll have to pay them a hefty pay jump to relocate, and they're still going to be wary of it. What if Steve goes bust and they've burned their bridges with me.

So Steves got higher costs for raw materials and expertise, and he's still making lower quality widgets that me. So his next problem is buyers. Again, I've already got all of them. He can try poaching some of my customers, but whose going to switch to an untested company who sell worse quality widgets at a higher price?

None of those problems are insurmountable, but they take decades to sort out, starting small and improving, and you've got to keep your semi conductor industry afloat through all that time, with Taiwan offering a better, cheaper product.

The only way for a government to ensure that is to either subsidise the industry, or make British companies buy British semi-conductors. Yes, in the long term its better for the security of the UK, but in the short term, you're forcing companies to use and in turn make inferior products for a higher cost. And thats a hard sell in terms of votes.