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.

Sadly, @GasPanic I don't think the logic you have just applied to Brexit was ever applied when most people voted for or against it!

@VimesandhisCardboardBoots thank you, well explained and fits with what WizdomE said from their experience of getting this started in the US.

"Going it alone" is trivial when you have a navy that is twice the size of the next two combined, and the ability to project force anywhere (and I mean anywhere) in the globe.

Britain didn't create it's empire based on the coal and iron it dug up from Yorkshire and Wales. It created it's empire on a big fuck off navy that controlled every trade route other countries needed to progress. And that was the result of various strategic decisions taken somewhere around the late 1600s that (as with most things) weren't that joined up at the time.

Britain is a trading nation.

Aren't all nations trading nations?

My UK regional area has a thriving semiconductor industry with a largest UK semiconductor fabrication plant within it.

I only know as DS doing a degree roughly in this area and it's a possible area of employment if he ends up back here after it.

It's not really heard much about even locally but its quite a large hub linking local research, design, and volume manufacturing.

I know China also rapidly building up it's chip and semi semiconductor capabilities - poltcial conmetatory think they won't attempt getting Taiwan till that's in place - as wars tend to dmanage manufactoring ablities.

That's really good to hear @JuliaAgrippina

These days, yes.

Historically, not so much. A lot of countries used to be quite self sufficient. They grew their own food, made their own stuff, and just got on with it, right up until the late 1800s / early 1900s.

The UK was never really like that. As a previous poster said, we were powerful because we traded, and because we controlled other peoples trade, right back to the 1500s (and probably before, but my history knowledge gets a bit flakey back then)

They have the material and cheap labour, no one can compete on price. Would you pay much more for home produced technology?

@VimesandhisCardboardBoots yes, I did mean nowadays. Afterall, it is not like we can coerce countries anymore like we used to with gun boats! So, if we are a trading nation, we need other nations to willingly trade with us. It isn't really a solo activity.

I think I'd be happy to see some Government subsidies going to the kind of company that JuliaA mentioned. I did a bit of googling and have found a big US owned semi-conductor manufacturing company in Wales that both the English and Welsh Governments are subsidising. I'm happy with that.

Trump is looking for a third term, if not I think he will put one of the Trump juniors up as a puppet.

It was absolutely planned, and by the authoritarian government of Taiwan in the early 1970s.

In the mid-1980s, the Taiwanese government invited Morris Chang to return from the US and found TSMC, which he did with a fair bit of help from Philips of the Netherlands. If only Philips had made a similar effort in the Netherlands!

taiwaninsight.org/2024/05/10/a-short-history-of-semiconductor-technology-in-taiwan-during-the-1970s-and-the-1980s/

In a sense, yes.

Britain perfected the art of value added middleperson.

China is the major source of processed materials for chip production, the US also has resources. Most other countries have to import mainly from China to manufacture, if China is willing to sell.

Having a DH working in this sort of area and I did to originally. What tends to happen is the technological advances come out of the UK and western countries, we have some small specialist produces for some of the technology. But most mass production is done in the Asia for the simple reason that wages and production costs are a lot cheaper.

Even DH's company who until recently produced there products completely in the UK, has now build a small plant out in China to build part of the product then ship it to the UK to finish production. Oddly enough this works out cheaper and increase there profits rather then carry on making the whole thing in the UK. Even including the huge cost of setting up such a facility in China.

We are great at innovation but aren't competitive enough for most manufacturing. It's a case of global economics really.

It’s like saying why do Apple and Samsung get to make half the phones in the world??? Why can the UK make all the phones…

Yes, that's exactly what I am asking 😀

Even DH's company who until recently produced there products completely in the UK, has now build a small plant out in China to build part of the product then ship it to the UK to finish production. Oddly enough this works out cheaper and increase there profits rather then carry on making the whole thing in the UK.

Shipping costs - even now - are insanely cheap. But going back to the 1980s, it was cheaper to built an engine in Japan, and freight it to the UK than it was to build it in the factory making the car it went into. I have a memory it was $10 an engine. Which if you are saving $800 an engine is a no brainer.

And imagine how many phones you can get into the same space an engine takes up.

In fact, because we have AI, let's ask, shall we ?

Approximate Cost Metrics (2026 Data)
On a purely variable basis, ocean LCL base rates fluctuate between $30 and $350 per m³ (CBM) depending on the lane. 1, 2]

Shipping CategoryAverage Base Cost per m³Representative DistanceEstimated Highest Cost per m³ per Mile
Short-Sea / Regional LCL (e.g., UK to Mainland Europe)
$150 to $350
~200 – 500 miles
$0.70 to $1.75 per mile
Transpacific LCL (e.g., Shanghai to US West Coast)
$40 to $80
~6,000 miles
$0.006 to $0.013 per mile
FCL (Full 40ft Container) (Packed to ~60 m³ max capacity)
$2,500 to $8,500
~6,000 miles
$0.007 to $0.023 per mile

I think the UK is good at the technological advances and research and development phase - but then the tech often seems to get sold to US companies or other countries and manurfactoring goes where it's cheapest - we have high energy costs here not just wages.

But I do think there is some long term planning happening round this particular area.

We're also third after US and Japan with highest concentration of game development studios - there's not much about that in media despite it making 6-12 billion for UK economy about twice as much as UK film industry and nearly as many jobs.

Even AI which does grab the news a lot tend not to hear we have the third-largest concentration of top AI research scientists in the world and tend to get ranked between 3rd and 4th place globally.

I'm starting to feel optimistic @JuliaAgrippina . Keep posting 😊

One thing a lot of people don't consider which puts the cost of manufacturing in the UK up, is our health and safety rules and regulations also around waste disposal. Semiconductor manufacturing produces a lot of chemical waste. Disposing of this in the UK is costly while in some Asian couture while getting better at it can often just dump ot into the local environment.

I'l dampen that by saying there are still companies who obsess over month end, let alone quarter or year end

Meanwhile when I worked for a non-UK company, they were talking in terms of 5 and 10 year investment and growth plans. The year I started there was an overall loss (as a result of massive investment in IT). "No worries" said the (pretty cool 😀) Dutch CFO. "We'll make it back next year. Now enjoy your summer".

People who follow football may see the same reflected in managerial choices.

I am a bit out of touch now, as I haven't worked in the sector for years, but don't ST Micro (France), Infineon (Germany), ESMC (Germany) and a few small companies in the UK have their own fabs and manufacture chips in Europe? Though as I recall ESMC is a JV between TSMC and Infineon (and a few others?) anyway.

But the bulk of UK tech firms (like ARM) have a fabless model and do the design and control the IP but outsource to the likes of TSMC to manufacture. We used to have more fabs in the UK in the early days of computing (last century), but like much manufacturing its cheaper done elsewere. At of course a risk to continuity of supply as the OP has said... I thought the cost of building a fab for mass production of chips was much higher than some of the number on this thread though - I seem to recall a minimum $15 billion being the cost over 10 years ago!

Controlling the IP is arguably as important, and of course almost every mobile phone in the world is built on ARM architecture and IP, so the UK could be in a worse position... Although even though ARM is a UK company it is listed on the NASDAQ, presumably because of higher valuation and a deeper pool of tech investors. Successive governments in the UK have made it a less attractive place to invest which probably hasn't helped I suspect, as ARM used to be dual listed on the NASDAQ and the FTSE.

Geologically parts of the UK (Scotland) are probably suited to chip manufacture. Fabs are incredibly heavy, and intolerant of seismic activty, not that has stopped TSMC in Taiwan. But it's got world beating skills and expertise in building fabs. It does help explain why Grenoble in the Alps is a good location for ST. Mind you, I think Bosch (Germany) and Tower (Israel) also have small fabs in California to maybe geology isn't that important afte all...or it matters more for large scale fabs?

UK industry is often driven too much by short term financial goals. If the project can't give you a return in 3 years then the accountants aren't interested in the industries I have worked in.

The problem with that is often in the development of high value manufactured products development times can take considerably longer than that, you have to have a longer term outlook.

Yes there is no harm in putting on some development pressure to reach targets ASAP. But expecting miracle returns in short timescales is difficult on complex products. Accountants would rather go for a quick win that allows them to get their bonus rather than actually implement a product that adds value to a company in the long term. After all, they will be gone somewhere else by the time that starts to deliver.

This is the kind of stuff that happens if you let your business get run by salespeople and accountants, which most UK businesses, even the hi tech manufacturing ones, are. German companies for example engineers tend to occupy more leadership positions. At the end of the day you need a good balance of skills in the board positions, with science/tech given as much weight as sales and marketing if you are going to develop complex products.

I think there are businesses out there in the UK that do good high value manufacturing, but they tend to be businesses that have that in their DNA and have always done it as part of their corporate make up.

Venture capitalists are another group I could have a rant about, but I'll save that for another time.

I rememeber while ago now seeing stats that showed british worker under foregin management had much higher productivity values. So I do think British owners/mangagers may well have issues like shorterism and lack of investment in equipment and people's skills.

There's also clearly issues moving from ideas/resarch/inital products areas we do well to actually progressing to production - long term companies.

We do very well in some area - art/music and tv exports - and many tech research sectors but there are clearly problem areas in many parts of the economy. The government are looking at some areas and how to support and others are not getting attention - same with media it doesn't always cover everything.