Should the U.S. fight or embrace TSMC?
Exactly one year ago today, Bloomberg published a story with a prescient headline: “The World Is Dangerously Dependent on Taiwan for Semiconductors.”
The investigation explored the perils of Taiwan Semiconductor Manufacturing Co., or TSMC, fabricating about 90% of the world’s most technologically intricate chips, including those found in iPhones and other major Apple products. The monopoly gives TSMC and Taiwan remarkable geopolitical leverage, but also spotlights the potential economic fallout of an invasion by China, which claims the island as its own territory.
Fast forward 12 months, and TSMC only continues to grow. The Wall Street Journal reported Tuesday that TSMC is now the most valuable company in Asia, surpassing China’s Tencent with a market cap topping $600 billion. Semiconductors rank among the world’s most in-demand commodities amid a pandemic-induced shortfall, leading to higher chip prices that are padding TSMC’s bottom line.
Recognizing the economic and national security threat posed by TSMC’s dominance, President Joe Biden and many members of Congress are pushing to back the CHIPS Act, which would funnel $52 billion in subsidies for domestic semiconductor manufacturing. The U.S. Senate passed its version of the bill in July, and House Speaker Nancy Pelosi said last week that the lower chamber will soon take up the legislation.
Biden and CHIPS Act supporters have turned the proposed subsidies into a straightforward argument: the U.S. needs more chips, we’ve fallen way behind foreign competitors on semiconductor manufacturing, and we need to catch up. The federal funds wouldn’t solve immediate chip supply problems, which the Biden administration predicts will last at least through the second half of 2022. However, the legislation would bring the U.S. in line with other countries that heavily subside the chip industry.
Still, Biden and legislators have yet to make a strong public case for exactly how the U.S. should regain strength on the semiconductor front.
The ideal nationalist outcome involves California-based Intel, with the help of CHIPS Act money, re-establishing itself as the world’s dominant semiconductor player after losing ground to TSMC and South Korean giant Samsung. In theory, Intel could become a high-volume, sand-to-silicon chip maker, cutting off as many foreign supply-chain choke points as possible in the process.
“Every aspect of defense, intelligence, government operations is becoming more digital,” Intel CEO Pat Gelsinger wrote in a CNN op-ed last month. “And we want to rely on foreign technology for those critical aspects of our defense and national security? I don’t think so.”
Intel heralded an early part of its planned rebirth last week, announcing its intention to spend $20 billion to $100 billion on a manufacturing development in Ohio. Company leaders hope to get CHIPS Act funds to help underwrite some of the costs.
The problem: there’s a reason Intel lost ground to TSMC. The Taiwanese company had superior management, staffing, and domestic support in recent years. There’s a reason Apple crosses the Pacific for its chips instead of partnering with its Bay Area neighbor.
CHIPS Act money could help TSMC bring more production to American soil, building on the company’s in-motion plans to open a $12 billion fabrication plant in Arizona by 2024. TSMC certainly wants that, evidenced by its rare smackdown of Intel last month.
Although unlikely, what happens if Taiwan falls to China in the near future? Would that money be better spent on domestic companies, as Gelsinger has suggested?
The CHIPS Act certainly aims to solve an important dilemma. Before the ink dries on any legislation, however, leaders in Washington need to offer more specifics on who will benefit and what outcomes they hope to produce.
Want to send thoughts or suggestions for Data Sheet? Drop me a line here.
Throwing in the towel? Early signs point to U.S. chip designer Nvidia abandoning its planned acquisition of Arm, a deal that antitrust regulators across the globe are scrutinizing due to its potential impact on the semiconductor industry, Bloomberg reported Tuesday. Citing sources familiar with the matter, Bloomberg reported that Nvidia has told partners that the purchase likely will fall through, while Arm owner SoftBank is preparing an IPO for the British semiconductor designer. Analysts have been skeptical for months that the potential $40 billion deal would go through following comments and actions by regulators in the U.S., Europe, and China.
Changing the topic. Google announced Tuesday that it’s scrapping and replacing its plan for overhauling its targeted advertising system next year, a victory for privacy advocates who criticized the initial proposal, The Wall Street Journal reported. The Alphabet unit will no longer move forward with plans to bundle users into small groups based on their browsing history and provide information about those cohorts to advertisers. Instead, Google now plans to label users as interested in “topics” based on search patterns, allowing advertisers to market to those interested in certain categories. Users will be able to monitor and delete their “topics” under the proposal, which is set to take effect next year.
But can it stop annoying Facebook posts? Meta boasted Monday that it will soon unveil the world’s most powerful supercomputer, with plans to use its artificial intelligence systems to help power the metaverse and improve the company's Facebook platform, Protocol reported. In a blog post, Meta executives said the supercomputer will contain about 16,000 graphics processing units, roughly 10,000 more than its current systems. Meta CEO Mark Zuckerberg said he expects the supercomputer will “enable new AI models that can learn from trillions of examples, understand hundreds of languages, and more.
A second shot at unionizing. Dramatic staff turnover could help swing the outcome of a second unionization vote at a pivotal Amazon warehouse in Alabama, where organizers hope to build momentum for a broader labor movement, Bloomberg reported Monday. Nearly half of the employees eligible to vote in the re-do election joined the Bessemer, Ala., facility since early 2021, when workers soundly defeated a closely watched unionization drive. A federal labor director ordered a re-vote after determining that Amazon improperly interfered with the election.
FOOD FOR THOUGHT
Clicking into place. Switching from cable to YouTube TV has been a seamless transition in my channel-flipping household, with one exception: the Amazon Fire remote stinks. For all of Comcast’s foibles, it got the remote right. Recognizing this glaring shortcoming, TV and streaming hardware manufacturers are upping their game, The Wall Street Journal reports. The new devices blend the simplicity of new-school remotes with the functionality of your 20th-century flipper.
From the article:
For far too long, TV remotes were ugly, clunky, button-filled clickers that were easy to lose between your couch cushions and hard to use. They’re now getting an update as companies try to make technology that blends more seamlessly into our lives.
TV makers are shipping next-generation remotes that are easier to find, power and use. Some companies unveiled revamped controllers at the CES electronics conference in January, generating more excitement in some corners than the newest TVs.
IN CASE YOU MISSED IT
Elon Musk to unveil Tesla’s future road map this week as stock endures market rout, by Christiaan Hetzner
Neil Young gives Spotify an ultimatum: Drop Joe Rogan over COVID misinformation or lose my music, by Alex Millson and Bloomberg
Has tech truly disrupted the economy? Not so much so far, by Philipp Carlsson-Szlezak and Paul Swartz
BEFORE YOU GO
Busted on the highway. Apple’s AirTags certainly come with their fair share of privacy concerns, but here’s one clever use for them. As The Washington Post reported Monday, a Colorado woman used an AirTag to secretly track her family’s belongings as they were shipped across the country last month. When the goods didn’t show up in New York on time, she called the mover and caught him lying about where the shipment was parked, helping to ultimately expedite the process. Even moving companies can’t get away with anything these days.
Editor's note: This story has been corrected to reflect the accurate location of Samsung's headquarters.
This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.