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1/ You may have noticed the faux-progressive Taiwan independence activists being a little more bold lately
2/ That's because their dear leader has figured out a new way to assert relevance on the world stage: by playing chicken with the global economy
3/ But it's not just autos. The DPP has weaponized the entirety of TSMC at this point. I have a source inside the company who can attest to this.
First, the US government and DPP have been collaborating to make sure US cos buy out TSMC's leading edge nodes until 2024
First, the US government and DPP have been collaborating to make sure US cos buy out TSMC's leading edge nodes until 2024
4/ What this means is that even if the US lifts its semicon fab ban on the only Chinese company with a leading edge semicon design arm, Huawei, it'll be "oops Huawei there's no room to fab your stuff anymore, guess you'll have to sit out the 5G boom"
5/ This is by design. My source has seen the Tsai administration and the US government demand TSMC's current and 3 to 5-yr planned fab capacity on a monthly and even weekly basis for a while now
6/ Both these entities carefully monitor that capacity to make sure geopolitical considerations are met in how TSMC selects its customers, and this interference has been escalating since 2018
7/ In addition, the US has been sanctioning Chinese fab players like SMIC to make sure China remains dependent on imported, US-designed and TW/SK-fabbed chips. https://www.cnbc.com/2020/09/28/us-sanctions-against-chipmaker-smic-hit-china-tech-ambitions.html
8/ Up until 2020, US tech-economic strategy was mainly to profit off the Chinese market. But after the COVID shock, that's shifted: the US now wants to bleed out the Chinese economy and specifically cripple Chinese tech companies with semiconductors
9/ In terms of bleeding out the Chinese economy, autos are where it starts.
My TSMC source tells me they have been asked by the TW/US govts to prioritize chips for auto plants outside China and for US/JP carmakers, to punish the EU for the #CAI https://twitter.com/TheDailyMao/status/1354843543341154308
My TSMC source tells me they have been asked by the TW/US govts to prioritize chips for auto plants outside China and for US/JP carmakers, to punish the EU for the #CAI https://twitter.com/TheDailyMao/status/1354843543341154308
10/ Yesterday, he mentioned that his TW govt counterpart was literally 'trying to stifle a smile' when he told her some of TSMC's Chinese customers in auto would have to shut down because they weren't getting enough chip supplies.
11/ But this isn't just some sort of 'happy accident' that a 'free market' will fix. TSMC does not have carte blanche to expand capacity as much as it wants. The market is not allowed to function in this instance... thanks to the TW regime.
12/ He has disclosed to me that the DPP has been using enviro regulations and other methods of pressure to keep TSMC from expanding its facilities 'too fast' - the TW regime seems to want an artificial shortage of chips to give them greater leverage in international negotiations
13/ And again, this is done in collaboration with the US government - to make sure 'every planned production line that comes online is instantly filled with US orders only.'
This is what was agreed upon between Tsai, Krach, and Morris Chang...
This is what was agreed upon between Tsai, Krach, and Morris Chang...
14/ ...and maintaining these artificial shortages to hurt companies producing in China are what Tsai means when she talks about restructuring the global supply chain away from China.
15/ As you may already have guessed, the EU is not happy about this arrangement. Besides the surface issue of their automakers being caught in an undeclared trade war, the EU also feels deeply betrayed by Taiwan's regime over this issue.
16/ The EU feels betrayed, because they agreed to help Taiwan keep its monopoly on advanced semiconductor fabrication back in 2018/19 when they blocked the shipment of EUV lithography machines to China's leading fab, SMIC https://www.reuters.com/article/us-asml-holding-usa-china-insight/trump-administration-pressed-dutch-hard-to-cancel-china-chip-equipment-sale-sources-idUSKBN1Z50HN
17/ Indeed, to show how quickly this situation is moving, the Biden administration will be twisting the knife at a meeting **tomorrow** with TW's regime by pushing TSMC and MediaTek to cancel their German orders and put US automakers at the front of the line
18/ The EU is really, really, REALLY mad. I have a different source - a C-suite executive in a Global 500 German conglomerate - who says he and his colleagues are joking that "it might be better for the Chinese to run Taiwan, at least then we could get what we needed" @OSmicard
19/ While that's clearly an exaggeration, it also shows the EU might exhibit a much more neutral stance in a US-China conflict over Taiwan island than many people assume.
Besides the diplo/econ benefits that brings for China, that also brings one very large military benefit...
Besides the diplo/econ benefits that brings for China, that also brings one very large military benefit...
20/ ...because the US contingency plan in a US-China conflict involves reconciling with Russia to add military pressure to China - and would require the EU to sacrifice a lot of interests to do so.
The EU won't do that anymore, which means China has free reign to focus south.
The EU won't do that anymore, which means China has free reign to focus south.
21/ This is what a Chinese military officer meant when he said leaving TSMC in the hands of Taiwan separatists was like leaving a gun in the hands of a small child.
These separatists have no idea how to play real power politics at the global level...
These separatists have no idea how to play real power politics at the global level...
end/ ...and they only hurt themselves and those closest to them.
But don't worry, the adults will be put back in charge - one way or another, and very, very soon.
But don't worry, the adults will be put back in charge - one way or another, and very, very soon.
