A 7.4 magnitude earthquake shook Taiwan on Wednesday, killing nine people, injuring thousands and causing landslides and damage to infrastructure across the island.
It is not surprising that there was a wave of concern around the world, given that the earthquake was the worst Taiwan had seen in a quarter of a century. But I don’t remember anyone mentioning the last one, a 7.6 magnitude earthquake in 1999 that killed more than 2,000 people and split the sidewalk outside my uncle’s 7-Eleven store in Taichung. Taiwan had such a low profile then that when I told people my family was from Taiwan, most just assumed I was pronouncing Thailand wrong.
What’s different now? That has a lot to do with Taiwan Semiconductor Manufacturing Co., which produces more than a third of the world’s computing power each year, according to the book “Chip Wars: The Fight for the World’s Most Critical Technology.”
TSMC is the most advanced and efficient producer of what is arguably the world’s most valuable resource: computer chips. Every product, service, or good that uses computers or the Internet relies on the production of chips, and that includes militaries around the world. Even a slight interruption in the Taiwanese company’s operations could cause economic and geopolitical shocks across the world.
The world now holds its breath if Taiwan evolves on social networks. Politicians from both the right and the left are planning official visits to Taiwan to show their support for democracy, the most recent being a congressional delegation led by Mike Gallagher (R-Wis.) in February. Journalists around the world have closely followed Taiwan’s presidential election, calling it an event with the potential to reshape global politics.
National security analysts are developing battle scenarios for a possible war between the United States and China over Taiwan, counting ships, missiles and bombs on both sides. And with the U.S. presidential election season ramping up, it will become important for all of us to learn about Taiwan.
I have no doubt that the world’s concern about democracy and the people of Taiwan is real. But it comes with at least concern for Taiwan’s chip foundries, where even a slight interruption in operations could seriously disrupt global supply chains.
Fortunately, Reuters reported Thursday that the chipmaker suffered little serious damage in the quake. After the earthquake struck off the coast of Taiwan’s Hualien County on Wednesday morning, TSMC briefly evacuated some of its workers from its factory in Hsinchu, more than 160 kilometers from the epicenter. They returned to work after a few hours. But even that brief disruption could cost the company as much as $60 million in revenue, as well as additional losses for businesses that rely on TSMC’s chips, according to a Barclays investor report released Wednesday.
TMSC’s main chip foundries are just over a kilometer from my late grandmother’s house in Hsinchu. The company is notoriously media shy, but it offers an on-site museum for the curious. When I was visiting relatives in February, I visited to see what I could learn.
Turns out it’s not much. The museum consists of four rooms with various interactive touch screens and audio presentations and mainly focuses on explaining the technology and history of semiconductor chips. It was like looking through a high-tech science textbook.
The museum was housed on a simple business campus, without the ostentation and branding excess of American technology campuses. National security analysts consider TSMC the most valuable company in the world, but it looks an awful lot like an Encino office park.
This modesty serves a strategic purpose, according to Raymond Kuo, who analyzes U.S.-China security issues for Rand Corp., with a focus on Taiwan.
TSMC has become a dominant position in semiconductor manufacturing by staying out of the spotlight, Kuo said. The company does not design chips itself and therefore does not compete with any of its customers, which include Intel, Apple, Sony, Dell and Hewlett-Packard.
And in Taiwan, highly skilled engineers and scientists accept relatively lower Taiwanese wages because they view a job at TSMC as a higher calling, which helps keep labor costs low and factories high. operate at any time. The company’s role in the island’s security is widely recognized – President Tsai Ing-wen has called the company Taiwan’s “silicon shield.”
“Part of what sets TSMC apart from its competitors is not its technology, but its organization,” Kuo said. “If a machine breaks down at 5 a.m., they have three teams of people with master’s degrees to keep it running all the time.”
An invading country cannot easily seize chip manufacturing as a war prize, like oil rigs or mines, Kuo said. A war risks damaging the machines, which themselves cost hundreds of millions of dollars, beyond repair. Their effective operation requires decades of expertise. Manufacturing chips requires enormous investment and government coordination of technological resources, much like the depiction of the race to create the atomic bomb in the film “Oppenheimer.”
Governments around the world have spent the past three decades fighting to capture the booming market for computing power and prevent political enemies from obtaining the advanced chips used to wage war. For the countries participating in this race, TSMC, and by extension, Taiwan, represents a winning hand.
In 2022, the Biden administration restricted the export of US chip technology to China and banned US residents, citizens and green card holders from working in Chinese chip companies. The move poses an existential threat to China’s semiconductor sector, which relies on American-designed TSMC chips.
But efforts to strangle Chinese chipmakers make Taiwan more valuable to China’s leaders, especially at a time when they face an unprecedented economic slowdown.
Wednesday’s earthquake showed that Taiwan can prepare for disaster. After 1999, planners established strict renovation requirements and equipped the island with a dense network of warning systems. The earthquake halted traffic throughout Taiwan, but with far less death and damage than 25 years ago.
TSMC’s facilities recovered most of their capacity the next day, and after the company told investors it would still meet its revenue guidance for the year, shares rose 3% Thursday morning.
But there are no chips or computerized warning systems sophisticated enough to predict the biggest threat facing Taiwan: a growing political and economic rivalry between the United States and China that threatens to envelop the entire world. .
Not yet anyway.
California Daily Newspapers
