What he won't support is them raising prices mostly for Nvidia. TSMC has done this in the past as a clear move to cut nuisance production, and nvidia's books are full of nonsense orders that they can't possibly fill. Wei isn't an idiot, unless Nvidia fronts a lot of cash, it's unlikely to work out in Jensen's favor.
this post was submitted on 06 Jun 2024
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And what if Nvidia does front a lot of cash (similar to how Apple bankrolls new nodes)?
Not saying this is happening or will happen, but it is a distinct possibility.
Then they’re going to have to compete with Apple on pricing, and nothing would make TSMC happier than Apple and NVIDIA in a bidding war for fab facilities.
TSMC would love such a setup, although I feel Apple will demand a measure of loyalty (and to my limited understanding Apple hates Nvidia).
TSMC knows full well that its monopoly (or oligopoly, depending what you think of Samsung I suppose) is on a timer with the development of the PRC's chip industry.
The development of PRC's chip industry is not guaranteed to go on a exponential curve.
There are inherently some disincentives to PRC's approach to managing their chip industry, lots of money chasing limited productive projects (you can bet some opportunistic people in China are going to try and piggyback the money faucet). Essentially no-bid type contracts that are going to create a culture of stagnation (at least partially). Lack of a broad customer base (e.g. Apple essentially bankrolling new nodes at TSMC); global demand will always be way bigger and more sophisticated than China, Russia and Iran.
Then you also have technical limitations like lack of access to hardware from ASML, more limited (and less competitive) tooling and design ecosystem.
The PRC chip industry doesn't need to develop exponentially. TSMC is not developing exponentially either.
Monopoly pricing is not just broken when w 1-for-1 peer competitor at the same price appears. Monopoly pricing can be broken by a less performant alternative at a cheaper price that is suitable for the vast majority of applications. You can see this in a number of industries where incumbent players are being displaced by new Chinese suppliers who don't quite make cutting edge stuff but can sell at a fraction of the price.
Hell, you can see it now with older chips at bigger physical nodes where China is now a significant portion of global production.
Will the PRC chip industry face many challenges? Of course it will. However, the PRC's track record of going from nothing to 5nm in a few years cannot be ignored by TSMC.
I don't mean to underestimate or playdown China's potential. Being from the former (russia-occupied) USSR, I think both the west and global south severely underestimate and misunderstand the nature of China/Russia (and how to deal with them).
What I am saying is that there are also inherent weaknesses to their economic and political systems that are often completely ignored; typically because they tend to be more medium/long term in nature.
Hell, you can see it now with older chips at bigger physical nodes where China is now a significant portion of global production.
Genuinely curious if you have any data on this.
Will the PRC chip industry face many challenges? Of course it will. However, the PRC’s track record of going from nothing to 5nm in a few years cannot be ignored by TSMC.
This is one example of "western" misinterpretation/misunderstanding of a regime such as China. While one should not casually dismiss their achievements, one should also be critical about their PR statement regarding 5nm.
To my understanding their 5nm approach has yet to be delivered (show me a product with a 5nm chip) and its fundamentally unsuitable for mass scale production.
It is reasonable to evaluate the role of "5nm" as a PR move and not as a working product.
I would speculate even their "7nm" chips may be less competitively viable than one would think based on their use in Huawei's smartphones. I could be wrong though, it's difficult to find good information on this topic.