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Imagine if the world's biggest manufacturer of chips just shut down.

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And I'm not talking Frito-Lay, I mean TSMC, the massive company based out of Taiwan,

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that produces around 90% of the world's leading-edge computer chips.

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Recently, earthquakes that shook Taiwan, as well as tensions with neighboring China,

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have led people around the world to be concerned about what would happen

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if TSMC suddenly couldn't make chips anymore.

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So, exactly how would the planet fare with the sudden loss of one of its most important companies?

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Before we answer, we'd like to thank our friend Dr. Ian Cutrus for helping us out with this video.

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When you're done watching, go check out his website, More Than More,

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and his YouTube channel, Tech Tech Potato. First, let's talk about natural disasters.

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Taiwan is located squarely within the infamous Pacific Ring of Fire,

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meaning earthquakes are a concern. TSMC, along with other fabs, is generally quite well protected against vibrations

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that can disturb the delicate machinery needed to produce chips.

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Between anchors that dampen the effects of earthquakes, and floating piles that allow buildings to be supported by more stable soil deep underground,

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TSMC can and does get back up and running even after significant earthquakes within a matter of hours.

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Good thing, too, considering one hour of downtime could cost the company millions of dollars.

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But earthquakes are one thing. Human cause problems, like war, are another.

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So let's say TSMC was wiped out due to some kind of military confrontation.

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What then? Well, do you remember the graphics card shortage from a few years back?

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It would be like that. Except much worse. A big part of the reason for this is not just because TSMC makes so many chips,

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but because they produce tons of leading edge chips.

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Basically, these are chips that have smaller transistors than other chips,

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allowing them to be higher performance and much more power efficient.

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Think current-gen CPUs and computers or the SoCs that power flagship smartphones.

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But it isn't just higher-end chips that would suffer a big-time supply shortage.

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Of the roughly 12 million 12-inch wafers that TSMC produces yearly,

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about nine and a half million of those are on older nodes for cheaper chips for applications

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that don't need the highest performance. In a smartphone, for example, about 70% of the silicon inside is on these older nodes.

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This means there would be shortages of everything,

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resulting not only in higher prices, say on cars, for example,

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but also a race to the bottom. What we mean is you'd start seeing PCs and phones being made with

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the fewest number of chips possible, meaning more basic functionality.

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Lower resolutions and refresh rates, older versions of Wi-Fi,

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and less responsive performance in general from most devices on the market

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would likely be the order of the day. If you don't want to deal with this extreme version of paying more for less,

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you'd have to hope your current devices are high-end enough to last until TSMC could get

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back up and running. But how would the world try to recover in the meantime?

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Of course, if TSMC went away, there are other chip fabs that would try to fill the void,

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but they don't have the capacity that TSMC does, especially for leading-inch products.

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Much more strain would be put on firms like Intel,

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Global Foundries, and lesser-known companies like Tower Semiconductor,

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along with other companies like Tokyo Electron and ASM,

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which make equipment important for chip making that they then sell to fabs.

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All this pressure means that there wouldn't be a whole lot of innovation for a while.

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You know how Intel does that thing where every year they talk about how their upcoming chip lineup is faster and consumes less power?

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Well, instead of that, all their efforts would be going into just cranking out

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as many chips as possible on existing process nodes.

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So it would be very difficult to upgrade, even if you had the cash.

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The problem would be exacerbated even further as some companies,

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AMD being one of them, are very reliant on TSMC to produce their chips to the point where

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their designs assume they'll have access to TSMC manufacturing.

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This means upcoming designs would instead get abandoned for the time being,

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and AMD would have to try and adapt anything still in development

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for foundries like Samsung or even Intel. Ironic, if you've no computing history.

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This kind of situation would probably last for six years or so,

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until TSMC could be rebuilt, and in the meantime,

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there would be obvious geopolitical consequences. As TSMC is a crucial source of chips for NATO member states and NATO-aligned countries,

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maintaining a sufficient chip supply would suddenly become a major national security

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issue for those nations, meaning you might see nationalization,

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or at least closer government direction over chip fabs within some countries' borders.

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Of course, the assumption is that the most likely way this would happen is due to a

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Chinese attack on Taiwan, but there's a high possibility that such an attack

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would result in the most costly war in human history,

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and that China would be cut off from nearly all global financial markets as a result.

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So do we really have to worry about TSMC going up in flames tomorrow?

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Most likely not. But no one would blame you if you screw out the latest gen high-performance

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ultrabook fresh in the box to go into your doomsday stockpile of canned limo beans.

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Thanks for watching, guys. If you liked this video, you might like the one where we covered

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this dude who built his own graphics card at home.

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Very cool.