WEBVTT 00:00:00.000 --> 00:00:04.160 Imagine if the world's biggest manufacturer of chips just shut down. 00:00:04.720 --> 00:00:10.000 And I'm not talking Frito-Lay, I mean TSMC, the massive company based out of Taiwan, 00:00:10.000 --> 00:00:14.320 that produces around 90% of the world's leading-edge computer chips. 00:00:14.320 --> 00:00:18.720 Recently, earthquakes that shook Taiwan, as well as tensions with neighboring China, 00:00:18.720 --> 00:00:22.560 have led people around the world to be concerned about what would happen 00:00:22.560 --> 00:00:25.520 if TSMC suddenly couldn't make chips anymore. 00:00:25.600 --> 00:00:32.080 So, exactly how would the planet fare with the sudden loss of one of its most important companies? 00:00:32.080 --> 00:00:36.480 Before we answer, we'd like to thank our friend Dr. Ian Cutrus for helping us out with this video. 00:00:36.480 --> 00:00:39.520 When you're done watching, go check out his website, More Than More, 00:00:39.520 --> 00:00:43.600 and his YouTube channel, Tech Tech Potato. First, let's talk about natural disasters. 00:00:43.600 --> 00:00:47.920 Taiwan is located squarely within the infamous Pacific Ring of Fire, 00:00:47.920 --> 00:00:54.080 meaning earthquakes are a concern. TSMC, along with other fabs, is generally quite well protected against vibrations 00:00:54.080 --> 00:00:57.600 that can disturb the delicate machinery needed to produce chips. 00:00:57.600 --> 00:01:06.080 Between anchors that dampen the effects of earthquakes, and floating piles that allow buildings to be supported by more stable soil deep underground, 00:01:06.080 --> 00:01:12.480 TSMC can and does get back up and running even after significant earthquakes within a matter of hours. 00:01:12.480 --> 00:01:18.240 Good thing, too, considering one hour of downtime could cost the company millions of dollars. 00:01:18.240 --> 00:01:22.400 But earthquakes are one thing. Human cause problems, like war, are another. 00:01:22.400 --> 00:01:26.800 So let's say TSMC was wiped out due to some kind of military confrontation. 00:01:27.600 --> 00:01:31.120 What then? Well, do you remember the graphics card shortage from a few years back? 00:01:31.760 --> 00:01:38.480 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, 00:01:38.480 --> 00:01:41.600 but because they produce tons of leading edge chips. 00:01:41.600 --> 00:01:45.040 Basically, these are chips that have smaller transistors than other chips, 00:01:45.040 --> 00:01:49.280 allowing them to be higher performance and much more power efficient. 00:01:49.280 --> 00:01:54.320 Think current-gen CPUs and computers or the SoCs that power flagship smartphones. 00:01:54.320 --> 00:01:58.400 But it isn't just higher-end chips that would suffer a big-time supply shortage. 00:01:58.400 --> 00:02:03.360 Of the roughly 12 million 12-inch wafers that TSMC produces yearly, 00:02:03.360 --> 00:02:09.120 about nine and a half million of those are on older nodes for cheaper chips for applications 00:02:09.120 --> 00:02:16.960 that don't need the highest performance. In a smartphone, for example, about 70% of the silicon inside is on these older nodes. 00:02:16.960 --> 00:02:20.240 This means there would be shortages of everything, 00:02:20.240 --> 00:02:23.760 resulting not only in higher prices, say on cars, for example, 00:02:23.760 --> 00:02:29.760 but also a race to the bottom. What we mean is you'd start seeing PCs and phones being made with 00:02:29.760 --> 00:02:33.760 the fewest number of chips possible, meaning more basic functionality. 00:02:33.760 --> 00:02:37.600 Lower resolutions and refresh rates, older versions of Wi-Fi, 00:02:37.600 --> 00:02:42.000 and less responsive performance in general from most devices on the market 00:02:42.000 --> 00:02:46.960 would likely be the order of the day. If you don't want to deal with this extreme version of paying more for less, 00:02:46.960 --> 00:02:52.400 you'd have to hope your current devices are high-end enough to last until TSMC could get 00:02:52.400 --> 00:02:56.240 back up and running. But how would the world try to recover in the meantime? 00:02:56.240 --> 00:03:00.960 Of course, if TSMC went away, there are other chip fabs that would try to fill the void, 00:03:00.960 --> 00:03:05.280 but they don't have the capacity that TSMC does, especially for leading-inch products. 00:03:05.280 --> 00:03:08.960 Much more strain would be put on firms like Intel, 00:03:08.960 --> 00:03:12.400 Global Foundries, and lesser-known companies like Tower Semiconductor, 00:03:12.400 --> 00:03:15.680 along with other companies like Tokyo Electron and ASM, 00:03:15.680 --> 00:03:19.840 which make equipment important for chip making that they then sell to fabs. 00:03:19.840 --> 00:03:24.000 All this pressure means that there wouldn't be a whole lot of innovation for a while. 00:03:24.000 --> 00:03:29.520 You know how Intel does that thing where every year they talk about how their upcoming chip lineup is faster and consumes less power? 00:03:30.320 --> 00:03:33.600 Well, instead of that, all their efforts would be going into just cranking out 00:03:33.600 --> 00:03:36.640 as many chips as possible on existing process nodes. 00:03:36.640 --> 00:03:40.080 So it would be very difficult to upgrade, even if you had the cash. 00:03:40.080 --> 00:03:43.520 The problem would be exacerbated even further as some companies, 00:03:43.520 --> 00:03:48.240 AMD being one of them, are very reliant on TSMC to produce their chips to the point where 00:03:48.240 --> 00:03:52.640 their designs assume they'll have access to TSMC manufacturing. 00:03:52.640 --> 00:03:56.320 This means upcoming designs would instead get abandoned for the time being, 00:03:56.320 --> 00:04:00.320 and AMD would have to try and adapt anything still in development 00:04:00.320 --> 00:04:04.880 for foundries like Samsung or even Intel. Ironic, if you've no computing history. 00:04:04.880 --> 00:04:08.480 This kind of situation would probably last for six years or so, 00:04:08.480 --> 00:04:11.600 until TSMC could be rebuilt, and in the meantime, 00:04:11.600 --> 00:04:19.680 there would be obvious geopolitical consequences. As TSMC is a crucial source of chips for NATO member states and NATO-aligned countries, 00:04:19.680 --> 00:04:23.680 maintaining a sufficient chip supply would suddenly become a major national security 00:04:23.680 --> 00:04:26.960 issue for those nations, meaning you might see nationalization, 00:04:26.960 --> 00:04:32.240 or at least closer government direction over chip fabs within some countries' borders. 00:04:32.240 --> 00:04:35.920 Of course, the assumption is that the most likely way this would happen is due to a 00:04:35.920 --> 00:04:40.480 Chinese attack on Taiwan, but there's a high possibility that such an attack 00:04:40.480 --> 00:04:43.760 would result in the most costly war in human history, 00:04:43.760 --> 00:04:47.600 and that China would be cut off from nearly all global financial markets as a result. 00:04:47.600 --> 00:04:51.120 So do we really have to worry about TSMC going up in flames tomorrow? 00:04:51.760 --> 00:04:56.960 Most likely not. But no one would blame you if you screw out the latest gen high-performance 00:04:56.960 --> 00:05:01.040 ultrabook fresh in the box to go into your doomsday stockpile of canned limo beans. 00:05:01.040 --> 00:05:04.480 Thanks for watching, guys. If you liked this video, you might like the one where we covered 00:05:04.480 --> 00:05:07.280 this dude who built his own graphics card at home. 00:05:08.320 --> 00:05:09.040 Very cool.