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