Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisn't Thal and I'm Tracy Alloway. So obviously, Tracy,
Speaker 1: we've been talking a lot about chips lately, but for
Speaker 1: all the episodes we've done, we haven't hit like what
Speaker 1: is sort of like UM. I guess I would say
Speaker 1: the elephant in the room or the guerrilla in the
Speaker 1: room that keeps coming up over and over again. Yeah,
Speaker 1: we've been going at it, I would say from a
Speaker 1: US perspective, very focused on the troubles at Intel, but
Speaker 1: we haven't really talked about the success story that is
Speaker 1: Taiwan Semiconductor Manufacturing Company better known as t s m C. Yeah,
Speaker 1: exactly right. So every episode that we do, it sort
Speaker 1: of comes back to them what a juggernaut they've become.
Speaker 1: And of course, you know, the sort of basic story
Speaker 1: is that manufacturing chips is extremely hard, it's extremely expensive,
Speaker 1: and it's a very difficult to do its scale until
Speaker 1: UM is one of the rare companies that designs and
Speaker 1: manufactures its own chips. But that for a lot of
Speaker 1: these companies that are sort of exploding riot gaining market share,
Speaker 1: they're having Taiwan Semi manufacture them, and Taiwan Semi is
Speaker 1: getting extremely good or is extremely good at manufacturing and
Speaker 1: maybe pulling away from Intel to some extent in terms
Speaker 1: of its manufacturing capabilities, right, And I think they actually
Speaker 1: invented the foundry model, which you know, this idea of
Speaker 1: just manufacturing chips, which keeps coming up over and over
Speaker 1: and over again in all of our conversations, as you know,
Speaker 1: one reason the entire semiconductor industry has changed and one
Speaker 1: reason why Intel is struggling. But the thing I find
Speaker 1: kay amazing, Like in one we all take it for
Speaker 1: granted that t SMC is this massive player in the
Speaker 1: semiconductor industry in the world, really, but I find it
Speaker 1: really really noteworthy, and you know, somewhat surprising in retrospect
Speaker 1: that what is a single company on an island has
Speaker 1: emerged to really dominate chips that are now vital to
Speaker 1: all sorts of things, so computers, smartphones, cars, everything. I
Speaker 1: think TSMC manufactures a little over half of the world's chips,
Speaker 1: so it's not quite a monopoly. But again, like they
Speaker 1: are the juggernaut in the room as you put it. Yeah, absolutely,
Speaker 1: and it's such a I mean, it's such a pivotal
Speaker 1: company for a lot of reasons. I mean you mentioned cars.
Speaker 1: There was just a story this week recording this January twelve,
Speaker 1: by the way, there was just a story this week
Speaker 1: about how car manufacturers around the world are actually running
Speaker 1: into supply constraints because they can't get chips because of
Speaker 1: the chip manufacturers decided to reduce their production of automotive
Speaker 1: chips during the crisis in the spring on the expectation
Speaker 1: that demand wasn't going to be there, and now they
Speaker 1: haven't ramped up. Taiwan Semi, uh, they're going to They're
Speaker 1: actually reporting earnings this week expected to be very strong.
Speaker 1: Earnings are soaring, the stock is soaring. And then of
Speaker 1: course because it's in this strategic position, and because Taiwan
Speaker 1: itself is in this strategic position obviously between the US
Speaker 1: and China and the rollover its status, it's just an
Speaker 1: incredibly central player and sort of necessary to understand the story, right,
Speaker 1: A big player in tech, a big player across multiple
Speaker 1: supply chains in a bunch of different industries, and certainly
Speaker 1: a player in geopolitics as well. So we really got
Speaker 1: to talk more Taiwan Semi, and we have the perfect
Speaker 1: guests to do that, someone who knows all about the company,
Speaker 1: who has been covering them for a long time, since
Speaker 1: long before they were the dominant player, uh they are today.
Speaker 1: We're going to be speaking to Tim Colpen. He is
Speaker 1: a tech columnist at Bloomberg Opinion. It's been with us
Speaker 1: a Bloomberg for fifteen years and he's actually been covering
Speaker 1: the tech industry from Taipei specifically for the last twenty
Speaker 1: one years. So there's everything about Taiwan Semi Conductor, where
Speaker 1: it came from, how it got to be this important player.
Speaker 1: Um So, Tim, thank you very much for joining us. Hey,
Speaker 1: thanks for your time, guys, good to talk to you. Tim.
Speaker 1: How would you describe the importance of Taiwan Semi Conductor
Speaker 1: in the world right now? Well as your assess just
Speaker 1: saying they are so huge Tracy pointed out, they create,
Speaker 1: you know, such a large share of the world's chips.
Speaker 1: There is probably not a single device in the world
Speaker 1: that doesn't have t SMC in there somewhere, whether it's
Speaker 1: a car, the iPhone of course famously, but even some
Speaker 1: really unimportant boring things like a temperature sense that he
Speaker 1: or some led lighter rate there. They do so much
Speaker 1: of the walls, products they're in, they're basically everywhere, and
Speaker 1: so if they were to stop production tomorrow, I think
Speaker 1: the global technology industry would grind to a halt very
Speaker 1: very quickly. It's so, I mean, I mentioned this in
Speaker 1: the intro, but we take it as a given that
Speaker 1: this one country has such a big position in global manufacturing,
Speaker 1: in the global supply chain. How did this actually come about?
Speaker 1: Or let me rephrase that. Let's start at the beginning.
Speaker 1: How did TSMC actually start? Well, the story of t
Speaker 1: s MC is in many ways the story of Taiwan's
Speaker 1: electronics industry. It was founded by Marris Young himself back
Speaker 1: in seven, but the seeds of Taiwan's seven conductor industry
Speaker 1: predated that by about fourteen or fifteen years, when an
Speaker 1: organization was set up by the Taiwan government back then
Speaker 1: in nineteen seventy three called it TRY the Industrial Technology
Speaker 1: Research Institute, and at the time the government realized that technology,
Speaker 1: and not specifically semi conductors because semi conductors were relatively new,
Speaker 1: but integrated circuits were going to be big. The other
Speaker 1: big area for Taiwan at the time was plastics, and
Speaker 1: for most of plastics is one of the world's in
Speaker 1: the plastics industry. And of course you may remember back
Speaker 1: here and your kid, you have these cheap plastic toys
Speaker 1: that were made in Taiwan. Barbie dolls, for example, were
Speaker 1: made in Taiwan for many, many years. So there were
Speaker 1: the two kind of twin engines of Taiwan's future, and
Speaker 1: the government knew that, and so they started getting into
Speaker 1: it through a government institute, spending money on it, and
Speaker 1: then working with the Americans and to a lesser extent
Speaker 1: Japanese and Europeans to transfer that technology to Taiwan to
Speaker 1: be made in Taiwan. So the first chips made out
Speaker 1: of Taiwan. Really we're rolling off the presses or the
Speaker 1: fabs in the mid seventies, and t SMC came along
Speaker 1: in the mid to late eighties, so there was it
Speaker 1: was already underway. But as Joe pointed out, it was
Speaker 1: the foundry of foundries. It was the first one to
Speaker 1: decide that offering a pure manufacturing solution so that clients
Speaker 1: don't need to have factories, and tier SMC would do
Speaker 1: it for them without designing their own chips, only purely
Speaker 1: manufactured for somebody else. That was very, very new it was.
Speaker 1: It was a ridiculous concept at the time, because you know,
Speaker 1: at the time, Jerry Sanders of a m D later
Speaker 1: said in that famous line that real men have fabs.
Speaker 1: At the time you designed and new manufactured, you did
Speaker 1: them both, Cyprus and Faraday and uh sort of free
Speaker 1: scale and all those other companies, of course Intel being
Speaker 1: one of them, they did both. A m D did both.
Speaker 1: And it was only after t SMC came along and said, hey,
Speaker 1: actually you don't need to we can do for you.
Speaker 1: That changed a lot of people's minds and it really
Speaker 1: turned silicon value around. So where did that idea come from?
Speaker 1: I mean, what was the sort of realization that this
Speaker 1: model could be powerful? Making to order has always been
Speaker 1: part of Taiwan's industrial DNA, going back many many years.
Speaker 1: You probably also know the fox Con which makes which
Speaker 1: makes your iPhone is also essentially an o EM they
Speaker 1: manufacture for others, and fox Con, which was getting going
Speaker 1: at a round about the same time, started off making
Speaker 1: basic plastic TV knobs. Terry Goa, who founded that, was
Speaker 1: really a plastics guy. He wasn't really an electronics gay,
Speaker 1: was a plastics guy. And so that was pretty much
Speaker 1: Taiwan's DNA. Don't do the design work, don't do the branding,
Speaker 1: don't do any of that. Just hey America, Hey Japan,
Speaker 1: Hey you're bring us your stuff. Your designs will make
Speaker 1: it for you cheaper, quicker, and all of that, and
Speaker 1: and so semiconductors at the time were the next thing
Speaker 1: and area, and you know it was. It was also
Speaker 1: in a similar period of time that what is now
Speaker 1: known as ASA started doing I B MR PC clones.
Speaker 1: Uh and we'll actually manufacturing for IBM. So it's the
Speaker 1: same kind of period as it was a little bit later,
Speaker 1: but it's the same general generation of Taiwan. But really
Speaker 1: the founding idea came from Mauris Young himself, who who
Speaker 1: went to Taiwan at the age of the ripe old
Speaker 1: age of fifty four to take up a retirement job.
Speaker 1: It's not well known, but in fact Marris Young is
Speaker 1: not Taiwanese. He was born in China and left China
Speaker 1: at the height of the Civil War in night. He
Speaker 1: was in Hong Kong for a brief stint and then
Speaker 1: found himself in the US and went on to study
Speaker 1: M I. T. And he spent a quarter of a
Speaker 1: century at t I Texas Instruments, and it was only
Speaker 1: after leaving Texas Instruments that the Taiwan government invited him
Speaker 1: to Taiwan to lead it TRY. He wasn't the founding
Speaker 1: chairman of it TRY, but he was I think that
Speaker 1: the third president of Vitry and UH and he came
Speaker 1: in and was brought to Taiwan not as a Taiwanese
Speaker 1: but as actually an American citizen, and Uh and Morris
Speaker 1: Jung got the idea of of doing a foundry model
Speaker 1: and that was really the start of the whole process.
Speaker 1: So how difficult was it to get the foundry model
Speaker 1: off the ground at the very beginning, because as you
Speaker 1: point out, that wasn't how people had been making semiconductors historically.
Speaker 1: They've been doing the designing and manufacturing in house. How
Speaker 1: much of a adaptation or change was it for the industry,
Speaker 1: And how difficult was it to get clients on board
Speaker 1: to actually go to them and say, hey, we're going
Speaker 1: to make your chips for you. It was. It was
Speaker 1: very difficult. And Morris Young recognized that, you know, he'd
Speaker 1: worked in the American semi conductor industry for twenty or
Speaker 1: thirty years. He knew that they were his people. Uh.
Speaker 1: And so when he started tiss him see, one thing
Speaker 1: that he knew early early on is a lot he
Speaker 1: had Taiwan government backing, and there was you know, very pockets.
Speaker 1: He knew that he needed to get industry on board,
Speaker 1: so he went hunting for an industry player that would
Speaker 1: be a cornerstone investor. He wanted to get someone on
Speaker 1: board that would take early steak in the company so
Speaker 1: that he could really make sure that they they were
Speaker 1: vested in the country. It was in the company. It
Speaker 1: was a vested interest to have TSMC succeeds. So he
Speaker 1: shopped it around to the Americans and they really wouldn't
Speaker 1: they wouldn't buy it. And eventually he stumbled across wild
Speaker 1: and stumble across, but he came across an investor that
Speaker 1: was willing, that really did see the vision it was
Speaker 1: willing to take a punt, and that was Phillips, the
Speaker 1: Dutch company which was for a while in the semiconductor industry.
Speaker 1: And so Phillips was actually a founding investor and had
Speaker 1: I think it was about thirty percent steak and they
Speaker 1: had that thirty percent steak for for I think almost
Speaker 1: twenty years until they started selling it down when they
Speaker 1: did their own kind of revamp in the early two thousand's,
Speaker 1: So that really really helped it show that you had
Speaker 1: someone in the industry on board and he had a
Speaker 1: certain amount of gravitas, and I think that was the
Speaker 1: key thing for for Lawrence Jung. And the other thing
Speaker 1: was that he was American. You know, he grabbed it
Speaker 1: through the ranks of Texas Instruments. He was a general
Speaker 1: instruments for a brief time before he went to Taiwan.
Speaker 1: So the industry in America knew who he was. They
Speaker 1: knew he was the real deal. There wasn't some unknown
Speaker 1: coming out from a far off land pitching a crazy idea.
Speaker 1: And so I think those two things together helped him
Speaker 1: get traction with the early clients who were willing to
Speaker 1: take a punt, and they did so and they were
Speaker 1: rewarded with it. So I want to just it'll go
Speaker 1: back to that founding a little bit more. I mean,
Speaker 1: you mentioned that prior to t s MC that the
Speaker 1: Taiwan government for already several years had been sort of
Speaker 1: like researching and building up this capability. Were there other
Speaker 1: players who could have been t SMC where there are
Speaker 1: other entities trying to viy to be sort of like
Speaker 1: a domestic national champion. And also, you know, like I've
Speaker 1: read a little bit about Asian development models, like particularly
Speaker 1: in Korea, and this idea of exports subsidies for companies
Speaker 1: that were um finding traction with sales outside, and I'm curious,
Speaker 1: like how much that effort to attract that foreign investor
Speaker 1: Phillips in that case was also about proving themselves domestically
Speaker 1: that t SMC could be the international player that the
Speaker 1: country should get behind. Yeah, I think that's a valid point.
Speaker 1: I think that they needed to well, they needed to
Speaker 1: sell up the masses. But you know, Taiwan was not
Speaker 1: democratic at the time. It was under martial law, so
Speaker 1: it's not like they had to the government of the
Speaker 1: Guaming Dung at the time really needed to worry about
Speaker 1: elections or or anything like that. But they did very
Speaker 1: much have concerns about the Communist Party on the other
Speaker 1: side of the strait that that tension continues to this day.
Speaker 1: And so there was definitely a feeling that Taiwana had
Speaker 1: to be big, strong place. You know, it's called Republic
Speaker 1: of China, and it needed to be strong and powerful
Speaker 1: and make money so that it could fend off the
Speaker 1: communist insurgency. And so these industrial policies were in a
Speaker 1: kind of war mentality, not unlike what Career went through.
Speaker 1: You know, they went through their own civil war and
Speaker 1: had a kind of war mentality after the Korean War ended,
Speaker 1: and had the tensions with between North and South, and
Speaker 1: of course Japain was rebuilding after its own war with
Speaker 1: America and much of Asia. So there was a war
Speaker 1: mentality for a lot of these countries. And that really
Speaker 1: I think directed industrial policy and without having to worry
Speaker 1: about democracy, to put it bluntly, they could go in
Speaker 1: and basically make decisions, make decisions for the long term
Speaker 1: and and really laid down what they were going to
Speaker 1: do for the next ten or twenty years. And so
Speaker 1: I think that getting the early investor on board in
Speaker 1: Phillips was very, very important. But to your earlier point,
Speaker 1: t SMC wasn't the earliest one. In fact, born out
Speaker 1: of it try Itchery was started, you know, in the seventies,
Speaker 1: but born out of Itchry in around eighty was another
Speaker 1: company called u MC United micro Electronics, and that company
Speaker 1: was spun out of Itchory, and that was in the
Speaker 1: semiconductor industry, but it was also designing its own chips,
Speaker 1: and in fact that then spun out of UMC in
Speaker 1: the late nineties was a company you called Media Tech,
Speaker 1: which some people might have heard of because they're actually
Speaker 1: quite a competitor to Intel and Core Common others today,
Speaker 1: they did have other competitors. It wasn't given that tear
Speaker 1: MC would win. They had competitor, a very strong competitor
Speaker 1: in UMC, and at the time there was also competitors
Speaker 1: overseas in Singapore there was a company called Charted there
Speaker 1: was also looking quite strong for a while until until
Speaker 1: they just couldn't keep up with t SMC. So t
Speaker 1: SMC had competition in the early days in foundries, but
Speaker 1: they were the ones who really stuck to date guns
Speaker 1: and managed to win out. So just on that winning point,
Speaker 1: there's one other thing from what I understand, that Chung
Speaker 1: actually did that helped t s mc um get itself
Speaker 1: into first place in the long run, and that was
Speaker 1: that they sort of sacrifice profits early on in order
Speaker 1: to grow their market share very quickly, which is something
Speaker 1: that we've seen in other big tech companies, I mean,
Speaker 1: notably Amazon and others like that. How was that decision
Speaker 1: made and how important was it to t s m
Speaker 1: C s a long term success. Well, the key really
Speaker 1: for for t SMC cost base it really comes down
Speaker 1: to what is the cost right And so of course,
Speaker 1: if you if you're trying to win over customers, but
Speaker 1: you're offering a price that is not acceptable or not
Speaker 1: competitive to them doing it themselves, then you're not going
Speaker 1: to win. And the cost based for for the t
Speaker 1: SMC model is it's mostly depreciation. You spend buckets of money,
Speaker 1: you know, a ten or twenty billion dollars a year
Speaker 1: at at the current rate, and that depreciates pretty quickly,
Speaker 1: to be honest, in only a few years. So your
Speaker 1: depreciation is very very high. And once you've built that
Speaker 1: in the border the equipment, if it sits idle, then
Speaker 1: you're not making money, right, So it's it's immediate cost
Speaker 1: off the bat. The other one is R and D,
Speaker 1: and that's where they really haven't skipped. They've been willing
Speaker 1: to spend buckets of money on R and D, which
Speaker 1: is engineers. At the end of the day, it's it's
Speaker 1: the best engineers money can buy. And so those two
Speaker 1: things they basically had to take it they reallyn't have
Speaker 1: a choice. They had to spend money to build the
Speaker 1: capacity and get the technology going, and they needed to
Speaker 1: spend money on the staff the engineers to to make
Speaker 1: the best best they could of this equipment. And then
Speaker 1: on the flip side, when they're going to their customers
Speaker 1: and saying, what we want to charge you this much, well,
Speaker 1: you have to be price competitive. So in a way
Speaker 1: it was it was a deliberate tactic, but also it
Speaker 1: was also an issue of the circumstances of the time.
Speaker 1: So when we think about like contract manufacturing in any industry,
Speaker 1: and of course the basic model as you identified, isn't
Speaker 1: it's not new. It's not new to chip people. They
Speaker 1: have always been set up to where one company designed something,
Speaker 1: another country does the building. I think for a long time,
Speaker 1: the business of and you can correct me if I'm wrong,
Speaker 1: but the business of sort of being a fab I mean,
Speaker 1: I don't think it was seen as particularly particularly sexy.
Speaker 1: It may have been a profitable business model, an important one,
Speaker 1: but it seems like in the discussions we're having lately,
Speaker 1: like something like it went from being like, okay, here's
Speaker 1: the here's the company that takes in your designs and
Speaker 1: then spits them back out to here's a company that's
Speaker 1: like a true tech leader, like they really have something
Speaker 1: in their manufacturing, know how that is increasingly difficult to
Speaker 1: be replicated. Was there some inflection point, some flip where
Speaker 1: like when did that happen? When did that sort of
Speaker 1: change of perception start to occur? I would argue that
Speaker 1: it happened during the period of the crossover from PCs
Speaker 1: to smartphones, because, as we know, PCs were Intel's domain
Speaker 1: and you know, am D's domain and turned up to
Speaker 1: the party and they made their own stuff. Am D
Speaker 1: doesn't anymore, but for the longest time they did make
Speaker 1: their own their own stuff. They designed it and made
Speaker 1: it themselves. They call them I, D M, right. And
Speaker 1: then we went into the smartphone business. There was a
Speaker 1: short period of time I you know, the two G
Speaker 1: phones that you know, the Nokias and so forth. But
Speaker 1: then we moved into smartphones and those were powered basically
Speaker 1: by by companies like Qualcom and Media Tech and and
Speaker 1: actually t I if you might remember, we're in that
Speaker 1: business for a little while. And these were companies that
Speaker 1: didn't have their own factories. Well t I did, but
Speaker 1: Qualcom certainly didn't. And media tech in and a lot
Speaker 1: of companies didn't have their own their own factories. They
Speaker 1: because they didn't need to have their own factories, a
Speaker 1: company like Caulcom could start up. Anybody could get together
Speaker 1: a few friends fresh out of grad school and try
Speaker 1: and start a chip design company, and Calcom was able
Speaker 1: to get away with doing that and and was very successful.
Speaker 1: So you have a company like Qualcom becoming very very
Speaker 1: successful by saying, you know what, we designed the best
Speaker 1: chips for for mobile phones, and we don't need to
Speaker 1: manufacture them. And I think the rest of the industry
Speaker 1: cottoned on. And as we're moving away from the PC
Speaker 1: era into the smartphone era and then electronic devices and
Speaker 1: we've got PlayStations and handhelds like the switch, and also
Speaker 1: to other devices, a lot of these chips were no
Speaker 1: longer the big hunky uh you know, Intel processes that
Speaker 1: were smaller and lighter. And then of course Apple came
Speaker 1: along and decided to do their own ships as well.
Speaker 1: And so I think that's really where we saw the
Speaker 1: flip from having to have your own factory to being
Speaker 1: able to do it without. And at the same period
Speaker 1: of time, the economics just wasn't working out for companies
Speaker 1: like a m D anymore, and a lot of companies
Speaker 1: who were making their own were being burdened and saddled
Speaker 1: by these massive factories and the depreciation costs they had
Speaker 1: to bear. No matter whether they sold one ship or
Speaker 1: a million chips, that appreciation was going to be the same.
Speaker 1: And so if you have a bad year or two,
Speaker 1: or there is a shift away from your business such
Speaker 1: as PCs to something else, and you don't have the
Speaker 1: chips to keep up, then you're going to be in
Speaker 1: debt very very quickly. And so we saw a lot
Speaker 1: of the companies that were designing and manufacturing for themselves
Speaker 1: just couldn't keep up economically or financially, and some went
Speaker 1: fabulous like a m D, and some just disappeared. Can
Speaker 1: we talk a little bit about the role of the
Speaker 1: US and China in all of it? So we mentioned
Speaker 1: that Taiwan itself is sort of perennially caught between these
Speaker 1: two forces, the US and China, which doesn't actually recognize
Speaker 1: it as an independent country. What influence has that relationship
Speaker 1: had on TSMC and how does TSMC feedback into that
Speaker 1: geopolitical relationship. T S m c s view of the
Speaker 1: geopolitical relationship is quite smart and diplomatic in almost the
Speaker 1: same way that they view their customers, where they want
Speaker 1: to be the neutral supplier to everybody. They want to
Speaker 1: be everybody's foundry. They don't want to be everybody's partner.
Speaker 1: And they take that view to the broader the global
Speaker 1: geopolitical situation by saying, well, you know, we're not in
Speaker 1: the American camp, we're not in the China camp. We're
Speaker 1: just in the camp of whichever client's needs. And that's
Speaker 1: the lie and that they have been taking for the
Speaker 1: longest time. Now, what's interesting is I think people misunderstand
Speaker 1: t SMC because Taiwan and t SMC is so close
Speaker 1: to China, and of course many devices are actually assembled
Speaker 1: in China. Most most electronic devices are assembled in China.
Speaker 1: People see it as being, oh, must be kind of
Speaker 1: close to China, But in fact the history in the
Speaker 1: genesis of t SMC is far more American than it
Speaker 1: is Chinese. Morris the two people who have held the
Speaker 1: chairmanship of TSMC both American citizens, Morris Young, the first
Speaker 1: one was not even Taiwanese, and the current one, Mark
Speaker 1: Leo is if you look at the annual report of
Speaker 1: t SMC, it say cities American citizen. I suspect he's
Speaker 1: a dual national aspect, he's got taiwan citizenship as well,
Speaker 1: But in actual fact they're both Americans. The style and
Speaker 1: the culture and the processes of the company are very
Speaker 1: very American. The corporate governance approach is very very American.
Speaker 1: It's very very different to the way most Taiwanese or
Speaker 1: Asian companies are run. And so that culture, of course
Speaker 1: is very important. And the clients for the longest time
Speaker 1: have been American. Yes, the devices get assembled in China,
Speaker 1: but all those big name semi conducted clients, the ones
Speaker 1: that pay the bills, they're all American. And so the
Speaker 1: relationship is much much closer to America than it is
Speaker 1: to China. Even though China of course is a large
Speaker 1: buyer of chips now and of course it's the place
Speaker 1: where so many semi conductors are then installed inside devices.
Speaker 1: The relationship is much much closer to America than China.
Speaker 1: Of course, it may change in the future. Uh, And
Speaker 1: both sides want to kind of drag t SMC to
Speaker 1: their side. But you know what, as of right now,
Speaker 1: you know, January, like cent or probably of the production
Speaker 1: capacity is in Taiwan. They've got pretty small production facilities
Speaker 1: or capacity in China, and of course they're going to
Speaker 1: do something in Arizona which would be at a similar
Speaker 1: small scale, but Taiwan still is the hard and soul
Speaker 1: of t SMC. So just on that note, on the
Speaker 1: idea of t SMC being quite smart in maintaining a
Speaker 1: neutral stance or trying to maintain a neutral stance between
Speaker 1: the US and China, how long do you think they
Speaker 1: can keep doing that given that semiconductors seem to be becoming,
Speaker 1: you know, rapidly politicized, and tech in general is becoming politicized.
Speaker 1: So we just saw, well over the past couple of years,
Speaker 1: we've seen the US announced all these restrictions on semiconductor technology.
Speaker 1: In the past week or so, again we're recording this
Speaker 1: on January twelve, we've seen the US announced fresh sanctions
Speaker 1: on Chinese military firms, and meanwhile China is saying that
Speaker 1: it is going to allow people to sue international companies
Speaker 1: if they comply with U S sanctions. It feels like
Speaker 1: remaining neutral is beca mean more and more difficult in
Speaker 1: the current environment. Of course, everything could change when the
Speaker 1: new US administration comes in, but in the meantime, it
Speaker 1: does feel like companies are going to be forced to
Speaker 1: choose sites. Yeah, Tracy, I think I think that's the
Speaker 1: key issue, and I think that's one of the most
Speaker 1: important things that we need to consider in this this
Speaker 1: whole situation. In fact, I've been arguing for for more
Speaker 1: than five years that there's this Berlin Wall of tech
Speaker 1: brewing between America and China, or American and Chinese fheres
Speaker 1: of influence. Even before Donald Trump came to power, that
Speaker 1: was already going to happen. Now, Trump clearly accelerated a
Speaker 1: lot of those moves, but it was already underway. T
Speaker 1: s MC wants to sit on that fence. They've been
Speaker 1: very good at sitting on that fence. But I've argued
Speaker 1: in columns of the last couple of years that they
Speaker 1: can't do it forever. They are going to have to
Speaker 1: choose sites. Now. I've got a lot of pushback from
Speaker 1: people at t SMC and others in the industry saying no, no,
Speaker 1: no where neutral, Always be neutral. We can manage to
Speaker 1: be neutral forever, and I just don't agree. I think
Speaker 1: that we saw that with the Huaowei situation over the
Speaker 1: last couple of years when at one point the US
Speaker 1: basically said almost directly to t SEMC without naming, like,
Speaker 1: you shall not make chips for Hawaiwei anymore, and they
Speaker 1: had to stop write a ground to a halt. Now
Speaker 1: that may open up again under a new administration in
Speaker 1: d C, but that was really should have been a
Speaker 1: wake up call to management at t SMC that you
Speaker 1: can't sit on the fence any longer. And I think
Speaker 1: that they are. They're realizing now they've they've got they've
Speaker 1: hired some new lobbyists a former Intel lobbyist amongst others
Speaker 1: in d C to help their cause. I think they
Speaker 1: now realize they can't sit on that fence forever, but
Speaker 1: they're going to try to hold on as long as
Speaker 1: they can before they have to choose sides. And when
Speaker 1: they do, they're going to choose the American side. That's
Speaker 1: where their bread is buttered. It really seems like kind
Speaker 1: of stressful though for the world, Like if literally you
Speaker 1: can't come up with a piece of electronics that in
Speaker 1: some way hasn't been touched by t SMC and they
Speaker 1: were men can just say don't work for that company anymore.
Speaker 1: And there's no alternative to t SMC anywhere near its scale.
Speaker 1: Like it's like just a pretty it seems like a
Speaker 1: pretty big sort of choke point for everything. Yeah, I mean,
Speaker 1: if you if you were to go back to the
Speaker 1: year two thousand when everyone is using Windows PCs, can
Speaker 1: you imagine a government saying you can't use Windows anymore
Speaker 1: and Android Sorry not Andrew, but Lennox wasn't really coming along.
Speaker 1: You can you imagine that the problems and the trouble
Speaker 1: that would happen, that would be the kind of equivalent
Speaker 1: today if you would be told you can't use t SMC.
Speaker 1: In Huawei struggled. They oh my god, the problems they
Speaker 1: faced in not being able to use They're putting in
Speaker 1: rush orders, rush orders to the last minute, so the
Speaker 1: t SMC would churn stuff out and get it out
Speaker 1: the door before the barriers came down. And that's really
Speaker 1: caused a lot of problems for Huawei. And they don't
Speaker 1: really have a backup source. So you know, one of
Speaker 1: the one of the themes, one of the big things
Speaker 1: we're talking about is this sort of like tech advantage
Speaker 1: that they're building up such scale, such manufacturing know how,
Speaker 1: ability to do it at an excellent quality at improving price.
Speaker 1: Um Intel, as we know, stumbling with their own manufacturers.
Speaker 1: In fact, their reports that Bloomberg ourselves have reported about
Speaker 1: perhaps Intel perhaps outsourcing some of its manufacturing to t SMC.
Speaker 1: Talk to us about the tech edge that the company
Speaker 1: is building and how difficult it is for even one
Speaker 1: of the largest competitors, let alone some of the smaller competitors,
Speaker 1: to match them in terms of price and quality. Semiconductors
Speaker 1: are really tough. They've always been tough, but they're getting
Speaker 1: tougher and tougher because we're now at this You've heard
Speaker 1: about More's law and the idea that we're getting to
Speaker 1: the end of Moore's law or beyond Moore's law, but
Speaker 1: we're getting some really really tough ends of semi conductors
Speaker 1: are essentially a mix of chemical engineering with physics and
Speaker 1: electronic engine electrical engineering, and they're getting to the point
Speaker 1: now with this new EUV technology that there's very very
Speaker 1: few companies that can afford to buy this EUV equipment
Speaker 1: and be have the know how, including the staff and
Speaker 1: the process is to run it. So even if someone
Speaker 1: else was managing to get their hands on one or
Speaker 1: two hundred million dollar piece of equipment that can do
Speaker 1: the later stuff. There's not many people who could run it,
Speaker 1: and so it becomes this this self fulfilling prophecy that
Speaker 1: t SMC is ahead of everybody else, and because they've
Speaker 1: heard of everyone else, they get all the best orders
Speaker 1: and all the money, and they've got really nice, fat margins.
Speaker 1: They've got one of the largest operating margins in the
Speaker 1: tech sector, and nobody else can compete because they don't
Speaker 1: have the money to keep up, which they don't have
Speaker 1: the money to buy all the equipment, which is they
Speaker 1: don't have the money to hire the best engineers and
Speaker 1: so on and so forth. And we really are at
Speaker 1: that point where t SMC a lot of people see
Speaker 1: that they're unassailable. I mean, of course they can mess up,
Speaker 1: and they probably will mess up, but we're now at
Speaker 1: this point where money talks, and it's not just money,
Speaker 1: it's that know how. It's the store of knowledge that
Speaker 1: they've built up over thirty years that no one else
Speaker 1: can get near, not even Intel. And when Intel stumbles,
Speaker 1: you know that things are getting really difficult in the
Speaker 1: chip industry. So what would a mess up actually look
Speaker 1: like for t SMC or what would it take for
Speaker 1: them to lose this top spot that they currently have
Speaker 1: in the industry. Well, I think there's one thing they
Speaker 1: could be losing the top spot, I guess to Samsung
Speaker 1: is probably the only other company that might take over
Speaker 1: from them, And Samsung is a very very strong competitor,
Speaker 1: and they were neck and neck for a while, and
Speaker 1: I think Samsung will come back again. They've got a
Speaker 1: lot of money. They've got a lot of their own
Speaker 1: orders in the nand and d RAM business, so that
Speaker 1: really helps them push their own semiconductort manufacturing. But in
Speaker 1: terms of t SMC, you know, having a bit of
Speaker 1: a nose dive or any any four. I think there's
Speaker 1: actually three areas that they could they could face problems.
Speaker 1: The first one I think is that they could be
Speaker 1: a victim of their own success in that they always
Speaker 1: at the cutting edge with the most incredibly good foundry technology,
Speaker 1: to the point where they're technology is so good that
Speaker 1: nobody really needs it. Like if you think of the
Speaker 1: CPU wars between Intel and a m D of twenty
Speaker 1: years ago, it was the coolest thing to be the
Speaker 1: one with the fastest clock speed, but today nobody cares
Speaker 1: about clock speed, right, nobody really pays attention they maybe
Speaker 1: they'd care about how many cares and a CPU. But
Speaker 1: all that kind of chest thumping is gone in the
Speaker 1: CPU industry. And I think we'll see a point in
Speaker 1: the future where maybe it won't be the leading companies
Speaker 1: like Apple or Hong Kom or Huawei, who say we
Speaker 1: don't need the latest technology, but maybe one of their
Speaker 1: top ten customers, maybe the tenth largest customers, is you
Speaker 1: know what, we're going to sit out this this round
Speaker 1: of new technology. The previous round is good enough for us,
Speaker 1: you know the the N minus too, which is you know,
Speaker 1: two generations old. That's good enough for now. We'll we'll
Speaker 1: stick with that. But t SM see, of course, has
Speaker 1: spent all this money to upgrade. And then of course
Speaker 1: another client might drop off and say, you know what,
Speaker 1: it's getting a bit expensive. What's what we've got now
Speaker 1: is good enough, We'll stick with that. And so I
Speaker 1: think we could see t s MC being too good
Speaker 1: and being a victim of their own success in that regard.
Speaker 1: The other area where I think that they could really
Speaker 1: kind of come down is is if there is a
Speaker 1: slowdown in the tech industry. Is so vast that it
Speaker 1: could really cut into their margins and their costs and
Speaker 1: so forth, because even though they're the best in the world,
Speaker 1: you know, people just don't have the money to buy things. Now.
Speaker 1: Of course, we all thought this pandemic might be yet
Speaker 1: a year ago when it was starting to unfold, we
Speaker 1: thought that the tech industry was going to come to
Speaker 1: its knees. It didn't pan out that way. And then
Speaker 1: the other thing actually that I think t SMC has
Speaker 1: to worry about is power, like energy electricity. The new
Speaker 1: technologies are the new EUV machines guzzle a lot of energy.
Speaker 1: In fact, and there's three science parks in Taiwan, the North,
Speaker 1: Center and South. The South Science Park, which is where
Speaker 1: the apple chips are made, actually had to rush in
Speaker 1: the power company had to rush in new transformers to
Speaker 1: feed enough electricity into the science park into t SMCS
Speaker 1: factories because they are such power hugs, and Taiwan actually
Speaker 1: has a power problem. Taiwan, for political reasons, is starting
Speaker 1: to shut down its nuclear power stations. Nobody wants coal,
Speaker 1: and the new neewable energy ideas that are coming on
Speaker 1: not coming on quickly enough, and so Taiwan, in fact,
Speaker 1: just just a week ago, UMC arrival face to power
Speaker 1: outage and Taiwan's face power outages, and this is a
Speaker 1: pending crisis. This is a looming crisis for the entirety
Speaker 1: of Taiwan, and if they don't get their act together,
Speaker 1: this could really hurt t SMC big time. So there
Speaker 1: are a few land mines out there that t SMC
Speaker 1: could step on, and not all of them will be
Speaker 1: will be up to itself to avoid it, will need
Speaker 1: help from the government. Another question that I have is,
Speaker 1: so we've been talking about how like some of these
Speaker 1: incumbent tech giants are. You know, they're going further up
Speaker 1: the tech stack themselves, some of these huge cloud players
Speaker 1: designing their own servers, designing their own silicon um. We
Speaker 1: had an episode we talked about Apple. Could some of
Speaker 1: these companies, these tech giants that have tremendous amounts of money,
Speaker 1: ever have a competitive reason to get in to manufacturing
Speaker 1: chips themselves. I don't think so. I don't see why
Speaker 1: a Google or a Facebook, or a Microsoft or anyone
Speaker 1: like that would want to get into the business. It
Speaker 1: would take probably in the order of a willingness on
Speaker 1: the part of a CFO or a CEO to burn
Speaker 1: maybe twenty or thirty billion dollars, Like I'm not joking
Speaker 1: because t SMC is going to be spending ten to
Speaker 1: twenty next year. It's spent ten to twenty last year.
Speaker 1: That's just on the equipment. And then you've got to
Speaker 1: get the engineers. And sad to say, the best semi
Speaker 1: conductor manufacturing engineers, not the design engineers. That the best
Speaker 1: semi conductor manterfacturing engineers are really all in Asia now
Speaker 1: distribute amongst the Koreans, the Japanese and the Taiwanese and
Speaker 1: more and more in China. Now you do still have Intel,
Speaker 1: and we shouldn't count our Intel now. Intel it's still
Speaker 1: a very very solid company. They're definitely struggling right now,
Speaker 1: but they have very very good engineers. So if you're
Speaker 1: an American company thinking I want to get into the
Speaker 1: chip game, I don't think any board of directors would
Speaker 1: sign off on that, to be honest, I think you'd
Speaker 1: be You'd be burning a lot of money for not
Speaker 1: a lot of upside. Why do they need it? They've
Speaker 1: got t SMC to do that for them. So here's
Speaker 1: something that I'm still struggling with a little bit and
Speaker 1: we've talked about on other episodes. Is this idea of
Speaker 1: learning by doing the link between semiconductor design and semi
Speaker 1: conductor manufacturing. Some of these red hot chip companies like
Speaker 1: say a Nvidia, do they are there ever going to
Speaker 1: be risks to their business model that they aren't more
Speaker 1: intimately involved with the manufacturing aspect of the job and
Speaker 1: are sort of strictly design or is that? Is that sustainable?
Speaker 1: And now I think that is a risk. I don't
Speaker 1: think it's a risk for the near term. I think
Speaker 1: it's a risk for maybe ten or twenty years out.
Speaker 1: I mean, quantum computing is kind of around the corner.
Speaker 1: I don't think we're going to see quantum computers next year,
Speaker 1: but you know, that's the thinking is in in the
Speaker 1: next generation, So say twenty years, quantum computers will be
Speaker 1: out there, and and quantum computing is just it turns
Speaker 1: on its head the semi conductor industry because instead of
Speaker 1: having ones and zeros, you've got cubits and and some
Speaker 1: kind of mid state between off and on that is,
Speaker 1: you know, different to the base of how semiconductors work now,
Speaker 1: which is very binary. Is literally a transistor is on
Speaker 1: or a transistor is off, and you write all of
Speaker 1: your code and you design semiconductor circuits around this basic
Speaker 1: logic gates this idea of on and off and quantum
Speaker 1: computing is very very different, and so if that comes through,
Speaker 1: it may be in the best interests of someone like
Speaker 1: an video to say, you know what, we want to
Speaker 1: dabble in making it ourselves because we we think we
Speaker 1: know the best way to do it. And maybe someone
Speaker 1: like in the video would say, you know, we're going
Speaker 1: to start a little test fab just you know, here
Speaker 1: in Silicon Valley and and play around with them, see
Speaker 1: how we do, and maybe they'll discover the works well
Speaker 1: for them, and they get a lot of orders and
Speaker 1: they decide that this is something they can scale up.
Speaker 1: But they would have to be designing and kind of
Speaker 1: discovering the technology themselves to do so. I don't think
Speaker 1: you can set up shop tomorrow and get that technology
Speaker 1: off the shelf. So much of what any semiconductor maker
Speaker 1: is doing now is very very proprietary, to the point
Speaker 1: where nobody else could copy it, even if they were
Speaker 1: to take over the factory, like if if if for example,
Speaker 1: China invaded and got access to t SMC factories and
Speaker 1: t SMC engineers disappeared. I don't think they would know
Speaker 1: what to do with it. So you'd have to have
Speaker 1: that fundamental knowledge and really be building that knowledge from
Speaker 1: the ground up. And I think there's a possibility that's
Speaker 1: someone like an Nvidio, maybe a m D or maybe
Speaker 1: a chip company we haven't come across yet decides that
Speaker 1: actually we want to have a closer relationship with man factoring.
Speaker 1: And in fact, I think the company that is very
Speaker 1: very closely connected to manufacturing is probably Apple. As Apple
Speaker 1: goes down the Apples silicon path, I think we'll see
Speaker 1: them get a bit more involved in the manufacturing process.
Speaker 1: What scope is there for government policy to play a
Speaker 1: role when it comes to encouraging domestic industries that are
Speaker 1: able to compete with t SMC. So, for instance, in China,
Speaker 1: we know that the government there has already announced its
Speaker 1: intentions to build up its own chip manufacturing capacity. We've
Speaker 1: talked a lot in this podcast about the idea that
Speaker 1: you know, more than half of the world semiconductors are
Speaker 1: coming from this one company that's on a rather vulnerable island,
Speaker 1: caught between two very very big geopolitical forces. If countries
Speaker 1: recognize chips as strategically important. Will they be trying to
Speaker 1: encourage their own domestic production and how successful do you
Speaker 1: think they might be in that? Yeah, I think that's
Speaker 1: very very true. I think both both Beijing and Washington
Speaker 1: of recognized semi conductors as being of national security and
Speaker 1: geopolitical interest to them. China is recognized that for twenty years.
Speaker 1: But you know what, they're still to be blunt with you,
Speaker 1: they're not really doing that well. The people say our
Speaker 1: China is catching up. China's catching up, and that's true,
Speaker 1: but it's not like t SMC and everyone else is
Speaker 1: standing still. They're still moving forward and leaps and bounds
Speaker 1: and and Smick Semi Collacter Matufacturing International, which is kind
Speaker 1: of I guess the most famous of the flag bearers
Speaker 1: in China is really still struggling to get close to
Speaker 1: company like t SMC, and they really can't replace t
Speaker 1: SMC for example, if in Huawe needs to outsource to
Speaker 1: somebody else. So I think China is a really good
Speaker 1: example of how difficult it is that with even with
Speaker 1: endless amounts of money and very very smart engine You know,
Speaker 1: China has really good engineers, right, But they're just not
Speaker 1: as good as the Taiwanese or even the Americans or
Speaker 1: the Japanese or Koreans. Right, and then the other side,
Speaker 1: of course, the United States, they would like to get
Speaker 1: their chip glory back. But you know, one of the
Speaker 1: big problems is if you look at Silicon Valley, like
Speaker 1: literally that stretch of land we call Silicon Valley, almost
Speaker 1: no silicon is made there anymore. Right. In fact, there's
Speaker 1: more silicon made in Arizona, where Intel has a factory
Speaker 1: that is made in California. That's that's data I checked out. Yeah,
Speaker 1: it's it's it's amazing. Arizona is the new Silicon Valley.
Speaker 1: So that's part of the problem that any government will face. Obviously,
Speaker 1: Donald Trump wanted to get things going, using State and
Speaker 1: Commerce and various other departments to push that forward. It
Speaker 1: remains to be seen where the Biden will will take
Speaker 1: that forward. But America does have a chance to bring
Speaker 1: back and revitalize its chip industry, and I think the
Speaker 1: way they will do it will be semi national interest
Speaker 1: protectionist policies such as you know, any new equipment it
Speaker 1: goes into Department of Defense server farm must have chips
Speaker 1: made in America that kind of thing. You know, you
Speaker 1: put up national security policies and that basically means it all,
Speaker 1: if you want to sell to these companies, you have
Speaker 1: to make it on our terms, which probably means on
Speaker 1: American soil. So that's what they're doing with t SMC.
Speaker 1: They're trying to get t SMC to set up and
Speaker 1: tier SMC will set up in Arizona. And I think
Speaker 1: if you were to take that to its logical conclusion,
Speaker 1: I can imagine where there would be some kind of
Speaker 1: technology transfer where companies outside of the United States, Taiwanese
Speaker 1: or Japanese or Korean companies will be incentivized and and
Speaker 1: pushed to transfer some of the technology or do joint
Speaker 1: ventures with American companies to help transfer that technology back,
Speaker 1: which would be a beautiful irony because the Asian countries
Speaker 1: got their technology from America fifty years ago, so it
Speaker 1: would really be a nice kind of closing of the
Speaker 1: loop if America then started to have the technolo lets
Speaker 1: you trying to come back the other way, tim that
Speaker 1: was that was fantastic. It's it's it answered a bunch
Speaker 1: of questions that we have. Is sort of the perfect
Speaker 1: way to move the story forward for us. So I
Speaker 1: really appreciate you join us, no problem. It's fun to
Speaker 1: touch you guys. Thanks to Tim Crash course in TSMC. Yeah,
Speaker 1: that was fantastic. I really I really enjoyed that, you know.
Speaker 1: I think that last question that you asked and his
Speaker 1: answer really helped put some pieces together for me about say,
Speaker 1: like the challenge that China has been sort of replicating
Speaker 1: a world class chip system, and it really sort of
Speaker 1: the whole story of t SMC and really all of
Speaker 1: this and how much of this knowledge is just embedded
Speaker 1: in the engineers and the processes that have been going
Speaker 1: on forever. This idea, like you cannot replicate it just
Speaker 1: with money. You could throw an infinite literally infinite amount
Speaker 1: of money at something or virtually infinite, but there's no
Speaker 1: way to sort of recreate that, know how overnight. I
Speaker 1: think it's just a really really important thing. Yeah. I
Speaker 1: think one of the things that's standing out in all
Speaker 1: of these episodes is just how deep the moat is
Speaker 1: around semi conductor expertise. The more I learned about it,
Speaker 1: the more difficult it seems to me to you know,
Speaker 1: catch up to these players, and in particular t SMC,
Speaker 1: which as we just discussed, has this big leading position
Speaker 1: in the industry. The other thing I loved was that
Speaker 1: last bit of irony from Tim, this idea that the
Speaker 1: US might end up doing tech transfers to import semiconductor
Speaker 1: expertise after having exported it many many years ago. I
Speaker 1: I love how we come full circle in that way.
Speaker 1: But I guess, just going back to the other point
Speaker 1: about the idea that there's this deep moat around foundries
Speaker 1: and semiconductor manufacturing. I mean twenty or thirty years ago,
Speaker 1: a lot of people wouldn't have expected Taiwan to have
Speaker 1: built up an industry like this, So I guess things
Speaker 1: can change over the long term. Yeah, things can change
Speaker 1: over the over the long term, and Tim sort of
Speaker 1: identified some things that over time could perhaps erode t
Speaker 1: S MCS, MOTE or maybe some different models, whereby, as
Speaker 1: you mentioned, maybe companies don't feel they need to pay
Speaker 1: for always the state of the art as a tech changes.
Speaker 1: But I really do think that drove home this idea.
Speaker 1: It's like there's sort of the whole thing, just the
Speaker 1: compounding advantage that t SMC is building up. Now you
Speaker 1: have to do it. Look at the company's stock price
Speaker 1: and I think it's now six or seven of your
Speaker 1: billion dollar company almost which puts in lead with some
Speaker 1: of the real, you know, huge tech winners. You can
Speaker 1: see this is increasingly this mode, this advantage is increasingly
Speaker 1: reflected in the investor perceptions of the company. Absolutely all right,
Speaker 1: So now my question is how many more semiconductor episodes
Speaker 1: are we going to be doing. I think we have
Speaker 1: one more. I think we maybe whether that we could
Speaker 1: maybe pause. I think we're going to be talking to
Speaker 1: one of our old favorites, Dan Waging, pretty soon to
Speaker 1: really sort of figure out, Okay, basically a year post COVID,
Speaker 1: how is the state of China's tech industry and where
Speaker 1: they really stand with all of this. But I think
Speaker 1: that will be the last one for now. For now
Speaker 1: is the key here, because I mean, I'm joking a
Speaker 1: little bit because you wanted to turn all thoughts into
Speaker 1: a semiconductor podcast. But I do think another one of
Speaker 1: the standouts from all these conversations is just how important
Speaker 1: this technology is going to be in the future and
Speaker 1: this idea that it really is becoming a strategic asset.
Speaker 1: I've seen some people compare it to oil in the
Speaker 1: sense that it underpins all these different things in the
Speaker 1: global economy. So I do think this is going to
Speaker 1: come up again and again and again. Yeah, no, totally,
Speaker 1: Like and I hadn't really even thought about, you know,
Speaker 1: that point about the US putting pressure on t SMC
Speaker 1: not to sell chips to Lahwei. That's super interesting in
Speaker 1: its own right, Like, here is this company that's in
Speaker 1: Taiwan that China itself, would you know, Taiwan from China's
Speaker 1: view as part of China, and yet still from the
Speaker 1: business perspective and sort of the way things are that
Speaker 1: it's the US that can pressure t SMC not to
Speaker 1: build for Huawei, then the other way around. Right, So
Speaker 1: we've spent you know, all this time talking about resiliency
Speaker 1: of supply chains and worrying about what happens if you know,
Speaker 1: there's a pandemic in the country where you manufacture something
Speaker 1: that's vital for your final product, or if sanctions come
Speaker 1: in that suddenly cut off supplier or something like that.
Speaker 1: And here we have an area where the impact could
Speaker 1: be really, really strong. But also it seems likely that
Speaker 1: because of the strategic importance of semiconductors, they will actually
Speaker 1: be targeted by countries that are trying to gain a
Speaker 1: tech advantage. Absolutely, it's super, super interesting dynamics that I
Speaker 1: hadn't really thought at all before prior to this conversation.
Speaker 1: All right, so we're all a semiconductor enthusiasts and nerds. Now,
Speaker 1: shall we leave it there? Yes? Leave it there? All right?
Speaker 1: This has been another episode of the All Thoughts Podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway and I'm Joe Why Isn't Thought? You can
Speaker 1: follow me on Twitter at The Stalwart. Follow our guest
Speaker 1: Tim Colpin. He's on Twitter at t Colpen and check
Speaker 1: out all of his columns at Bloomberg Opinion. Follow our
Speaker 1: producer Laura Carlson. She's at Laura M. Carlson. Followed the
Speaker 1: Bloomberg head of podcast, Francesco Levi at Francesca Today, and
Speaker 1: check out all of our podcasts under the handle at podcasts.
Speaker 1: Thanks for listening.