Comment by Riaz Haq on September 30, 2020 at 12:56pm

Instead of #AI, #Pentagon Is Clinging to old #tech. #US #politics of killing off old weapons systems is so forbidding — often because it involves closing factories or bases, and endangers military jobs in congressional districts — that the efforts falter.

https://www.nytimes.com/2020/09/29/us/politics/military-cyberweapon...

A bipartisan House panel said on Tuesday that artificial intelligence, quantum computing, space and biotechnology were “making traditional battlefields and boundaries increasingly irrelevant” — but that the Pentagon was clinging to aging weapons systems meant for a past era.

The panel’s report, called the “Future of Defense Task Force,” is one of many underway in Congress to grapple with the speed at which the Pentagon is adopting new technologies, often using the rising competition with China in an effort to spur the pace of change.

Most reach a similar conclusion: For all the talk of embracing new technologies, the politics of killing off old weapons systems is so forbidding — often because it involves closing factories or bases, and endangers military jobs in congressional districts — that the efforts falter.

The task force said it was concentrating on the next 30 to 50 years, and concluded that the Defense Department and Congress should be “focused on the needs of the future and not on the political and military-industrial loyalties of the past.”

“We are totally out of time, and here is a bipartisan group — in this environment — saying that this is a race we have to win and that we are currently losing,” said Representative Seth Moulton, Democrat of Massachusetts, who served with the Marine Corps in Iraq and was a co-chairman of the task force. “There is a misalignment of priorities, and diminishing time to make dramatic changes.”

The report calls for the United States to undertake an artificial intelligence effort that uses “the Manhattan Project as a model,” citing the drive in World War II to assemble the nation’s best minds in nuclear physics and weapons to develop the atomic bomb. The task force found that although the Pentagon had been experimenting with artificial intelligence, machine learning and even semiautonomous weapons systems for years, “cultural resistance to its wider adoption remains.”

It recommended that every major military acquisition program “evaluate at least one A.I. or autonomous alternative” before it is funded. It also called for the United States to “lead in the formulation and ratification of a global treaty on artificial intelligence in the vein of the Geneva Conventions,” a step the Trump administration has resisted for cyberweaponry and the broader use of artificial intelligence.

But questions persist about whether such a treaty would prove useful. While nuclear and chemical weapons were largely in the hands of nations, cyberweapons — and artificial intelligence techniques — are in the hands of criminal groups, terrorist groups and teenagers.

Nonetheless, the report’s focus on working with allies and developing global codes of ethics and privacy runs counter to the instincts of the Trump administration, making it more surprising that the Republican members of the task force signed on.

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“The Pentagon knows how to acquire large programs,” like “fighter jets or aircraft carries, but it is less adept at purchasing at scale the types of emerging technologies that will be required for future conflict,” it said.

Defense Department officials have sought to address that problem. But the task force found that while those efforts sometimes succeeded, they were too small, and “the Pentagon has so far only been able to tap into a fraction of the innovation being developed in the United States.”

Comment by Riaz Haq on November 2, 2020 at 10:46am

#China's #Huawei develops plan for chip plant to help beat #American sanctions. #Chinese fab will initially experiment with making low-end 45nm chips, a #technology global leaders in chipmaking like #TSMC & #Intel started using 15 years ago. #SiliconValley https://www.latimes.com/business/story/2020-11-01/huawei-chip-plant

Huawei is working on plans for a dedicated chip plant in Shanghai that would not use American technology, enabling it to secure supplies for its core telecom infrastructure business despite U.S. sanctions.

Two people briefed on the project said the plant would be run by a partner, Shanghai IC R&D Center, a chip research company backed by the Shanghai municipal government.

Industry experts said the project could help Huawei, which has no experience in fabricating chips, chart a path to long-term survival.

U.S. export controls imposed in May and tightened in August leverage American companies’ dominance of certain chip-manufacturing equipment and chip-design software to block semiconductor supplies to Huawei.

Industry experts said the planned local facility would be a potential new source for semiconductors after stocks of imported chips Huawei has been accumulating since last year ran out.

The fabrication plant will initially experiment with making low-end 45nm chips, a technology global leaders in chipmaking started using 15 years ago.

But Huawei wants to make more advanced 28nm chips by the end of next year, according to chip industry engineers and executives familiar with the project. Such a plan would allow Huawei to make smart TVs and other “internet of things” devices.

Huawei then aims to produce 20nm chips by late 2022, which could be used to make most of its 5G telecoms equipment and allow that business to continue even with the U.S. sanctions.
“The planned new production line will not help with the smartphone business since chipsets needed for smartphones need to be produced at more advanced technology nodes,” said a semiconductor industry executive briefed on the plans.

“But if it succeeds, it can become a bridge to a sustainable future for their infrastructure business, in combination with the inventory they have built and which should last for two years or so,” he said.

“They possibly can do it, in maybe two years,” said Mark Li, a semiconductor analyst at Bernstein in Hong Kong.

He added that although the chips Huawei needed for making mobile network base stations would ideally be made on 14nm or more advanced process technology, using 28nm was possible.


“Huawei can make up for the shortcomings on the software and system side,” he said. Chinese producers could tolerate higher costs and operational inefficiencies than their offshore competitors.

The project, first reported by Chinese newspaper Caixin last month, could also jump-start China’s ambitions to shake off its dependency on foreign chip technology, particularly from the U.S., which wants to slow China’s development as a technology power.

Huawei has already been investing in the domestic semiconductor sector, especially among smaller operators, a chip industry executive said.

“Huawei has strong abilities in chip design, and we are very happy to help a trustworthy supply chain develop its capabilities in chip manufacturing, equipment and materials. Helping them is helping ourselves,” rotating chairman Guo Ping told journalists in September.

Comment by Riaz Haq on December 23, 2020 at 5:11pm

What started as #Asian pivot for #America is now a full-blown containment strategy to check #China's power by "supporting India’s efforts to pose military dilemmas for China....." #India #Pakistan #CPEC #Asia https://www.dawn.com/news/1596983


The opening line (of "Rising to the China Challenge" report) declares: “The United States and China are locked in strategic competition over the future of the Indo-Pacific” and then goes on to paint a stark contrast between America’s “free and open” vision and the “closed and illiberal” future that the report sees China as envisioning. It then goes on to state that “managing the China challenge” should be the topmost priority of US foreign policy and that doing so will carry economic costs for Americans and require sacrifice and trade-offs. This makes it clear that the coming decade will be shaped by the US-China confrontation, with all the turmoil and scheming that this entails.

There’s a lot in the report that is meant to alarm or goad US policymakers into action, in keeping with the standard policy of exaggerating threats in order to justify a massive response. To summarise, the report warns that “China is poised to surpass the United States in gross domestic product, while racing ahead to gain technological advantage in key areas such as artificial intelligence, quantum computing, and genomics,” and that the US response must then be to compete in the domains of “economics, technology, diplomacy, ideology, governance, and human capital”. Which pretty much covers all bases.

The report notes that the US has an advantage in the number of regional allies and partners it has, such as Australia, Japan, South Korea and Thailand, and notably mentions India a total of 31 times. By contrast, the only mention of Pakistan is a hyphenated one, occurring in the context of the Indo-Pakistan border. And that brings us to exactly what the US intends to do for India in military terms with the aim of propping it up as a regional counterweight to China. In the report’s own language, this entails “supporting India’s efforts to pose military dilemmas for China, thereby providing low-cost means to complicate the ability of the People’s Liberation Army (PLA) to concentrate … on US strongholds in East Asia and the Western Pacific”, noting that while India “has the potential to contribute as a military counterweight to China”, its “structural impediments and resource constraints” have hampered it.

The report then spends a good amount of space on how to remove those impediments and relieve those constraints. It envisions an India armed with super and hypersonic anti-ship missiles along with the targeting systems needed to maximise the potential of these weapons. It also proposes making it easier for India to build and/or acquire more cutting-edge attack submarines. There is a focus on improving Indian military transportation infrastructure, allowing it to better redeploy forces on short notice. More crucially, it emphasises making “major investments in [Indian] electronic warfare, cyber offence and counterspace systems”, thus changing the Indian army’s approach from “territorial defence” to multi-domain dominance.

Interestingly, it also proposes turning a blind eye to Indian acquisitions of Russian defence technology so as to not corner Russia or inconvenience India. In that context, the report also proposes “removing barriers” to assistance to allied countries, which in this case means turning a blind eye to growing authoritarianism and Hindutva-led fascism in India. After all, principles are nice to have, but not at the expense of power. As for us, we know that while India may acquire capabilities against China, those capabilities will be first used against us. Will we be forced into a camp or can deft diplomacy reap us some benefits? Either way, things are about to get interesting, once again.

https://www.cnas.org/publications/reports/rising-to-the-china-chall...

Comment by Riaz Haq on December 27, 2020 at 7:26am

THE world is undergoing a transformation of historic proportions. Two main drivers of this are the growing US-China rivalry and the scientific and technological revolution worldwide especially in the US, China, Western Europe and other developed countries. Both developments will have far-reaching implications for global politics, security and economy. Countries, which understand the fundamental forces driving the world and take steps to safeguard their national interests, will forge ahead of others who fail to understand the implications of the changes shaping the globe.

https://www.dawn.com/news/1598083

This prospect raises critical foreign policy and security issues for the consideration of Pakistan’s leaders and policymakers. The main foreign policy challenge confronting Pakistan would be to deepen its strategic cooperation with China in the face of the growing US-India strategic partnership while maintaining friendly ties with the US-led West which has its own importance in Pakistan’s political, economic and security calculations. The ramifications of the global geopolitical transformation in the Middle East, in the backdrop of the growing Indo-US-Israeli political, security and economic footprint in the region and the deep political divide between Iran and some of the GCC states, will pose their own set of difficult foreign policy choices for Pakistan.

The scientific and technological revolution unfolding in the US, China, Western Europe and other developed countries is another element driving the global transformation over and above the growing US-China rivalry. Developments in cutting-edge information technology ie semi-conductors, data, 5G mobile networks, internet standards, artificial intelligence and quantum computing particularly will help determine not only which country or countries have military edge but also a more dynamic economy.

Countries neglecting education, particularly science and technology, in their national development plans will increasingly become irrelevant in international politics with the passage of time. Unfortunately, Pakistan, which lags far behind in economic, scientific and technological development because of the short-sightedness of its leaders and policymakers, falls in this category. In the absence of necessary corrective steps by our government, the adverse consequences of our flawed policies will continue to haunt us far into the future.

Comment by Riaz Haq on January 14, 2021 at 4:06pm

Lack of #Computer Chips Disrupts #Automobile Factories Worldwide. #Semiconductor chips are used in touch screens, engine controls & transmissions, communications, suspensions, anti-lock brakes & collision avoidance systems with cameras and other sensors https://www.nytimes.com/2021/01/13/business/auto-factories-semicond...

Geopolitics also played a role. The Trump administration in September placed restrictions on Semiconductor Manufacturing International Corporation, China’s main foundry, which produces chips for cars and many other applications. The company’s customers began looking for alternatives, generating additional competition for chip supplies from other foundries, said Gaurav Gupta, a vice president at the research firm Gartner.

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The chip crisis is an example of how the pandemic has shaken the global economy in unpredictable ways. Carmakers expected to face supply chain shortages, and plants closed early in 2020 because of fear that workers would infect one another, or because trucking firms had stopped delivering. Most U.S. auto factories ceased production for roughly two months last spring.

Automakers braced for turmoil when the pandemic hit. They expected supply chain disruptions and plummeting sales. But they never figured that a year later one of their biggest problems would be PlayStations.

Strong demand for gaming systems, personal computers and other electronics by a world stuck indoors has sucked up supplies of semiconductors, forcing carmakers around the world to scramble for the chips that have become as essential to mobility as gasoline or steel.

Virtually no carmaker has been spared. Toyota Motor has shut down production lines in China. Fiat Chrysler Automobiles temporarily stopped production at plants in Ontario and Mexico. Volkswagen has warned of production problems at factories in China, Europe and the United States. Ford Motor said last week that it was idling a Louisville, Ky., factory for a week because of the shortage.

When Covid-19 hit, automakers slashed orders for chips in anticipation of plunging sales. At the same time, semiconductor makers shifted their production lines to meet surging orders for chips used in products like laptop computers, webcams, tablets and 5G smartphones.

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Businesses also upgraded their digital infrastructure to handle online meetings and employees working from home, while telecommunications companies invested in broadband infrastructure, further fueling demand for semiconductors.

Then auto sales bounced back faster than expected at the end of 2020, catching everyone off guard. The shortages of chips that ensued are expected to last well into 2021, because it can take semiconductor makers six to nine months to realign production.

“Consumer electronics exploded,” said Dan Hearsch, a managing director at the consulting firm AlixPartners. “Everybody and their brother wanted to buy an Xbox and PlayStation and laptops, while automotive shut down. Then automotive came back faster than expected, and that’s where you get into this problem.”

While the shortage is not expected to cause auto prices to rise very much, buyers might have to wait longer to get the vehicles they want.

The chip shortage has its roots in long-term forces reshaping the auto and semiconductor industries, as well as short-term confusion from the pandemic.

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“Future investment in these foundries will therefore be critical so that the automotive industry can avoid such supply chain upheavals in the future,” Continental said in a statement.

Infineon, based in Munich, said it was stepping up investment in new production capacity in 2021 to as much as 1.5 billion euros, or $1.8 billion, from €1.1 billion in 2020. The company is also ramping up production at a new chip factory in Villach, Austria, that will produce 12-inch wafers.

Comment by Riaz Haq on January 22, 2021 at 12:08pm

China is home to 1.87 million scientific researchers, the most in the world, and a growing number of high tech giants such as Huawei, Tencent and ZTE.

https://asia.nikkei.com/Politics/International-relations/China-rise...


Despite recent efforts by the Kremlin to stimulate the domestic tech sector, Russia has not enjoyed similar success. Experts warn that Russia is falling behind in key emerging technologies such as artificial intelligence, and that unless that changes, its defense industry will have a difficult time keeping up with China and the U.S.

"Russia doesn't have giants like Microsoft or Huawei that produce technologies that can be used for civilian and military purposes," said Kozyulin of the PIR Center. "Instead, the government itself has to create everything from scratch, which is very costly."

As China has become more advanced, Russia has begun exploring opportunities to codevelop weaponry with Beijing. In 2016, the two countries partnered to develop and produce over 200 next-generation heavy lift helicopters for the PLA by 2040. Another major collaboration was announced in August, when Russia arms officials revealed that Moscow and Beijing had begun working on developing a new non-nuclear submarine.

"It's pretty clear that Russia is transitioning to a technology transferring and subcontracting role, since although China can now make many of its own systems, it still lacks Russia's tremendous amount of engineering experience and ability to develop a lot of key components," said Michael Kofman, director of the Russia program at the Washington-based CNA military research center.

But other experts are skeptical that such an arrangement is sustainable in the long run. Siemon Wezeman, a senior researcher at the SIPRI Arms and Military Expenditure Programme, argued that Moscow could be falling too far behind to keep Beijing interested.

"I expect the Russians to be completely out of the picture for the Chinese as a provider of technology within five to 10 years," he said. "The Russians will be looking to see if they can somehow get their hands on Chinese technology because the Russians are falling behind, and in some cases they're not getting anywhere anymore."

Wezeman added that in the long run, it is even possible that China will push Russian arms manufacturers out of their traditional markets in Africa, the Middle East and Latin America. He warned that China is well-positioned to outcompete Russia in these markets, since unlike Moscow, Beijing can bundle arms deals together with lucrative economic agreements.

"There is no real reason for those countries to go with the Russians if they can get something similar or better from the Chinese," Wezeman said. "In a way the Chinese probably have more to offer, not only in terms of the weapons, but also all kinds of other arrangements."

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China passes US as world's top researcher, showing its R&D might. TOKYO -- China has outstripped the U.S. in putting out research papers in the natural sciences, data released Friday shows, further illustrating its emerging dominance in scientific investigation.Aug 8, 2020


https://asia.nikkei.com/Business/Science/China-passes-US-as-world-s...


https://www.nippon.com/en/japan-data/h00809/

Comment by Riaz Haq on January 22, 2021 at 12:27pm

Pakistan’s Performance in Global Impact Factor Race


https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6115561/


Pakistan is a home to more than 200 million people, 189 Higher Education Commission (HEC) chartered universities and degree awarding institutes4 including 29 medical universities, 157 medical schools5 125 engineering, 92 management sciences and 28 agricultural institutes.4

In Pakistan, there are 371 HEC indexed journals in various academic disciplines of science and social sciences4. In the last week of June 2018, Philadelphia USA based, a notable indexing institute, Thomson Reuters, Institute of Scientific Information (ISI) Web of Science, currently known as “Clarivate Analytics” released a global science and social science journals Impact Factor (IF) list of year 2017.6

Impact factor represents the total number of citations to a journal’s articles divided by the number of articles published during the previous two years. It is widely used in the academic world as a yardstick of a journal’s prestige. From Pakistan, out of 371 only 12 (3.24%) academic journals have achieved a place in ISI-Web of Science.

Worldwide, 12271 science and social sciences journals are indexed in the ISI-Web of Science, their IF is ranging from 0.001 to 244.58.6 The Cancer Journal for Clinicians USA achieved a top position in the world with Impact Factor 244.58. The other top ranking journals are New England Journal of Medicine USA 79.25; Lancet USA 53.24; Nature UK 41.57; and Science USA 41.05.6 These journals are leading the world and have maintained their topmost positions in the global IF race.

In our environs, China is leading the region with 203 academic journals achieved a remarkable position in ISI Web of science with IF 0.0045 to 15.393. India has 104 with IF 0.096 to 2.658; Iran 42 IF 0.280 to 2.667; Pakistan 12 IF 0.280 to 1.217; and Bangladesh has 4 with IF 0.214 to 1.532. Only one Journal from Pakistan, “Pakistani Veterinary Journal” exceeds the IF 1.217.6

While comparing the quartile factor of the journals, subject category in percentile rank, the top 25% of journals in a particular category are placed in Q1, next in Q2 and so on. 41 Chinese journals achieved a position in first quartile Q1, Q2: 63, Q3:57 and 62 journals in Q4. India has Q1: 0, Q2: 4, Q3: 26 and in Q4:74. Iran has 42 academic journals from them Q1: 1, Q2: 4, Q3: 12 and in Q4:25. However, Bangladesh has 4 ISI-Web of Science indexed journals only one journal placed a position in Q3 and 3 in Q4.6

The quartile ranking of Pakistani journals is: 2 journals in both Q2 and Q3 and the remaining 8 journals are in Q4. Only one Journal, Pakistan Veterinary Journal exceeds the IF 1.217 and two journals placed a position in quartile 2.6

In medical sciences, Pakistan Journal of Medical Sciences achieved an IF 0.719; Journal of Pakistan Medical Association IF 0.718; Journal of College of Physicians and Surgeons of Pakistan- JCPSP IF 0.439.6 These medical sciences journals are establishing a platform to publish quality research but still the road is rutted and needs its renewal. They should fascinate the international science community and enhance the research visibility in the global science to upsurge the IF and quartile ranking of the academic journals to compete internationally. Sadly, few Pakistani journals, which are celebrating their golden anniversaries of 50 years, have yet still failed to achieve a place in ISI Web of Science.

Comment by Riaz Haq on January 24, 2021 at 10:14am

China’s Ascent
The rise of China will have far-reaching consequences—the world should get ready
By Keyu Jin

https://www.imf.org/external/pubs/ft/fandd/2019/06/rise-of-china-ji...

China in 2040 will look on the face of things to be a mighty economic power. Under plausible projections, it will have firmly established itself as the largest economy in the world, with 60 to 70 percent of the US income level. But in 20 years, China will still be a developing economy by many measures—its financial development will lag its economic development, and many economic and policy distortions may still persist.

In that scenario, the world must be prepared for China to be its first systemic emerging market economy. It should brace for greater volatility and uncertainty as China becomes more intermeshed with global financial markets. It should prepare for a China that emits shocks distinctive to developing economies—but on a much larger scale and with greater thrust and impetus.

Every significant policy move, stock market panic, and cyclical upswing or downswing in China can plausibly diffuse and propagate through the web of financial networks that links nations. In China today, 70 percent of investors in capital markets are retail investors, quick to react to noise and changes in sentiment. Mercurial stock markets and volatile exchange rates may become the rule, not the exception.

Currently, China is already inadvertently sending shocks to the rest of the world, despite its small international financial exposure. My own research with Yi Huang shows that it is not only policy shocks (monetary and fiscal) that spill over to the rest of the world but also the shocks of policy uncertainty.

In a country where reforms big and small happen on a regular basis, where policy moves often instigate cyclical fluctuations rather than subdue them, where policy direction and strategy are based on experimentation rather than experience, uncertainty can be a first-order menace to overly sensitized financial markets.

Our research shows that during 2000–18, Chinese policy uncertainty shocks significantly affected not only economic variables, such as world industrial production and commodity prices, but also key financial variables, including global stock prices and bond yields, the MSCI World Index, and financial volatility.

Now imagine China in 2040, more consequential and with a greater number of channels open to the rest of the world—whether cross-border bank lending, portfolio holdings, capital flows, or a more dominant renminbi. In that scenario, shocks emanating from China would not only propagate more swiftly and potently, they would also be amplified and expanded through its increasing and diverse financial channels.

The rise of China today bears much similarity to the ascent of the United States in the late 19th century. Although it was growing rapidly and catching up with European countries, it had the developing economy malaise of unsophisticated capital markets. Corporate governance was riddled with problems and banking crises occurred regularly; weak financial intermediaries and a shortage of financial assets, along with the absence of a lender of last resort, prevented the efficient mobilization of capital. The vagaries of the US economy and the financial panic in 1873 were fully transmitted to Europe and Great Britain, which had significant exposure to the US economy.

Comment by Riaz Haq on January 24, 2021 at 10:21am

The shape of China’s recovery

By Keyu Jin

Fortunately, although the government’s short-term recovery measures have slowed progress on longer-term reforms, its post-pandemic spending spree is more targeted than last time, and thus unlikely to fuel another credit bubble. Among the most notable features of this package is its emphasis on investments in innovation. In the name of building “new infrastructure,” the government is redirecting resources from traditional projects to data centers, artificial-intelligence applications, and electric-vehicle charging stations, increasing investment in high-tech manufacturing and services by nearly 10% over the course of the year.

This suggests that we should expect a continued commitment to opening up the economy, particularly in financial services. Chinese policymakers recognize that the domestic financial system needs to become more competitive and more closely integrated with Western institutions and corporations amid heightening geopolitical tensions.

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China’s economy is on the road to recovery after the COVID-19 shock in the spring of 2020. Negative growth rates in investment, manufacturing activity, and consumption have reversed course and moved into positive territory, and some indicators, such as exports, have even beaten expectations, registering a positive growth rate of more than 10% in the third quarter of the year.

How an economy recovers from an economic shock determines how robust its recovery will be. Back in 2009, the Chinese government’s 4 trillion yuan ($605 billion) stimulus plan following the global financial crisis fueled a credit boom, which inflated the shadow-banking sector and sent debt levels soaring to alarming heights.

To be sure, China’s overall response salvaged the economy and maintained impressive growth rates. But as investment flooded into infrastructure projects and housing, and onto the balance sheets of large state-owned enterprises, it created even more economic distortions than there had been before the crisis. Overall productivity growth would remain diminished for the next decade.

This time around, China’s recovery is again based on a large stimulus plan, coupled with measures to control the virus so that work and other economic activities can resume. But much of the spending so far has come from the public sector rather than private enterprise. Moreover, recent figures show that China’s post-COVID rebound has been led by investments in infrastructure and housing, whereas consumption growth has been sluggish and nowhere near the pre-crisis trend.

Even though people are safe going about their normal lives, the service sector is still nowhere near a true recovery. Out of an abundance of caution, people are saving more and going out less. This trend could bode ill not just for China but also for the rest of the world, since it may be an indication of what awaits other economies.

Comment by Riaz Haq on February 25, 2021 at 5:36pm

#Superpower status will depend on #semiconductor chips. #TSMC building world's largest $20 billion fab in #Taiwan to manufacture chips at dimensions of just 3 nanometers that'll power everything from latest iPhones to medical equipment to F-35 fighters. https://www.ft.com/content/44e28cad-55b7-4995-a5c5-6de6f9733747


This vast capital expenditure highlights the near-insatiable demand for computer chips, the dominance of Taiwanese chipmakers and the sophistication of modern manufacturing. TSMC’s chips power everything from Apple’s latest iPhones to medical equipment to F-35 warplanes, accounting for about 55 per cent of global semiconductor sales.

But the manufacture of semiconductors is becoming a geopolitical imperative, too. As part of its squeeze on China’s tech industry, the US has pressured TSMC to stop supplying Huawei, previously one of its biggest customers. China, which spends more on importing computer chips than oil, is developing a semiconductor industry to reduce dependence on overseas suppliers. 

Sensing their own vulnerability, the US, Japan and the EU are also stepping up their efforts to develop indigenous semiconductor industries, as their carmakers and computer games companies wail about the lack of supply. Computer chips currently vie with vaccines as must-have resources for any nation state.

If military capability in previous centuries was built on breech-loading rifles, warships or atomic bombs, it may well depend in the 21st century on the smartest use of advanced chips. The centrality of TSMC to the global semiconductor industry is sometimes given as a reason why mainland China might yet invade Taiwan. But far bigger military and political considerations will determine Beijing’s course of action.

By any measure, TSMC is an extraordinary company which is reaping the benefits of out-investing its rivals. It has just announced that its capital spending will further increase to between $25bn and $28bn this year as it struggles to add capacity fast enough to match demand. During an earnings call last month, CC Wei, TSMC’s chief executive, said that surging sales of smartphones and high-performance computers and the adoption of 5G mobile technology were fuelling demand for the company’s leading-edge logic chips. “We believe that 5G is a multiyear megatrend that will enable a world where digital computation is increasingly ubiquitous,” he said.

Most other semiconductor companies have dropped out of the race to manufacture 3nm chips due to the stratospheric costs. It will now be hard for any rival to catch up with TSMC because of its vast capital spending, its technological expertise, its network of suppliers and its support from the Taiwanese government. Only Samsung of South Korea is visible in its rear-view mirror.

“What separates TSMC from other foundries is its appetite to take risks and its ability to execute. It is an incredible business model,” says Brett Simpson, a tech analyst at Arete, an independent research firm. “The market is heading for one dominant player and one subscale player that is hanging in there and executing very well.”

The bigger concern for TSMC is the geopolitical tension between the US and China. With two fabrication plants in China, one in the US state of Washington and another planned in Arizona, TSMC has been hedging its bets. But like many other companies in a fast-polarising world, it is being forced to choose.

Shelley Rigger, a professor at Davidson College in North Carolina and author of Why Taiwan Matters, says that US pressure on China is only reinforcing Beijing’s determination to become self-sufficient in semiconductor manufacturing: “China has infinite money to throw at a problem like this and no scruples about doing what needs to be done.”

Taiwan has long feared that the world could divide into Chinese-dominated red supply chains and US-focused blue supply chains, jeopardising relations with either its biggest trading partner or its main strategic ally. The island’s room for manoeuvre is becoming as thin as TSMC’s wafers.

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