CCP-PLA technologically pushed back, cracks in the global order can be filled

Apple introduced its first Mac comput­ers since 2005, with­out an In­tel mi­cro­pro­ces­sor. In­tel—has botched its tran­si­tion to sub-10-nanome­ter chips and are still behind.

But, if In­tel is a few years be­hind, Chi­na’s lag may be closer to a decade.

And if it wasn’t enough, to rub salt on the Chinese wounds, Apple is getting its processors from Taiwan.

Last year China pro­duced only 16% of the semi­conduc­tors it con­sumed do­mes­ti­cally. In 2014, China announced a Na­tional Inte­grated Cir­cuit Plan promis­ing to spend $150 bil­lion to ex­pand lo­cal semiconduc­tor manufactur­ing.

It didn’t work; you can’t throw money at the prob­lem. It takes state-of-the-art equip­ment & home­grown ex­per­tise.

On geopolitical angle- If Chi­na’s self-re­liance ini­tia­tive fails, & a Biden adminis­tra­tion con­tin­ues an advanced chip em­bargo—China would be in a bind. China’s military, in an arms race with the US, has to be ner­vous about be­ing locked out of sub-10-nanome­ter chips.

Fi­nally, the CCP-PLA is likely to calculate the costs & ben­e­fits of bring­ing Tai­wan’s ca­pacity un­der its con­trol (by force), even as the U.S. weighs de­fend­ing it. TSMC (Taiwan Semiconductor Manufacturing Co., Ltd) has five fabs on a sin­gle cam­pus, Hsinchu Science Park.

But even the forced control would likely fail almost right away. It’s not just another manufacturing. The formula might be writ­ten down but is re­ally in the head of TSMC’s engi­neers and is tweaked al­most daily.

A forced Tai­wan takeover would crater out­put even if China brought in main­land en­gi­neers. It’s more art than sci­ence.

Plus a forced takeover could generate hefty shock waves capable of dam­aging China’s econ­omy even more than the pandemic did.

In short, the CCP-PLA have been technologically pushed back at least by a decade. And meantime, the cracks in the global order can be filled.