The Hustle

What to know about the Taiwan chip situation

The world put all its chips in one basket — now it’s trying to decentralize.

Replace eggs with semiconductors, and the phrase “don’t put all your eggs in one basket” describes an enormous issue facing the global economy.

At the middle of it is Taiwan Semiconductor Manufacturing Company, a $300B+ company that accounts for 92% of global advanced semiconductor production capacity, building chips for much of the world’s tech across iPhones, military equipment, cars — you name it.

As the name suggests, TSMC is in Taiwan

That presents a dicey geopolitical conundrum:

What’s being done?

In July, Congress passed the CHIPS and Science Act, putting ~$53B toward US manufacturing.

The US also recently blocked the sale of advanced semiconductors and equipment to Chinese firms, and restricted US companies and citizens from aiding Chinese chip development.

As for companies…

These moves are a start, but the estimated total investment required for major global regions to completely reshore production is pegged at ~$1T each, plus $45B-$125B a year thereafter. In other words, we’ve got a ways to go.

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