If China invades Taiwan, TSMC can wreck Apple's chip production line remotely

AppleInsider

As saber-rattling about a Chinese invasion of Taiwan grows, two Apple suppliers have confirmed that they can scuttle chip production lines from outside the country, should the need arise.

TSMC's headquarters in Hsinchu, Taiwan

Tensions between Taiwan and China have continued to grow, with no signs of stopping anytime soon. With China insisting Taiwan is its territory and its government unwilling to rule out military action, there are fears that China could try to take control of the country by force.

In March, a U.S. admiral testified that China would be able to invade Taiwan by 2027, due to its military growth. With the U.S. Congress approving a $8 billion aid package in April to improve Taiwan's defenses, the Biden administration has also sought out assurances from the private sector.

U.S. officials have communicated concerns to counterparts in the Netherlands and Taiwan about Chinese intervention, reports Bloomberg. The concerns include fears of what could happen to production lines used to create processors, including TSMC's lines used to make chips for Apple.

ASML Holding is a Dutch company that produces chip manufacturing equipment for an extreme ultraviolet (EUV) process. That includes production lines for chip production used by TSMC on behalf of Apple, including its iPhone and Apple Silicon chip families.

Assurances have been made by ASML to the Dutch government about the potential threat of a Chinese invasion. Two people familiar with the discussions say ASML has the capability to remotely disable its machinery in case such a threat emerges.

The fear is that the machinery could fall into Chinese hands, something that other world governments have been keen to avoid.

Spoils of war, a competitive edge

Each machine, the size of a bus and valued at more than $217 million per unit, is used to create chips with the smallest commercially available transistors. While ASML has shipped its machinery to clients in China, there is the worry that the high-priced hardware could be taken as spoils of war.

The worry of China taking the machines and using them to create new chips has caused governments to be wary.

This has already included the Netherlands prohibiting ASML from selling its EUV machinery to China at all. This was a request sought by the U.S, which has also asked ASML directly to cancel shipments to customers in China.

Even so, ASML still expects China to be its biggest market for its hardware.

The U.S. has a secondary reason to prevent China from gaining access to the specialized machinery. The United States is keen to foster chip production on its shores, and it doesn't want to give China any advantages.

That production drive includes a $6.6 billion subsidy handed to TSMC in April, to build a third fabrication plant in Arizona.

With Taiwan already producing 90% of the world's advanced chips, the prospect of China seizing the hardware and getting a major hardware advantage for manufacturing is too much for the U.S. government to bear.



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tmay

For more on this subject, I recommend "World on the Brink; How America Can Beat China in the Race for the Twenty-First Century" by Dmitri Alperovitch.

Washington Post interview;

https://www.youtube.com/watch?v=CwfGrjVjgas&t=918s

robin huber

Has no idea the fab machinery was Dutch! Why haven’t we bought our own “busses” from them. If the machine does most of the work, where is the labor cost saving by having chips made in Taiwan?

avon b7

It's all pretty much nonsense from a chip perspective.

Only a tiny fraction of the world's chip output is on cutting edge nodes. What makes the world go around is everything else that isn't cutting edge. The much older, more mature nodes. 

There are strategic commercial reasons behind China not having access to cutting edge nodes so the most likely outcome of hostilities is old-fashioned, ehem, 'anonymous' physical destruction, a la Nord Stream, for example and the bulk of our telecommunications runs over undersea cabling too so that is guaranteed to get the snip if things go wrong. Satellite communications will also be interfered with. 

That would see a lot of already fabricated chips with very little to do. 

Sanctions have only accelerated China's chip efforts and determination and, as we move beyond silicon, new solutions will come to market (phototonics are showing promise). Possibly for highly specialised fields first but 'kill switches' are simply spanners in the works when it comes to fabrication. 

Apple took a huge risk in putting all its chip related eggs into one basket mostly in Taiwan. It's paid off so far but the risk (political, economic, natural disaster or otherwise) remains and they are seeking to change that slowly. A wise move. 

charlesatlas

Just disable? I was hoping for some explosive charges, and then the CEO can say into his iPhone, "Code zero zero zero. Destruct. Zero."

sbdude

I was hoping for a self-destruct sequence a la star trek. I am sadly disappointed.

avon b7

robin huber said:

Has no idea the fab machinery was Dutch! Why haven’t we bought our own “busses” from them. If the machine does most of the work, where is the labor cost saving by having chips made in Taiwan?

It's Dutch today but mostly because the US backed off when it came to developing the research. 

ASML took the risk and reaped the rewards only to have part of the rug pulled out from under its feet due to sanctions. Its CEO has repeatedly spoken out against not being able to sell to one of its major markets. China. The CEO of Nvidia has said the same.

The chip fabrication process is complicated. Lithography machines have components from all over the world. Then there is the software (EDA) side, the raw material side, the packaging side, etc. to final fabrication. Then logistics and whatnot. 

Taiwan and mainland China are key to having the process churn out sufficient quantities to meet demand. 

edited May 2024

mikethemartian

robin huber said:

Has no idea the fab machinery was Dutch! Why haven’t we bought our own “busses” from them. If the machine does most of the work, where is the labor cost saving by having chips made in Taiwan?

Intel has purchased one of the latest ASML machines. However there is much more to it than just buying the machines from a third party. I assume TSMC’s key advantage is that it has developed a superior PDK than other fabs.

davidmalcolm

People who point out that all of Apple’s chips are in one basket fail to realize that China is also Apple’s second biggest market. 

If China did seize control of Taiwan Apple probably has enough connections to be able to secure that they’d still at the very least v be able to sell the best chips they have in China unless the machines are destroyed.

for the rest of the world they’d probably switch over to having Intel or another fab work on whatever their current designs are. Apple probably has assurances that they can take a lot of TSMC’s IP to another fab in this kind of incident. Plus I suspect that if China was going to invade they’d be pulling out a lot of top talent before the fighting began or soon after. 

Don’t get me wrong, it would probably be very bad for absolutely everyone, but Apple would land on their feet faster than most. They already have a fair bit of manufacturing happening out of China. 

I suspect we would see a really rough year where consumer spending on technology would plummet as prices of goods would sky rocket. You might even see the resurgence of the dumb phone as a lot of companies just try to piece together anything they can ship. 

You’d also see a lot of problems in general with inventory that is made in China as I suspect the west would go pretty hard with cutting off China economically. They’d probably be allowed to keep dealing with Russia, India, the Middle East, Africa and South America, but the EU and North America would be pissed and would use it as an excuse to push for more local manufacturing. (Heck so many things could be automated in terms of manufacturing and a lot of the reasons companies don’t use machines is because Chinese peasant hands are cheaper and rich people like having slaves.)

Honestly, I think the most dangerous thing to think of happening when China invaded is the fact that we know they were working on Covid as a bio weapon, and I doubt they learned their lesson so I’d expect to see China invade and that we’d also start seeing some new plague released in a few major western cities as China announces that they’re closing their borders. 

blastdoor

The best deterrence would be for the Allies to show they can scale up defense production. Right now, they’re kind of trying but kind of failing. Nothing will encourage China more than a Russian win in Ukraine due to a failure to supply Ukraine with enough anmo. That would be a clear sign of western weakness, and Taiwan could basically kiss its freedom goodbye.

strangedays

davidmalcolm said:

People who point out that all of Apple’s chips are in one basket fail to realize that China is also Apple’s second biggest market. 

If China did seize control of Taiwan Apple probably has enough connections to be able to secure that they’d still at the very least v be able to sell the best chips they have in China unless the machines are destroyed.

for the rest of the world they’d probably switch over to having Intel or another fab work on whatever their current designs are. Apple probably has assurances that they can take a lot of TSMC’s IP to another fab in this kind of incident. Plus I suspect that if China was going to invade they’d be pulling out a lot of top talent before the fighting began or soon after. 

Don’t get me wrong, it would probably be very bad for absolutely everyone, but Apple would land on their feet faster than most. They already have a fair bit of manufacturing happening out of China. 

I suspect we would see a really rough year where consumer spending on technology would plummet as prices of goods would sky rocket. You might even see the resurgence of the dumb phone as a lot of companies just try to piece together anything they can ship. 

You’d also see a lot of problems in general with inventory that is made in China as I suspect the west would go pretty hard with cutting off China economically. They’d probably be allowed to keep dealing with Russia, India, the Middle East, Africa and South America, but the EU and North America would be pissed and would use it as an excuse to push for more local manufacturing. (Heck so many things could be automated in terms of manufacturing and a lot of the reasons companies don’t use machines is because Chinese peasant hands are cheaper and rich people like having slaves.)

Honestly, I think the most dangerous thing to think of happening when China invaded is the fact that we know they were working on Covid as a bio weapon, and I doubt they learned their lesson so I’d expect to see China invade and that we’d also start seeing some new plague released in a few major western cities as China announces that they’re closing their borders. 

Actually no, we don’t know that at all. I’m no fan of brutalist authoritarian regimes, but that conspiracy theory hasn’t been proven. 

spheric

davidmalcolm said:

 the fact that we know they were working on Covid as a bio weapon

This is anything but accepted fact. Stop presenting it as such. 

ronn

The CCP would be foolish to invade a sovereign nation. Which means it's bound to happen sooner rather than later. I think Taiwan and it's partners have plans ready for launch once the CCP goes full-on crazy.

melgross

avon b7 said:

It's all pretty much nonsense from a chip perspective.

Only a tiny fraction of the world's chip output is on cutting edge nodes. What makes the world go around is everything else that isn't cutting edge. The much older, more mature nodes. 

There are strategic commercial reasons behind China not having access to cutting edge nodes so the most likely outcome of hostilities is old-fashioned, ehem, 'anonymous' physical destruction, a la Nord Stream, for example and the bulk of our telecommunications runs over undersea cabling too so that is guaranteed to get the snip if things go wrong. Satellite communications will also be interfered with. 

That would see a lot of already fabricated chips with very little to do. 

Sanctions have only accelerated China's chip efforts and determination and, as we move beyond silicon, new solutions will come to market (phototonics are showing promise). Possibly for highly specialised fields first but 'kill switches' are simply spanners in the works when it comes to fabrication. 

Apple took a huge risk in putting all its chip related eggs into one basket mostly in Taiwan. It's paid off so far but the risk (political, economic, natural disaster or otherwise) remains and they are seeking to change that slowly. A wise move. 

This is one area in which we can agree. Telling China that we’re not going to sell you the most advanced chips is just going to spur them on to spend a few dozen more billion on figuring out how to do it themselves. China is not Russia. Russia hasn’t the talent or money to compete. China, even with its current economic problems, does.

tmay

blastdoor said:

The best deterrence would be for the Allies to show they can scale up defense production. Right now, they’re kind of trying but kind of failing. Nothing will encourage China more than a Russian win in Ukraine due to a failure to supply Ukraine with enough anmo. That would be a clear sign of western weakness, and Taiwan could basically kiss its freedom goodbye.

Exactly right.

I would note that the U.S. and Germany, have been especially "timid" in allowing their weapons systems to interdict Russian forces in Russia, as well as destroy Russian military production at the source. Of note, recently developed Russian systems have fallen to Western weapons systems that are decades old; Russian hardware just isn't that great.

melgross said:

avon b7 said:

It's all pretty much nonsense from a chip perspective.

Only a tiny fraction of the world's chip output is on cutting edge nodes. What makes the world go around is everything else that isn't cutting edge. The much older, more mature nodes. 

There are strategic commercial reasons behind China not having access to cutting edge nodes so the most likely outcome of hostilities is old-fashioned, ehem, 'anonymous' physical destruction, a la Nord Stream, for example and the bulk of our telecommunications runs over undersea cabling too so that is guaranteed to get the snip if things go wrong. Satellite communications will also be interfered with. 

That would see a lot of already fabricated chips with very little to do. 

Sanctions have only accelerated China's chip efforts and determination and, as we move beyond silicon, new solutions will come to market (phototonics are showing promise). Possibly for highly specialised fields first but 'kill switches' are simply spanners in the works when it comes to fabrication. 

Apple took a huge risk in putting all its chip related eggs into one basket mostly in Taiwan. It's paid off so far but the risk (political, economic, natural disaster or otherwise) remains and they are seeking to change that slowly. A wise move. 

This is one area in which we can agree. Telling China that we’re not going to sell you the most advanced chips is just going to spur them on to spend a few dozen more billion on figuring out how to do it themselves. China is not Russia. Russia hasn’t the talent or money to compete. China, even with its current economic problems, does.

China's economy is in shambles, so the level of effort to recreate the entire supply chain to compete in leading edge nodes isn't something that will happen very rapidly, if at all. It certainly will be more than a "few dozen more billion".

China not having access to leading edge nodes for AI, for example, maintains the edge that the U.S. and the Western World have on weapons development, anti-ship missiles, as an example, a primary constraint on any attempt of invasion by China.

The greatest danger to Taiwan is though the end of the decade, as the potential window for a successful invasion closes.

avon b7

tmay said:

blastdoor said:

The best deterrence would be for the Allies to show they can scale up defense production. Right now, they’re kind of trying but kind of failing. Nothing will encourage China more than a Russian win in Ukraine due to a failure to supply Ukraine with enough anmo. That would be a clear sign of western weakness, and Taiwan could basically kiss its freedom goodbye.

Exactly right.

I would note that the U.S. and Germany, have been especially "timid" in allowing their weapons systems to interdict Russian forces in Russia, as well as destroy Russian military production at the source. Of note, recently developed Russian systems have fallen to Western weapons systems that are decades old; Russian hardware just isn't that great.

melgross said:

avon b7 said:

It's all pretty much nonsense from a chip perspective.

Only a tiny fraction of the world's chip output is on cutting edge nodes. What makes the world go around is everything else that isn't cutting edge. The much older, more mature nodes. 

There are strategic commercial reasons behind China not having access to cutting edge nodes so the most likely outcome of hostilities is old-fashioned, ehem, 'anonymous' physical destruction, a la Nord Stream, for example and the bulk of our telecommunications runs over undersea cabling too so that is guaranteed to get the snip if things go wrong. Satellite communications will also be interfered with. 

That would see a lot of already fabricated chips with very little to do. 

Sanctions have only accelerated China's chip efforts and determination and, as we move beyond silicon, new solutions will come to market (phototonics are showing promise). Possibly for highly specialised fields first but 'kill switches' are simply spanners in the works when it comes to fabrication. 

Apple took a huge risk in putting all its chip related eggs into one basket mostly in Taiwan. It's paid off so far but the risk (political, economic, natural disaster or otherwise) remains and they are seeking to change that slowly. A wise move. 

This is one area in which we can agree. Telling China that we’re not going to sell you the most advanced chips is just going to spur them on to spend a few dozen more billion on figuring out how to do it themselves. China is not Russia. Russia hasn’t the talent or money to compete. China, even with its current economic problems, does.

China's economy is in shambles, so the level of effort to recreate the entire supply chain to compete in leading edge nodes isn't something that will happen very rapidly, if at all. It certainly will be more than a "few dozen more billion".

China not having access to leading edge nodes for AI, for example, maintains the edge that the U.S. and the Western World have on weapons development, anti-ship missiles, as an example, a primary constraint on any attempt of invasion by China.

The greatest danger to Taiwan is though the end of the decade, as the potential window for a successful invasion closes.

China will get there far quicker than they would have otherwise, specifically due to sanctions. Short term gain in exchange for long term loss in semiconductor related revenues. 

"Enhancing Computing Power for AI. In October 2023, MIIT and other agencies announced the Action Plan on the Development of High-Quality Computing Power Infrastructure. Among other things, the plan aims to increase China’s computing power to 300 EFLOPS by 2025. According to MIIT, China reached 197 EFLOPS, ranking second globally, as of 2023. The action plan includes the creation of 50 computing hubs by 2025 to boost advanced computing capabilities and improve data management, processing, and infrastructure. This initiative highlights the significant investment of the Chinese government in advanced computational infrastructure to meet future AI and other computing demands."

https://www.insideglobaltech.com/2024/02/08/spotlight-series-on-global-ai-policy-part-iii-chinas-policy-approach-to-artificial-intelligence/

edited May 2024

beowulfschmidt

ronn said:

The CCP would be foolish to invade a sovereign nation. Which means it's bound to happen sooner rather than later. I think Taiwan and it's partners have plans ready for launch once the CCP goes full-on crazy.

CCP does not consider Taiwan to be a sovereign nation.  They consider it to be just another Chinese province.  So I also expect them to "exercise their legitimate sovereignty over this rebellious province" sometime within the the next decade.

beowulfschmidt

kitchenbox said:

"Scuttle" might not be the best word in this context. "Scuttle" typically means to deliberately sink a ship or ruin something, often implying destruction. For chip production lines, a more appropriate word might be "halt" or "suspend," as these words imply stopping production without the destructive connotation.

Unfortunately, merely "disabling" it permits the possibility of re-enabling it, or analyzing what is still intact, which I assume all parties but CCP would want to prevent.  Outright destruction to the point where it can't even be successfully analyzed is the only way to prevent that.

blastdoor

tmay said:

blastdoor said:

The best deterrence would be for the Allies to show they can scale up defense production. Right now, they’re kind of trying but kind of failing. Nothing will encourage China more than a Russian win in Ukraine due to a failure to supply Ukraine with enough anmo. That would be a clear sign of western weakness, and Taiwan could basically kiss its freedom goodbye.

Exactly right.

I would note that the U.S. and Germany, have been especially "timid" in allowing their weapons systems to interdict Russian forces in Russia, as well as destroy Russian military production at the source. Of note, recently developed Russian systems have fallen to Western weapons systems that are decades old; Russian hardware just isn't that great.

Agreed — less timid initial support could have led to even more devastating losses for Russia and Ukraine could be on the cusp of victory by now.

Had that happened, the limits of western defense production might not have been so publicly exposed.

if there is some small benefit to be salvaged from this failure, perhaps it will be that western governments and electorates wake up to the need to rebuild their industrial base to support defense production. In a war with China, the model of designing products in California and building in China clearly will not work. We will need to build thousands of drones (maybe millions of less complex variants) in allied countries.

jdiamond

avon b7 said:

[...] Apple took a huge risk in putting all its chip related eggs into one basket mostly in Taiwan. It's paid off so far but the risk (political, economic, natural disaster or otherwise) remains and they are seeking to change that slowly. A wise move. 

Apple keeps trying and failing.  They tried so hard to get Samsung as a second source, but they just weren't good enough. Apple even tried out Intel, but they weren't good enough either.  As you go down that list, foundries just get less cutting edge.

jdiamond

avon b7 said:

[...] Apple took a huge risk in putting all its chip related eggs into one basket mostly in Taiwan. It's paid off so far but the risk (political, economic, natural disaster or otherwise) remains and they are seeking to change that slowly. A wise move. 

Apple keeps trying and failing.  They tried so hard to make Samsung work as a second source, but they just weren't good enough. Apple even tried out Intel, but they weren't good enough either.  As you go down that list, foundries just get less cutting edge.