Ex-Intel CEO backs Trump's sovereign wealth fund plan — and says it can help the US keep up with China in the tech race

[Maximus]

Many governments and companies around the world have tried to copy the success of TSMC and Taiwan (ROC) in the semiconductor industry. But strangely, they often follow China’s (PRC) model instead of learning from what TSMC and Taiwan actually did. This is one reason why we haven’t seen another success story like TSMC or Taiwan.

Pat Gelsinger is one example. He misunderstands this and led Intel down the wrong path.

From what I’ve seen, TSMC and Taiwan followed free market principles more than government intervention. The government did play a role, but it was limited, especially when it came to providing founding capital. This could be an interesting topic to explore in a separate thread.

That’s a interesting point and it does make some sense. However, I can see how others—particularly many in China—might argue that SMIC was already on a successful trajectory, and that the only major obstacle to its continued rise has been the EUV embargo.

 

[Fred Chen]

Sounds like subsidized wafer yield loss Biggest incentive to not improve.

 

[Xebec]

From what I’ve seen, TSMC and Taiwan followed free market principles more than government intervention. The government did play a role, but it was limited, especially when it came to providing founding capital. This could be an interesting topic to explore in a separate thread.

FWIW.. According to wikipedia: Although the government of Taiwan is the largest individual shareholder,[11] the majority of TSMC is owned by foreign investors

i.e. Government involvement is substantial.

Also:
When Chang founded TSMC in 1987, he did so with $100 million in seed money from the Taiwanese government.

TSMC and Taiwan’s Government: Two Boats on the Same Tide - Domino Theory

The simple answer is an alignment between the interests and constraints of TSMC and the Taiwanese government. The government was instrumental in TSMC’s founding. Since then, a mutual dependency has developed. While the Taiwanese government may feel some apprehension about TSMC’s current outbound...

dominotheory.com

TSMC certainly succeeded because it was private and well run; but it wouldn't have existed without government.

 

[benb]

A sovereign wealth "bad bank" that can buy bankrupt chip companies, restructure them, (looking at you Wolfspeed) and have the patience, like with Fanny Mae and Freddy Mac, to just wait 15 years for profitability to return, that is something the US knows how to do and succeed at.

 

[hist78]

Sounds like subsidized wafer yield loss Biggest incentive to not improve.

I remember this comic:

 

[DanX]

A sovereign wealth "bad bank" that can buy bankrupt chip companies, restructure them, (looking at you Wolfspeed) and have the patience, like with Fanny Mae and Freddy Mac, to just wait 15 years for profitability to return, that is something the US knows how to do and succeed at.

Are you kidding me ？
If this can turn a profit, capital will move in.
The biggest problem with government intervention isn’t that it’s guaranteed to lose money (I’d bet it will), but that no private investor will ever want to put money here again.
I know it so well.

 

[benb]

Are you kidding me ？
If this can turn a profit, capital will move in.
The biggest problem with government intervention isn’t that it’s guaranteed to lose money (I’d bet it will), but that no private investor will ever want to put money here again.
I know it so well.

I get your point that the CCP capital brings CCP objectives to achieve certain goals other than profitability drives out private capital from the Chinese chip market. That's fair.

How you avoid it is, when a firm goes bankrupt, private capital is wiped out. Restructured to zero. Shares have no value.

Then the government steps in, in some manner. The FDIC resolution of Silicon Valley Bank. The Resolution Trust Company during the 1980s Savings and Loan crisis. Or in 2009, the conservatorship of Fanny Mae. There are different names but the same basic process. No bail out. The government has skin in the game but generally behaves passively. And no private equity draining the firm like a vampire.

 

[DanX]

That’s a interesting point and it does make some sense. However, I can see how others—particularly many in China—might argue that SMIC was already on a successful trajectory, and that the only major obstacle to its continued rise has been the EUV embargo.

haha, funny story。
SMIC was stuck at 28nm for many years.
It was only after Liang Mong-Song’s arrival that SMIC first cracked 14 nm, then 7 nm, and finally went back to re-tune 28 nm—at which point the 28 nm node could be called a volume-production success.
SMIC’s success was more to luck than skill.

 

[Daniel Nenni]

FWIW.. According to wikipedia: Although the government of Taiwan is the largest individual shareholder,[11] the majority of TSMC is owned by foreign investors
i.e. Government involvement is substantial.
Also:
When Chang founded TSMC in 1987, he did so with $100 million in seed money from the Taiwanese government.

TSMC and Taiwan’s Government: Two Boats on the Same Tide - Domino Theory

The simple answer is an alignment between the interests and constraints of TSMC and the Taiwanese government. The government was instrumental in TSMC’s founding. Since then, a mutual dependency has developed. While the Taiwanese government may feel some apprehension about TSMC’s current outbound...

dominotheory.com

TSMC certainly succeeded because it was private and well run; but it wouldn't have existed without government.

I would argue that TSMC would not have succeeded without Phillips. Phillips made a big investment (27% stake) and made the technology available for TSMC to get started. Phillips also gave TSMC a global reach and the confidence fabless customers needed to take the initial risk with a new foundry based in Taiwan. Morris Change managed the relationship with Phillips and the Taiwanese Government so he deserves the credit for making it all happen.