Commerce secretary warns of deep recession if the US loses access to Taiwan-made chips

[midian182]

What just happened? Commerce Secretary Gina Raimondo has warned of the potentially catastrophic consequences if the US is cut off from the Taiwanese chip manufacturing industry it relies on. Should the nightmare scenario ever become a reality, the US would face a "deep and immediate recession."

Following a Senate vote earlier this week where the $52 billion CHIPS bill advanced by 64-32, allowing it to move to the next stage, Raimondo talked to CNBC's Sara Eisen about the US' heavy reliance on Taiwan and companies such as TSMC for its semiconductors.

"If you allow yourself to think about a scenario where the United States no longer had access to the chips currently being made in Taiwan, it's a scary scenario," Raimondo said. "It's a deep and immediate recession. It's an inability to protect ourselves by making military equipment. We need to make this in America. We need a manufacturing base that produces these chips, at least enough of these chips, here on our shores because otherwise, we'll just be too dependent on other countries."

The Chips Act will offer $52 billion in subsidies to companies to help create new fabs in the US, unless said companies operate or plan to expand to unfriendly countries like China. Any firm that wants to use money from the $52 billion pool won't be allowed to make chips on a 28nm or smaller process node in the Asian nation.

Gina Raimondo

Around 90% of the world's cutting-edge chips come from TSMC, a statistic that has led to warnings about what would happen if China invaded the island using military force, a move the country previously said it wouldn't hesitate to make if it was deemed necessary.

"Taiwan is not a stable place," said Intel boss Pat Gelsinger late last year. "Beijing sent 27 warplanes to Taiwan's air defense identification zone this week. Does that make you feel more comfortable or less?"

Fears of what could happen if China ever did invade Taiwan intensified last month when Chen Wenling, chief economist at the government-run China Center for International Economic Exchanges, said that if the US and the West ever impose destructive sanctions on China like those placed on Russia, China must respond by recovering Taiwan and seizing TSMC.

While the CHIPS bill has advanced through the Senate, it still must pass both chambers. Intel is one of the Act's most vocal supporters, having recently announced it would be delaying the groundbreaking ceremony of its Ohio semiconductor factory and warned of more potential delays as a result of the bill stalling. GlobalFoundries gave a similar warning about the CHIPS Act delay slowing its plans.

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https://www.techspot.com/news/95380-commerce-secretary-warns-deep-recession-if-us-loses.html

 

[George Keech]

I think people need to look at this from other angles. The west would have issues and severe financial difficulties.

But poorer countries would be kicked out of the market with western bidding wars and then before you know it half of Africa doesn't even have enough chips to operate a telephone line.

 

[McKocoa]

If China invades on short notice, Taiwan will blow the chip fabs, China would never be able to seize them. The resulting shortages would be huge if it happened in the next 5 years

 

[wiyosaya]

We need to make this in America.

That is an epic understatement, IMO, more like an uh DUH, moment.

And also IMO, it is an epic fail of US Capitalism fostered by those US Companies ever on the hunt for the last $0.01 they can siphon from the bank accounts of their customers. Such companies have absolutely no understanding of when enough is enough.

 

[defaultluser]

If China invades on short notice, Taiwan will blow the chip fabs, China would never be able to seize them. The resulting shortages would be huge if it happened in the next 5 years

Precisely

And even worse, anyone who fails to Scorched Earth the place will face the additional hardships of keeping a working fab running under wartime. Imagine running TSMC at anywhere near current output if China had Russian-level sanctions on itself? OR protecting it from precision bombers?

China will suffer many times more as they currently have (under current sanctions) if they launched an attack on Taiwan, ad that would definitely trigger a worldwide recession untill the wart was over.

Its not a good idea for China to make the invasion, but remember Its a lot harder to plan this sort of thing 100 miles away over water (compared to just moving troops overland into Ukraine.) Tiawan would likery become another Afghanistan for China , with two decades wasted holding nothing of significance

I

 

[kira setsu]

Saying you cant make your military equipment, while constantly bullying other countries, if your chip flow got broken, and the world knowing your greedy *** kicked out all your work to other places and wont be able to bounce back for years while panic building to catch up...

Is probably the dumbest damn thing you can possibly utter, if I was China I'd go after taiwan in a heartbeat, at worst those fabs blow themselves up and leave 2 powerhouses in a bad way.

Hell, with how broken the US is right now, split on literally every subject, we probably wouldnt get ourselves together quick enough if china actually went for it.

 

[Theinsanegamer]

Were facing a deep recession anyway with the level of unstable debt teetering on the brink already. Maybe, just maybe, if American companies were not so greedy as to ship everything to one of our biggest ideological opponents to save a buck, we wouldn't be here right now.

 

[wiyosaya]

Were facing a deep recession anyway with the level of unstable debt teetering on the brink already. Maybe, just maybe, if American companies were not so greedy as to ship everything to one of our biggest ideological opponents to save a buck, we wouldn't be here right now.

We rarely agree, but on this we are 1000% in agreement.

 

[wiyosaya]

And to think it was Tricky D!ck Nixon who helped to start it all by "normalizing" relations with China.

 

[ypsylon]

Were facing a deep recession anyway with the level of unstable debt teetering on the brink already. Maybe, just maybe, if American companies were not so greedy as to ship everything to one of our biggest ideological opponents to save a buck, we wouldn't be here right now.

Well it's not solely United States problem. Every loser (read: manufacturer) producing anything in China (not Taiwan) enriches this regime. Biggest concertation camp in the World. Whatever you can find in stores near you, it doesn't matter if you're in New Yok, Paris, Cairo, Helsinki, Sao Paulo, Johannesburg or Canberra is made in China. From soap to disc brakes, from photovoltaic panels to tooth brushes and from condoms to shovels.

Take for example stuff which is close to us, enthusiasts. Water blocks, not even electronics. WTH everything is made in China? Is it such a problem to find tools and people adept at working metal in Europe or US or Africa? Why there is only 1 (literally ONE) Chinese company in the World which manufactures tempered glass for every single device or case on the planet. Globalization is all and nice, but right now - even ignoring WW3 hanging in the air for a minute - manufacturing capacity is total $hitstorm. Everything is made in Taiwan or China, almost nothing is made anywhere else. It's USA own fault that they feed this Communist monster, because all administrations since 1990's were too dumb to understand that China doesn't work in months, years and decades. Since ancient Emperors that culture work on centuries. Patience is a virtue and China has all patience, manpower and perfidy to overcome any opponent.

 

[Endymio]

If China invades on short notice, Taiwan will blow the chip fabs,

That's a pipe dream. First of all, it would remove the primary reason for the rest of the world forcefully opposing China's invasion. Secondly, it would mean that, even should Taiwan somehow win the war, it would have decapitated itself economically. Thirdly, do you not think China has anticipated the potentiality? The first inkling Taipei would have of an attack is waking up to find 40,000 Chinese paratroopers setting up a perimeter around the TSMC grounds.

That said, it is the threat of incidental damage to these facilities that is the primary reason China is hesitant to use force against Taiwan. But reluctance doesn't translate to abject refusal.

 

[Tantor]

That's a pipe dream. First of all, it would remove the primary reason for the rest of the world forcefully opposing China's invasion. Secondly, it would mean that, even should Taiwan somehow win the war, it would have decapitated itself economically. Thirdly, do you not think China has anticipated the potentiality? The first inkling Taipei would have of an attack is waking up to find 40,000 Chinese paratroopers setting up a perimeter around the TSMC grounds.

That said, it is the threat of incidental damage to these facilities that is the primary reason China is hesitant to use force against Taiwan. But reluctance doesn't translate to abject refusal.

I agree. The LAST thing Taiwan would do is blow the fabs. If China invades and gets everything intact, they'll be far kinder to the Taiwanese. Because it isn't just the fabs, it's the engineers and techs who operate the fabs.

 

[Vanderkaum037]

Were facing a deep recession anyway with the level of unstable debt teetering on the brink already. Maybe, just maybe, if American companies were not so greedy as to ship everything to one of our biggest ideological opponents to save a buck, we wouldn't be here right now.

I don't blame companies for doing what they were designed to do--maximize shareholder value. If you're the director of a company you are actually legally-obligated to take actions to maximize shareholder value. I blame our captured regulatory and political system and I blame the supreme court for deciding that corporate bribery (lobbying and campaign donations) is protected free speech. Ross Perot warned us in 1992 that "free trade" would lead to a giant sucking sound as American jobs were siphoned off to the lowest bidders. He was absolutely right.

It's up to us, the electorate, to impose our will on the giant piles of capital that divide us and control us. We do that by electing presidents who will appoint supreme court justices who will repeal Citizens United, and we do this by amending state corporations statutes such that "American" companies that offshore their capital and labor are hit with real transfer pricing taxes and tariffs, and failure to comply results in corporate dissolution, and veil-piercing for criminal liability on the part of controlling shareholders.

 

[maxxcool7421]

@article ... DUH ... Jebus money christ ... Been saying this forever.

 

[BadThad]

Taiwan and the rest of the world will be screwed, China will take over very soon - likely while our current ineptocracy is in charge.

 

[toooooot]

If China invades on short notice, Taiwan will blow the chip fabs, China would never be able to seize them. The resulting shortages would be huge if it happened in the next 5 years

Or we do it.
Either way, they can not get their hands on these chips.
Chinese system could not produce anything close to what free countries created.
The best they have came from outside of their country with western companies.
And a tiny piece of land, Taiwan, created what a huge nation of a billion people could not.
It is not theirs, and they should never get it for as long as they treat their own people the way they do.

 

[Watzupken]

If China invades on short notice, Taiwan will blow the chip fabs, China would never be able to seize them. The resulting shortages would be huge if it happened in the next 5 years

This is going to hurt US more than anyone. In the first place, China is already pretty much cut off from fabs outside their country. So any attempt to sanction them further is not going to be meaningful. US is also trying to cut them off from being able to buy equipments for cutting edge fabs but that may have an impact later. On the other hand, China is making progress in their fab and chip producing capability all thanks to the sanctions that US impose on them, plus much fatter budget to catch up. You can claim that China stole the technology, but stolen or not, it’s already being used and so a pointless claim.

Frankly speaking, while we hear US claiming about China’s provocative actions, I actually feel that it’s US that’s taunting and giving China every reason to invade. Whatever CHIPS act they introduce is not going to help them because there are dependency on many nations that they sanctioned to produce and provide the raw materials. This is not a game where you can produce goods out of thin air just because the fab exists. So back to Stone Age I guess.

 

[nodfor]

The more panic you spread, the more money you can spend!
There goes 52 billion...

 

[kiwigraeme]

Were facing a deep recession anyway with the level of unstable debt teetering on the brink already. Maybe, just maybe, if American companies were not so greedy as to ship everything to one of our biggest ideological opponents to save a buck, we wouldn't be here right now.

The world has been threaten with recession a couple of times in the last 30 years - the main thing that stopped it was Americans kept buying and consuming - Japanese go mega cautious - Europeans slow their spending a little- China who knows - but they control their currency and have had a hot economy right up to covid anyway .

So will be really interesting - the big difference is not the debt - other periods had huge national debts - it's the inflation - so attacks from both sides - govts are trying to curtail the multiplying effect of money . Bit Coin won't do Jack . If Govts ramp up shovel ready projects - demand for resources, labour will cause more inflation - an interesting time in human history - War , conspiracy stuff, every year warmer than last , food/water uncertainty , Covid mutating , new virii likely to arise as well . Stress out and over heated population with weakened immune systems - we live in interesting times

 

[Endymio]

You can claim that China stole the technology, but stolen or not, it’s already being used and so a pointless claim.

No, not pointless if it motivates the proper action to be taken to prevent future thefts.

China is already pretty much cut off from fabs outside their country. So any attempt to sanction them further is not going to be meaningful ... Whatever [the US] introduces is not going to help them because there are dependency on many nations that they sanctioned to produce and provide the raw materials. This is not a game where you can produce goods out of thin air

So your argument is that cutting China off from the rest of the world helps their semi industry, but prevents the US semi industry from advancing? And I'm not sure what "raw materials" you believe are sanctioned. The US has sanctiond Russian noble gases ... but there are many other sources of these.

Frankly speaking, while we hear US claiming about China’s provocative actions, I actually feel that it’s US that’s taunting and giving China every reason to invade. just because the fab exists.

By that logic, if you post a photo of your new car on Facebook, you're giving thieves the right to steal it.

 

[captaincranky]

Following a Senate vote earlier this week where the $52 billion CHIPS bill advanced by 64-32, allowing it to move to the next stage, Raimondo talked to CNBC's Sara Eisen about the US' heavy reliance on Taiwan and companies such as TSMC for its semiconductors.

Quite frankly, if this passed the senate, it should be a cakewalk through the heavily Democratic house. Or are they on vacation?

None of this horsesh!t takes into account that TSMC is currently building a fab in the US. OK, that's the good news. Now the bad news. With TSMC as an "American company", it forces the US into a mutual defense pact with Taiwan, which would be damned near as binding as NATO Then too, there's the American workers that TSMC hadn't quite figured out how to deal with yet

 

[captaincranky]

Taiwan and the rest of the world will be screwed, China will take over very soon - likely while our current ineptocracy is in charge.

Especially, since the current "ineptocracy" got there via a "stolen" election, right?

 

[scavengerspc]

Taiwan and the rest of the world will be screwed, China will take over very soon - likely while our current ineptocracy is in charge.

Where the hell have you been man? Its 2022!

The "ineptocracy" has been out of power for a year and a half now, and like their acolytes seem to be spending a lot of time in courtrooms and going off to jail.

 

[AlaskaGuy]

Where the hell have you been man? Its 2022!

The "ineptocracy" has been out of power for a year and a half now, and like their acolytes seem to be spending a lot of time in courtrooms and going off to jail.

Two tier justice system.

https://twitter.com/i/web/status/1550463447686684674

 

[Endymio]

The "ineptocracy" has been out of power for a year and a half now

In that time, we've seen a doubling of energy prices, the fastest rate of inflation rise in US history, millions of mothers unable to feed their infant children from lack of formula, the sharpest rate of increase in violent crime recorded, huge increases in illegal immigration, foreign policy debacles in Afghanistan and Ukraine, declining real wages for all US workers, sharp drops in the stock market, and a decline in US GDP that, if all the estimates are correct, will officially become a recession when second-quarter figures are released next week.

Oh, and per-day Covid case counts are, today, higher than they were Biden was first elected.