Loading summary
Transcript1 lines
- [00:00]
Host
Today on the podcast, we're gonna be talking about Taiwan Semiconductor Manufacturing Company because they have a new $6.6 billion proposal to invest into the company to create chips here in the United States and actually specifically in Arizona. So for those that know, I am based in Arizona, so this is very interesting to me to see what's going on. But I also think from a national perspective with the CHIPS act, and then also internationally, as we kind of look at the landscape and the importance of these semiconductors for AI and for the entire ecosystem, I think this is a pretty relevant topic. So let's get into it. So the big headline here is that the U.S. department of Commerce has announced that they are planning to invest 6.6 billion for a new Taiwan Semiconductor Manufacturing Company facility. And this is actually about 30% of the funding, I think, needed, about a third of the funding needed to build this whole facility. So it's actually, you know, a pretty sizable chunk. The investment, of course, is coming as part of the CHIPS and Science act, which was kind of set up to boost domestic semiconductor production. Right. That's the whole point of this, is they're trying to get this built more in the United States. And I think there's actually a lot of countries that are working on similar things. I know that the UAE and a lot of other countries. Right. This is kind of important. Traditionally, we've had all of this manufactured in Taiwan. Even China has done a lot of manufacturing of chips. But people are kind of on shoring a lot of this. As you know, this is a very critical part of the supply chain for technology. And in case there's sort of any sort of, you know, skirmish between Taiwan and China or China itself, people want to make sure that they're kind of protected from that. So people are starting to, you know, build these fabs in house. And I actually think this goes so far as to say that when Sam Altman actually, you know, there's this big headline recently which a lot of people said was, like, fake, but it was reported that Sam Altman was trying to raise, like, $7 trillion. And I don't think. I don't know if that's an actual accurate number, but I think, regardless, he was trying to raise a ton of money. And what his strategy was is he was going to different, specifically, like, sovereign wealth funds and different countries. So it's actually the government that he was trying to partner with who would put the money in, and then he would go and get Taiwan Semiconductor Manufacturing Company to build chip fabs specialized for AI in their country. And so he, you know, he was expecting, I think he's seen that the pattern and the trend here that countries want their own fabrications in house because I mean, even for China, right, like China, the United States made a bunch of tariffs and and trade laws saying that Nvidia couldn't ship certain powerful chips to China. So I would imagine China would want to build more of these in house and not rely on inventory. Nvidia, there's all sorts of like geopolitical issues here. And I think at the end of the day the answer is for everyone to build in house. Okay, so with all that out of the way, let's talk about what is currently happening on this $6.6 billion in, in Arizona. So the proposed facility right now is going to be, they have a greenfield site and it's essentially focused on advanced 2 nanometer technology for a bunch, there's a bunch of different applications, but included in this is like computing, 5G, 6G communications. And they're actually building this from the ground up from scratch. A brand new facility for some of this like very advanced, cutting edge technology these chips are going to be built for. So this is what's interesting to me and I think you'll see this as you see these kind of similar. I guess the reason why I think this is important and interesting is because, you know, of course to me locally in Arizona, this is important. But I think, you know, based off of everything I said with Sam Altman, we're going to start seeing similar things play out in countries all around the world. And so I just want to go over some of the downstream effects, you know, we anticipate seeing here. You could probably anticipate seeing similar things in other places and also other states. As this gets rolled out, I would imagine other places in America will have similar programs. Microsoft and Sam Altman are also looking at making some huge data center plays for I think $100 billion. So right now this whole initiative is expected to create around 20,000 jobs during construction. Right? So I think that's while the whole thing's getting built, 20,000 jobs. And then once it's up and running, that's going to be about 6,000 manufacturing jobs. And if you kind of look at, if you kind of look at like jobs from these kind of projects, you can say that like 6,000, you know, straight up manufacturing jobs exist and then there's like a runoff of, you know, maybe another 6,000 or 12,000 jobs that are created from those 6,000 people also having to buy things. Right. So when you have these big projects, it's like more than just the people working at the facility, it's their employees spend also kind of, I don't know, boosted local economies in these areas too. So all of this comes as the Biden administration is emphasizing local manufacturing. We saw the same thing from the Trump administration. So this is, you know, something that both. I think it seems rather bipartisan right now as the threat of, you know, foreign adversaries taking over our supply chain is obviously problematic. So I think this is great. We're seeing this from both sides of the political spectrum in the United States. And there is obviously something. This obviously was all something brought to light during the COVID you know, COVID 19 thing where we had, you know, China who alluded to holding off medical supplies and you know, if we didn't play ball. And so I think we actually dropped all the tariffs from Trump's trade war with, with China. I'm not sure the relation of that, but all of that disappeared very quickly and China sent us medical supplies. But I think that was kind of an uncomfortable feeling for anyone to feel like another country had leverage over us on, you know, our most critical supply chains. So it would appear we're trying to get away from that with the, in this kind of tech environment. So the semiconductor sales globally has actually reached 4,47.6 billion dollars that's of January this year. This is a huge bump up from last year. And I think that there is a huge growing demand for these components. Right. Obviously with AI and everything happening, just all of this, all of the hardware to run, this is growing rapidly. So of course we had, you know, statements from the White House praising the TSMC investment in Arizona and saying that this is kind of indicative of a broader trend towards American made semiconductors. This is really interesting to me because we saw similar rhetoric from Trump when he was president. So yeah, I think all in all this is great. That this is bipartisan makes me really happy. I hate it when different political parties argue over something that is obviously good, but somehow people are picking sides on it and it becomes a partisan issue. So I'm really happy we're not doing that with something that is this critical. While the focus I think for all of this has been kind of on encouraging domestic companies. Right. So we have like intel that has, so far from the CHIPS act, intel has taken a ton of money right now. TSMC is definitely the dominant player in the market as far as these kind of advanced technologies go. I believe they have like 90% specifically of this of this kind of advanced chip market globally right now. And so obviously like in, in America we hear intel like, oh yeah, that's included in every computer. This is kind of what we think of when we think of chips. But TSMC is actually way bigger globally. So I think that it makes a lot of sense to kind of bring them in and start expanding them within the United States. In addition. Right. I kind of mentioned this earlier, but with all of the geopolitical tensions over Taiwan's future, you know, China claims that it's part of China. Taiwan says it's independent. America is, is, you know, has not really taken, I don't know, it goes back and forth. Right. With America. I think we, yeah, all sorts of, all sorts of geopolitical politics with Taiwan and with all of that, people are saying that this could be a major disadvantage or definitely would be if let's say China went and took over Taiwan and you know, blocked its shipments of these chips to the United States. So there's been a bunch of, you know, high profile US figures that have made some controversial, controversial remarks on this. I mean, I won't speculate on them, but I'm going to tell you what they said. So we had, we had Massachusetts Congressman Seth Moulton who said an event back in May, quote, we should make it very clear to the Chinese, if you invade Taiwan, we will blow up tsmc. I think that one was pretty controversial and I think he kind of like distanced himself from the comments a little bit later on. But yeah, you know, I think it's just something I bring it up because I think it's something that a lot of people are thinking about. Like this is obviously, you know, TSMC is the 800 pound gorilla in the market right now. And I think that it's a very strategic player. People don't want to see go somewhere else. So what's interesting is in addition to like Apple and Nvidia being clients of TSMC and getting their chips there, also Sonia, MediaTek, AMD, Qualcomm, Broadcom, all of these, like all of these major technology players that we know are getting their chips from tsmc. So you know, if TSMC goes down, this has major impacts for Apple, Nvidia and everyone else. Something that I think was very interesting was there was, I think the. A former Trump national security adviser Robert O'Brien recently said, quote, the United States and its allies are never going to let those factories referring to TSMC fall into Chinese hands. Some people are saying he's also suggesting what the Massachusetts politician was Saying, you know, destroy them and not let them, you know, not let them get into Chinese hands. Because TSMC really is 90% of the world's most advanced chips. So it's like this is. This is absolutely huge. Beyond all of that, I think that this is a really interesting point right now. Someone, I think last year it was. It's Now Biden's former U.S. director of National Intelligence, but Averil Haynes also talking about this whole, you know, theoretical US Invasion or this, you know, Chinese invasion, said, quote, it will have an enormous global financial impact that I think runs somewhere between 600 billion to $1 trillion on an annual basis for the first few years. So that's it. If, you know, all of TSMC's chips were kind of halted and weren't being able to shift everywhere and let's say China kind of overtook the factory. Okay, so all that to say it makes a lot of sense why the United States is now investing $6.6 billion into these chip fabs here. And it's going to be interesting to see how this plays out. I think this new facility, right, that they're trying to get 6.6 billion for is going to take 10 years to build. Right? So they want it done within the decade. Could take up to 10 years to build. And I think this just really underscores a big issue. We're seeing similar things out of Metta and Google, who both have announced their own chip kind of projects and plans where they're going to be manufacturing their own chips. But these facilities take a very long time. And so I think in the Meantime, Taiwan Semiconductor Co. Has a, you know, has a monopoly kind of on this market. And you have other players like Nvidia who are doing very, very well because it's hard to catch up to them with just how difficult it is to. To kind of get all of this manufacturing, all of this manufacturing facilities built and, you know, created. So I'll keep you up to date on everything else happening. But this is a very interesting story for a lot of reasons. If you enjoyed the episode today, I would super, super appreciate it if you could leave me a review on the podcast. It helps me to know that I should keep making these podcasts and, you know, find great guests and make these in a timely manner. Really appreciate all of you for listening, and I'd really appreciate it if you could leave me a review. Hope you have a great day.