China will probably only attack Taiwan if CCP is willing to burn 4IR to the ground

The rulers in Taiwan will obviously blow up all TSMC facilities to prevent CCP from controlling this part of the vital chip industry after an attack. Beijing knows that. Xi will therefore only attack Taiwan if CCP is willing to risk the destruction of 4IR (fourth industrial revolution) in a global war, before peace returns and humanity begin rebuilding the old way of life we had prior to 4IR.

But is it realistic to destroy today’s essentially international chip industry? If WW3 kills 99% of all Chinese, there will still be 14 million left. America will only have 3,3 million standing. 4IR will be on the scrapheap of history.

If a global non-nuclear war begins in 2022 for example it’s no doubt that the regular international chip supply chain will instantly crash and not be back until the war is over. In wartime it took five years for the Manhattan Project to create a nuke, but it will take much longer for an AI version of MP to 1) achieve multi-domain narrow AI supremacy, and 2) build swarms of tiny insect killer drones.

Not easy to build 4IR tech if underwater fiber cables have been cut, GPS satellites are down, Big Tech on the US West Coast has been hit by non-nuclear hypersonic missiles, and maybe some fabs have also been destroyed by saboteurs.

However, if China and Russia don’t go to war in the 2020s they will give AUKUS enough time to build a secret backup system for production of cutting-edge AI bots. This will not be reflected in any public defense budget.

I doubt China/Russia will start any type of global kinetic war. It’s easy to imagine an international 4IR war when red teaming future scenarios. Xi and Putin are not armchair strategists however. They have an abundance of skin in the game. They are too selfish, too human, too dependent on other actors inside CCP and Kremlin. Therefore bet my shoe and umbrella that we’ll see a lot of saber-rattling and tabloid drama the next twenty or thirty years, a repeat of the decades prior to 1914. After this hopefully great entertainment the superior AI bots of America will end the show, maybe in a very anticlimactic way.

If you think I’m ghoulish here I totally agree, but reality is sometimes bizarre and clinically sick, so any description of it reflects that. I’m not the one who created 4IR tech and gave it to dictators and sociopathic CEOs. And I’m not alone describing the possible disastrous fallout if or when 4IR spins out of control. For more info read:

ExtremeTech:

Why We Can’t Build Our Way Out of the Semiconductor Shortage

“The factories that build microprocessors are typically referred to as semiconductor foundries. They cost between $10-$20 billion and can take 3-5 years to build.”

Bloomberg:

The Chip Shortage Keeps Getting Worse. Why Can’t We Just Make More?

“This year, TSMC will spend as much as $28 billion on new plants and equipment. Compare that to the U.S. government’s attempt to pass a bill supporting domestic chip production. This legislation would offer just $50 billion over five years.”

“Once you spend all that money building giant facilities, they become obsolete in five years or less. To avoid losing money, chipmakers must generate $3 billion in profit from each plant. But now only the biggest companies, in particular the top three that combined generated $188 billion in revenue last year, can afford to build multiple plants.” (…)

“The brutal economics of the industry mean fewer companies can afford to keep up. Most of the roughly 1.4 billion smartphone processors shipped each year are made by TSMC. Intel has 80% of the market for computer processors. Samsung dominates in memory chips. For everyone else, including China, it’s not easy to break in.”

Wealthion:

China May Risk World War Over…Semiconductors? | George Calhoun On Taiwan, Evergrande & Xi Jinping

“It made me a little more anxious than when I started out thinking about it” (32:39 -32:56)

George Calhoun in Forbes (Sep, 2021):

War With China? The Economic Factor That Could Trigger It

“‘For our country,’ Vice Premier Liu He told the country’s top scientists in May, ‘this technology is not just for growth. It’s a matter of survival.’” – Bloomberg”

““American leadership in semiconductors is vital to the technological superiority of the U.S. military.” – The National Research Council (NRC) of the United States National Academies of Sciences, Engineering, and Medicine”

“Modern wars are fought with semiconductors.” – a U.S. Senator” (…)

““In 2020 the Chinese economy spent $350 billion buying chips based largely on Western technology—more than it spent on oil.””

“To satisfy this enormous appetite for silicon, China buys 60% of the world’s chip production. 90% of it is sourced from outside China or produced domestically by foreign manufacturers (e.g., Intel INTC -0.9%). In short, China is highly dependent on a resource that it does not control.”

“This problem (from the Chinese perspective) is huge and growing. China’s position in the global industry is small and stunted. The U.S accounts for nearly 50% market share of the global industry, and has maintained this dominant position for three decades. China is stuck at about 5% – and is not really a player outside its captive Chinese market.”

“More important is the qualitative gap. The high-value part of the semiconductor industry is the “fabless” IC sector, the companies that control the design of the chips that power the digital economy. Fabless companies drive the cycles of innovation which lead the broader economy.”

“China is not a player at all in the fabless segment. 9 of the top 13 fabless IC players (those with more than $1 Billion in revenue) are U.S.-based. There is not a single Chinese company in this group.”

“In the foundry sector, the other “half” of the industry where the physical manufacturing of integrated circuits is carried out, China has struggled for decades to gain a foothold. China’s fabrication capabilities are meager, and are four to five technology generations behind the leaders. China’s “champion” in this space — Semiconductor Manufacturing International Corp. (SMIC) – has announced a plan to build a new IC fabrication facility (in partnership with the city of Shanghai) to produce integrated circuits using 28-nanometer technology. This is about ten years behind the Taiwanese foundry, TSMC, which is scheduled to bring out 3-nanometer chips next year. (Samsung already manufactures another version of 3-nanometer IC’s.) Indeed, Taiwan dominates the foundry business – with 63% of the market, 10 times the size of China’s position. (Keep that key fact in mind.)” (…)

“The three industry leaders in IC manufacturing – TSMC, Samsung, and Intel – have announced plans to invest over $300 Billion in the next ten years. That’s a big number even for Beijing. …”

” … With such a massive investment deficit, it is virtually certain that the technology gap will widen. China will likely fall further behind.” (…)

Government Action Isn’t The Answer

“Why can’t the Chinese government solve this through direct public investment — a moon-shot approach, the sort of thing that authoritarian regimes supposedly excel at?”

“They have certainly tried. Semiconductor independence has been the explicit focus of Chinese government industrial policy for decades. New initiatives have repeatedly been announced, with grandiose, soviet-style bravado – in 2014, for example, Beijing set “a goal of establishing a world-leading semiconductor industry in all areas of the integrated circuit supply chain by 2030.””

“The track record has not been encouraging. …” (…)

“Industrial policy, government funded and directed, just may not work here. An industry expert quoted in BusinessWeek put it this way:”

““The semiconductor industry is very market-oriented. It isn’t like launching a space station. In the chip industry there’s a lot to consider, from cost to efficiency. These factors are difficult to put in government policies.””

An AI Manhattan Project in pre-war times will be international however, like the first MP, increasing the likelihood that AUKUS & Co will achieve AI supremacy first.

Graham Allison, one of the grand old men in strategy today and known for warning about the Thucydides Trap, wrote about the chip menace as early as June 2020:

Could Donald Trump’s War Against Huawei Trigger a Real War With China?

“If Chinese forces seized TSMC factories and laboratories, then would this solve Huawei’s and other Chinese technologies leader’s advanced semiconductor problems? While views differ, having consulted with a number of those at leading U.S. and UK companies in this industry, my best judgment is that this could buy China critical time—one to two years— to advance its own initiatives. Of course, industry leaders like Qualcomm and ARM are continuously improving their designs and their manufacturing processes. But since Huawei and a number of other Chinese firms have been hard at work in developing indigenous capabilities, even if they should be a year behind, given their other advantages in 5G, this could still allow China to sustain its leadership in this critical new technology.” (…)

“In sum, as I wrote in Destined for War? (which was published on Memorial Day three years ago), we should expect things to get worse before they get worse. As the United States increasingly demonizes a rising China that is threatening to displace us from our position of leadership in every arena, and China pushes back to ensure that it can achieve its China Dream, both should be acutely aware that Thucydidean rivalries most often end in real wars. Moreover, the major risk of war in these rivalries comes not from either the rising or ruling power deciding that it wants war with the other. Instead, actions that have unintended effects, third-party provocations, or even accidents that would otherwise be inconsequential or readily managed often trigger a vicious spiral of reactions that drag the principal protagonists to what both know would be a catastrophe.”

“In sum: the remainder of 2020 could pose as severe a test for the United States and China as the final five months of 1941 did for the United States and Japan.”

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