China Morning Missive
Slowly, ever so slowly, the realities of altering global supply chain dependencies are beginning to breach the public zeitgeist. The American “can do” spirit is running up against some very hard truths. Both in terms of the literal limitations of physics and that of obstacles from an overly ossified system.
For the first time, these very issues are raised and addressed in a rather detailed expose from the New York Times.
Before continuing it needs to be stressed that high end chips, and TSMC in particular, were considered atop all priorities when it came to the renewed focus on reshoring. Two birds, one stone went the thinking. America would have access to domestically made chips and the supposed China threat to Taiwan would be taken off the game board.
Put very bluntly, America wanted high-end chips and wanted TSMC.
What is now becoming increasingly clear is that boundless ambitions are running head long into a wall of limited capabilities. Dare I even suggest that this would be the first time America leadership (both corporate and political) is waking up to this new reality.
The entire TSMC Arizona plant example is emblematic of just how complicated the entire reshoring thesis is in terms of actual execution. Furthermore, this TSMC example can be fully extrapolated to just about every other dependency now facing the hegemon.
While America most certainly has the money, not capital mind you just money, to throw at the various problems, it lacks the physical inputs required to address those issues. It is also a game of relativity meaning that China built a supply chain fortress over three decades and continues to improve upon its position. To play catch up, America will need to run at twice the speed and that’s were problem number two comes into play.
As addressed in this NYT’s piece, the primary issues are that of regulations and labor. Suffocating under the weight of the former and scrambling to source the latter. Neither of these obstacles can be easily overcome in the short run. Taiwan TSMC shows the real-world implications of having to navigate these issues and the same will be required of all foreign groups planning to build production facilities in the United States.
The road to hell is paved with good intentions and, it would seem, all of these global groups which have committed billions in investment to America are well on their way to a nightmarish end.
18,000 Reasons It’s So Hard to Build a Chip Factory in America
The transformation of Phoenix into a semiconductor hub by Taiwan’s TSMC illustrates the difficulties of large-scale projects in the United States.
