Taiwan is now Arrakis
July 27, 2020·0 comments
He who controls the spice controls the universe.
Yep, that's the plot of Dune, by Frank Herbert.
It is, in fact, the plot of the entire Dune series of books, one of the ur-texts of modern science fiction. There's this galactic empire, see, and interstellar travel requires access to a certain narcotic drug, colloquially called "spice", which only exists on one barren world - Arrakis. So if you want to control the empire, you have to control the supply of spice. And if you want to control the supply of spice, you have to control Arrakis.
I thought about all this when I read this little gem in the aftermath of Intel's self-immolation last week ... you know, the earnings announcement where this crown jewel of American innovation and strength told us that they had decided to financialize themselves into oblivion. Or as I like to call it, "pull a GE".
TSMC gets large Intel chip order, Apple R&D plant (Seeking Alpha)
Taiwan-based newspaper Commercial Times reports that Intel has ordered 6nm chips from TSMC for next year.
The unprecedented Intel order would reportedly include 180,000 wafers, only slightly behind the raised 200K order from AMD, major TSMC client and Intel rival.
TSMC's leading-edge capacity is now fully-booked for the first half of next year.
In other news for the pure-play foundry, Economic Daily News says Apple is setting up a display tech R&D plant within TSMC.
The world's principal supplier of semiconductors - the spice of OUR global empire - is now Taiwan.
Forget about Hong Kong. Forget about the Uighurs. Forget about the virus. Forget about the Trade Deal. Forget about the South China Sea. Forget about all the reasons you've been told that the United States should or could be at odds with China.
And by forget, I don't mean that you should really forget. What I mean is that none of these reasons really matter anymore. None of these reasons are spice. None of these reasons are the supply of semiconductors - the sine qua non of modern global power.
There is no future where the United States can both maintain its existential national interests and allow the world's principal supplier of semiconductors to come under the direct political control of China.
And there is no future where China can both maintain its existential national interests and allow the world's principal supplier of semiconductors to remain outside its direct political control.
Thanks a lot, Intel. Thanks a lot, Bob Swan. Thanks a lot, Jack Welch. Thanks a lot, all you Wall Street wizards of financialization.
Taiwan is now Arrakis. It's now the most important country on earth. And we WILL fight over it.
DISCLOSURES
This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.
Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.
