Chapter 194 All Companies Want to Make Peace Except TSMC
The fact they cannot say is that if they continue to operate under the existing system, the Federation will be doomed. The consequences of the hollowing out of the manufacturing industry are already terrible enough, and if they continue to divide the work with China in this way, the Federation will face the trend of hollowing out of high-end technology within 20 years.

Without manufacturing and high-end technology, it would be impossible for the Federation to maintain its position in finance and public opinion.

Just now, the overseas version of TikTok can greatly reduce the squids' control over public opinion by relying on the advantages of its algorithm. If China also drains out its high-end technology, the Federation will fall into the same status as Russia in the future.

What is more likely is that it is not as good as Russia, because of Russia's geographical location. After all, it spans the Eurasian continent, which is much better than the Federation on the edge of the World Island.

Therefore, the Federation cannot accept this reality.

There have been many geopolitical masters in federal history, from Brzezinski to Kissinger to Huntington, but no one knows how to solve the current dilemma.

Federal lawmakers are even less aware.

“Gentlemen, I have never said that if we cooperate with China, we will not advance our own topological semimetal technology.

Cooperating with China is just a helpless move under the current circumstances, and it does not mean that our own internal research and development will stop.

The more we understand topological semimetal materials and the more parameters we have, the deeper our cooperation will be, and the better we will be able to reverse engineer this technology.

Rather than defining it based on a few words from engineers who have worked on the project, as is done now.

This is an unreasonable approach. We should have a healthy competition with China. At least in the field of semiconductors, the measures taken by Washington in the past have fully proved that we cannot restrict China.

So now we should change direction and look for a new direction, instead of running in the wrong direction like we are doing now, rushing into a dead end road even though we know it is a dead end road ahead. " Frank spoke from the bottom of his heart.

“Frank, you can’t let us compromise with China just because Intel’s interests are damaged.

The method you proposed also has a big problem. If you cannot cooperate with China, your motivation to develop new materials is 100%, but once you can cooperate with China, your motivation will be less than 30%. "The congressman said.

Frank held his forehead with his hand: “Your opinion is based entirely on your own assumptions.

Even if what you said is true, we will continue to take action, just like Intel has given part of its orders to Nikon until today in order to avoid being kidnapped by ASML.

Intel has always used US dollars to ensure supply chain redundancy, and we always have a Plan B for our supply chain.

Even if the Federation allows us to cooperate with China, we will invest resources in the topological semimetal project."

Frank gave an example, “I think in the past six years, businesses in the federal government and even in the entire developed world have understood one thing, which is that we cannot be held hostage by one party.

Our supply chain needs to take redundancy into account and have multiple sources.

Apple is outsourcing more and more mobile phone assembly to India, and Apple's industrial chain is shifting.

TSMC is transferring its production lines to Japan and Taiwan, and Samsung is also reducing its share in China.

That's no problem, we are also doing our best to cooperate with the federal strategy.

Similarly, because of this strategy, Intel's market share in China has been shrinking, and China is undergoing a comprehensive de-federalization process from the government to state-owned enterprises.

Whether it's Intel's processors or Microsoft's operating systems, China is looking for domestic alternatives.

As China loses foreign investment, we are also losing the Chinese market.

The balance has been broken. The Federation's technological products will have no advantages over topological semimetals, and may even be at a disadvantage. This will cause the market for Chinese technological products to not only be limited to China, but they will be able to push their products to the world.

Just like what China did with smartphones in the past, sell their technology products around the world.

Taking smartphones as an example, I believe you are all familiar with Huawei's smartphones equipped with 1nm chips, which perform better than Apple.

From the perspective of computing power, it is fully capable of carrying some local large AI models. Huawei has also stated that it will release large AI models on the latest Hongmeng OS as soon as possible.

It will also be the first AI phone in the true sense, and it is also better than Apple in terms of heat dissipation and power consumption. If it is sold at the same price as Apple, and uses the AI ​​big model to bypass the limitations of Google components, Apple's overseas market will be severely affected, if not completely lost, right?

Then the Federation will lose the Chinese market, and Chinese companies will get the Chinese market. They will not only get the Chinese market, but also the markets of other countries around the world.

Before, I would have considered this a reasonable loss, but now the balance is tipped, gentlemen, do you understand?
Just as we had to import China’s perovskite battery technology to keep Tesla competitive in the global market, we now have to import China’s topological semimetal products to keep our technology products competitive in the global market.”

Before coming to this special hearing, Frank did a lot of preparation to try to change the minds of the lawmakers.

Liu Deyin saw that the situation was not good, because the transition from silicon-based to topological semimetals was equivalent to a complete change of track, and almost all of TSMC's previously accumulated patents would be invalidated.

TSMC has already won in advanced processes. In the 3nm field, Intel cannot catch up, and Samsung's yield rate is not as good as TSMC.

Once you change the track, you have to start all over again.

Moreover, chip foundry is only a part of Samsung and Intel's many businesses, and it can even be said that it is not the most important part.

Samsung Electronics’ mobile phone business is the most important. If they do not cooperate with China, they will visibly lose the global market, which is unacceptable to them.

For Intel, chip foundry is even less important because they have already lost and can find TSMC to manufacture their own 3nm chips.

So they can compromise with China, cooperate with China, and start over. For them, it means that everyone is back to the same starting line and starting the race, which is a good thing.

For TSMC, chip foundry is everything to them. Now that their original advantages are gone, they have moved their advanced processes to the federal government. They are really going to be ruined.

"I think compromising with China is a beautiful-sounding bubble," said Liu Deyin.

Before he could finish, Frank interrupted him and said, "Mark, you naturally don't want to cooperate with China. For you, the interests of TSMC are greater than the interests of the Federation."

Liu Deyin's face immediately turned dark: "Frank, you are slandering me."

The moderator of the hearing stood up and said: "Please don't make personal attacks, let alone question each other's positions."

In addition to representatives from semiconductor companies, there were also representatives from some leading federal financial institutions, such as Goldman Sachs, JPMorgan Chase & Co., and BlackRock, all of which sent people.

Goldman Sachs CEO David Soderbergh interjected: “Members of the Congress are experts in the field of geopolitics.

I don't want to talk about whether cooperation with China will affect the geopolitical balance, because I lack expertise in this area. I want to talk about this issue from a financial perspective. What I can be sure of is that once we cooperate with China, it will have a huge stimulating effect on the US stock market, and the Federal Reserve will not need to use monetary policy to stimulate the stock market.

The positive impact of this incident alone is enough to get the stock market back on track.

Just like after March 2020, the US stock market formed a beautiful long positive line.

The most important thing in the capital market is stories. The market is tired of the story of AI today. Although everyone is saying that AI will change the world, the changes it will bring to the world have not yet arrived.

Text-based artificial intelligence is amazing enough, but it also causes aesthetic fatigue in people. In the face of China's technological breakthroughs, it is not enough to generate sufficient interest in people.

China's semiconductor industry has a better story and better expectations than the federal artificial intelligence industry.

So the Chinese stock market is rising and the Nasdaq is falling.

If we cooperate with China and our technology companies can also use topological semimetal technology, our story will be much more imaginative.

Just like after Tesla’s Cybertruck was announced to be equipped with perovskite battery technology, even though it had not sold a single Cybertruck equipped with perovskite battery technology, their market value had increased by more than $100 billion.

Intel can launch 1nm chips, Apple phones can launch 1nm chips, and Nvidia can launch graphics cards with 1nm process, which greatly improves AI computing power.

Including AI, there are better stories to tell.

It was originally going to take until 2030 for us to advance the process to 1nm, but now we have done it, which means we have shortened the time by five years to reach our original level.

What’s more important is the problem that everyone was originally worried about, that after 1nm, this is the process limit, and now it no longer exists.

The reason why it is only 1nm is because China’s technological process is not advanced enough. In fact, it can be made even smaller.

What a huge boost this will bring to the global semiconductor industry, AI industry, and consumer electronics, and how much room for imagination will this bring?

In these areas, the Federation has a large number of high-quality companies and advantages. If we do not cooperate with China, it means handing over all these imagination spaces to the future China.

And if we cooperate with China, it will all be ours.

Dear members of parliament, think about your stocks. Once we cooperate with China, your losses will be quickly wiped out and you will achieve substantial profits. "

Goldman Sachs will do anything for profit, without any bottom line. Their bottom line will always be lower than you estimate.

Maybe this is not a Goldman Sachs problem, but a problem for all financial institutions.

Because CITIC in China does not do much better than Goldman Sachs in the process of sponsoring listed companies, and CITIC is still a state-owned enterprise.

After coming out of the hearing, Liu Deyin felt very cold, because every one of the corporate representatives who participated in the hearing wanted to make peace with China.

In his view, this kind of cooperation is peacemaking.

Once the federation agrees, it means that these companies will continue to cooperate with China, and the speed of topological semimetals replacing silicon will leap forward again.

As for the possibility that China would not agree, they had not thought about this possibility.

Because in their view, although China has achieved some advantages in technological breakthroughs, this is not enough to change its international division of labor. China is still a producer, and the Federation is still a consumer.

The Federation can break the rules, but China cannot.

Liu Deyin stood at the door of the Capitol building and seemed to hear a bell ringing.

"Lao Qin, did you hear any sound?"

Qin Yongpei asked doubtfully: "Do you mean the human voice?"

Liu Deyin shook his head: "No, maybe I heard it wrong."

He felt deeply uneasy, wondering if this would be the death knell for TSMC.

After the federal hearing, although Washington has not yet reached a final conclusion, major technology giants have begun to increase their investment in China.

Technology giants like Intel and Nvidia, which already have branches in China, have increased their investment and expanded their workforce in an effort to make a big splash.

"We hope to obtain a portion of the production capacity of topological semimetal chips." Intel's business people have already begun to take action to try to lock in SMIC's future production capacity.

Intel has always cooperated with SMIC, and some foundry orders for mid- and low-end chips are given to SMIC.

There are two main reasons for this: SMIC's foundry business is cheaper, and they don't want to support TSMC.

TSMC is Intel's direct competitor in advanced processes.

There was no other choice but to ask TSMC to do the manufacturing, as Intel’s chip manufacturing team was really not strong enough.

"Can you cooperate with us?" The business representative of SMIC was also surprised. "Doesn't the Federation not allow federal companies to cooperate with Chinese companies on topological semimetal chips?"

"I don't know, maybe the policy will change soon. The order from the federal headquarters allows us to start contacting them first.

We are already doing the preliminary preparation work here.

For engineers like those from HiSilicon who have experience in topological semi-metal chip design, we directly offer double the salary to poach them,” Intel’s business representative replied.

This is the best time for China's semiconductor industry professionals, even better than 18 and 19.

The chip boom in 18 was a chip boom, but in fact, very few companies could survive more than four months, and most of them were just cheating for money and subsidies.

The present moment is completely different.

(End of this chapter)