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<keyword id="19986399" type="General" weightage="20" keywordseo="Tata-Electronics" source="keywords" meta.keywordsubtype="org" meta.entityname="Tata Electronics" meta.hostid="261" meta.entityid="Tata Electronics">Tata Electronics</keyword> on Thursday said it has concluded an agreement with Taiwan-based Powerchip <keyword id="20073013" type="General" weightage="20" keywordseo="semiconductor-manufacturing" source="keywords">Semiconductor Manufacturing</keyword> Corporation, which will provide technology support for the Dholera wafer fab of the Indian tech major. As per the agreement, PSMC will provide design and construction support to build India's first AI-enabled greenfield fab in Gujarat, license a broad portfolio of technologies and provide engineering support to the fab unit. "We are pleased to partner with PSMC, whose technology and expertise will significantly accelerate our roadmap to pioneer semiconductor manufacturing in India. It will position us to play a key role in the growing semiconductor market to serve global customers," Tata Sons Chairman N Chandrasekaran said. The company is setting up a chip manufacturing unit in Dholera at an investment of up to Rs 91,000 crore ( about USD 11 billion). "<keyword id="19924335" type="General" weightage="20" keywordseo="Tata-Group" source="keywords" meta.keywordsubtype="org" meta.entityname="Tata Group" meta.hostid="261" meta.entityid="Tata Group">Tata Group</keyword>'s multi-fab vision for Dholera is projected to create over 1,00,000 skilled jobs," the statement said. Tata Electronics' Dholera-based Fab will have a manufacturing capacity of up to 50,000 wafers per month. "This partnership represents a win-win situation, as it positions PSMC and the Taiwanese ecosystem to gain a significant first-mover advantage in the rapidly expanding Indian market while helping India achieve self-reliance in semiconductor manufacturing," Powerchip Group, Chairman and CEO of PSMC, Frank Huang said. SEE ALSO:<a href="https://www.businessinsider.in/business/telecom/news/airtel-is-using-ai-powered-technology-to-block-spam-calls-and-messages/articleshow/113691942.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/telecom/news/airtel-is-using-ai-powered-technology-to-block-spam-calls-and-messages/articleshow/113691942.cms" target="_blank">Airtel is using AI-powered technology to block spam calls and messages</a><a href="https://www.businessinsider.in/stock-market/webstories/diffusion-engineers-ipo-quick-review-ipo-gmp-risk-factors-and-more/slidelist/113687580.cms" target="_blank"></a> <a href="https://www.businessinsider.in/stock-market/webstories/diffusion-engineers-ipo-quick-review-ipo-gmp-risk-factors-and-more/slidelist/113687580.cms" target="_blank">Diffusion Engineers IPO quick review – IPO GMP, risk factors and more</a><a href="https://www.businessinsider.in/stock-market/news/manba-finance-ipo-allotment-how-to-check-allotment-ipo-gmp-listing-date-and-more/articleshow/113667907.cms" target="_blank"></a> <a href="https://www.businessinsider.in/stock-market/news/manba-finance-ipo-allotment-how-to-check-allotment-ipo-gmp-listing-date-and-more/articleshow/113667907.cms" target="_blank">Manba Finance IPO allotment – How to check allotment, IPO GMP, listing date and more</a>

Tata Electronics, PSMC conclude pact for ₹91,000 crore Dholera chip manufacturing unit

Prime Minister <keyword id="19895781" type="General" weightage="20" keywordseo="narendra-modi" source="keywords">Narendra Modi</keyword> urged CEOs of US majors to take advantage of India's growth story as the country is making all efforts to become the third largest economy of the world in his third term. India is currently the fifth largest economy of the world after the US, China, Germany and Japan with a GDP of around USD 3.9 trillion. India has been the fastest growing large economies of the world with GDP growth rate of over 7 per cent for the last three consecutive years. Addressing CEOs of the large US tech firms on Sunday, Modi said India will make every effort to become the third largest economy in the world in his third term (2024-29). Companies should take advantage of India's growth story for collaboration and innovation by co-developing, co-designing, and co-producing in India for the world, harnessing the opportunities from the country's economic and technological growth, he said. Assuring the business leaders of India's deep commitment to the protection of intellectual property and to fostering tech innovation, Modi highlighted the economic transformation happening in the country, particularly in electronics and information technology manufacturing and semiconductors. Modi asserted that his government was committed to making India a "global hub of <keyword id="20073013" type="General" weightage="20" keywordseo="semiconductor-manufacturing" source="keywords">semiconductor manufacturing</keyword>". The meeting took place at the Lotte <keyword id="19904497" type="General" weightage="20" keywordseo="New-York" source="keywords">New York</keyword> Palace Hotel on Sunday during the second leg of Modi's three-day US visit. It saw the participation of CEOs of 15 major US-based firms working on cutting-edge technologies such as AI, quantum computing and semiconductors. "Had a fruitful roundtable with tech CEOs in New York, discussing aspects relating to technology, innovation and more. Also highlighted the strides made by India in this field. I am glad to see immense optimism towards India," Modi said in a post on X. During the conference, Modi said technology collaboration and efforts such as the Initiative on Critical and Emerging Technologies (ICET) lie at the core of the India-US Comprehensive Global Strategic Partnership, according to a Ministry of External Affairs press release. Organised by the Massachusetts Institute of Technology (MIT) School of Engineering, the CEOs of top US tech firms, including Google CEO Sundar Pichai, Adobe CEO Shantanu Narayena, Accenture CEO Julie Sweet and NVIDIA CEO Jensen Huang attended the meeting. Others who participated in the roundtable included AMD CEO Lisa Su, HP Inc. CEO Enrique Lores, IBM CEO Arvind Krishna, Dr Noubar Afeyan, Chairman of Moderna, and Verizon CEO Hans Vestberg. Modi also talked about India's BIO E3 (biotechnology for environment, economy and employment) policy to develop the country into a biotech powerhouse and on the topic of AI, noted that India's policy is to promote AI for all, underpinned by its ethical and responsible use. The CEOs appreciated India's growing prominence as a global technology hub, driven by its innovation-friendly policies and flourishing market opportunities. They also expressed strong interest in investing and collaborating with India, agreeing that investing in startups would be a synergistic opportunity to innovate and develop newer technologies in the country. Others who attended the conference included Biogen Inc CEO Chris Viehbacher, CEO of Bristol Myers Squibb, Chris Boerner, Eli Lilly and Company CEO David A. Ricks, LAM Research CEO Tim Archer, GlobalFoundries CEO Thomas Caulfield, and the CEO of Kyndryl, Martin Schroeter. "Further cementing technology and business connect. PM @narendramodi interacted with the top tech leaders and CEOs of USA, in a Roundtable hosted by the Massachusetts Institute of Technology School of Engineering, in New York today. PM emphasised India's growth prospects and discussed initiatives to foster collaborations and innovation across diverse sectors," the official account of the MEA said in a post on X. The prime minister had a separate meeting with Krishna P Singh, CEO of Holtec International, which is into nuclear and solar power generation. They discussed Holtec's plan for expanding manufacturing in India and advancing energy cooperation, PMO India said in a post on X. Earlier on Sunday, Modi addressed the <keyword id="20115166" type="General" weightage="20" keywordseo="Indian-diaspora" source="keywords">Indian diaspora</keyword> at the packed Nassau Veterans Coliseum on Long Island in New York. He also held bilateral meetings with world leaders at the sidelines of the UN General Assembly session here. Modi reached New York on Saturday after attending the Quad Leaders' Summit hosted by President Joe Biden in Wilmington, Delaware. <div type="Article" hostid="261" msid="113516805" title="Why is Indian Prime Minister Narendra Modi visiting the US this weekend?" mstype="2" mssubtype="0"></div>

PM Modi invites US CEOs to take a 'byte' out of India's growing technology sector

<ul class="summary-list"><li>The tariffs Donald Trump proposed while campaigning could help create US semiconductor jobs.</li><li>Tariffs could also help US chipmakers compete with companies abroad that sell chips at lower prices.</li></ul>If president-elect Donald Trump follows through on his <a target="_blank" href="https://www.businessinsider.com/companies-raising-prices-trump-tariffs-inflation-goods-getting-more-expensive-2024-11">campaign promise to impose tariffs</a>, the domestic semiconductor industry could see job gains.Industry experts told Business Insider that tariffs on foreign-made chips could help level the playing field for US chipmakers, which are <a target="_blank" class="" href="https://www.businessinsider.com/intel-chip-troubles-problem-us-economy-domestic-production-chips-act-2024-11">facing fierce competition</a> from their counterparts abroad. The tariffs could also encourage US businesses to source more chips domestically and help persuade chipmaking giants, like the Taiwan-based <a target="_blank" href="https://www.businessinsider.com/tsmc-making-apple-iphone-chips-helps-us-semiconductor-bet-2024-10">TSMC</a>, to keep building factories in the US. These developments could aid job growth in the US semiconductor industry, though experts disagreed on how much.Trump's proposed tariff policies include a 60% tariff on goods coming from China and up to a <a target="_blank" class="" href="https://www.businessinsider.com/companies-raising-prices-trump-tariffs-inflation-goods-getting-more-expensive-2024-11">20% tariff</a> on all imports, including chips. US companies source many of the chips needed to power items like iPhones and washing machines from abroad: The US share of overall chip production fell from <a target="_blank" href="https://www.businessinsider.com/why-us-doesnt-make-chips-semiconductor-shortage-2021-4">37%</a> of the world's supply in 1990 to roughly <a target="_blank" href="https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/09/fact-sheet-two-years-after-the-chips-and-science-act-biden-%E2%81%A0harris-administration-celebrates-historic-achievements-in-bringing-semiconductor-supply-chains-home-creating-jobs-supporting-inn/#:~:text=As%20a%20result%20of%20these,Vice%20President%20Harris%20took%20office.">10%</a> today.In an <a target="_blank" href="https://open.spotify.com/episode/0e9ynAH6hmZIIeOx0SaGQu">interview</a> with podcaster Joe Rogan in October, Trump criticized the Biden administration's <a target="_blank" href="https://www.businessinsider.com/intel-chips-act-funding-all-hands-meeting-2024-11">CHIPS Act</a> legislation, which included $52.7 billion in tax breaks and subsidies for companies in the semiconductor industry. He said that the federal government should have implemented tariffs instead to motivate global chipmakers to build more factories in the US, which would then create jobs."You didn't have to put up $0.10," Trump said. "You could have done it with tariffs. You tariff it so high that they will come and build their chip companies for nothing."To be sure, the impacts of a tariff policy on chips could be mixed. Jeff Koch, an analyst at the semiconductor research and consulting firm SemiAnalysis, told BI that tariffs could lead to higher prices for goods containing chips, such as cars, electronics, and appliances. He added that US chipmakers could likely benefit from these tariffs because it could help them compete with companies abroad that sell chips at lower prices.The Trump campaign did not respond to a request for comment.<h2 id="dc733634-a51d-47cf-a7b9-405bdfac9e61">Tariffs on chips could boost construction and manufacturing jobs</h2>Patrick Moorhead, founder, CEO, and chief analyst at the research and advisory firm Moor Insights and Strategy, told BI that tariffs could increase the number of US chip manufacturing jobs. He added that he thinks the policy could incentivize chipmakers like TSMC and Samsung, which is based in South Korea, to boost manufacturing in the US."The cost of manufacturing in the US for Samsung and TSMC would be lower than a 30% to 40% tariff on <a target="_blank" href="https://www.businessinsider.com/quartz-mine-computer-chips-hurricane-helene-spruce-pine-semiconductor-2024-9">wafers</a> and <a target="_blank" href="https://www.businessinsider.com/us-ai-chip-production-manufacturing-nvidia-labor-china-taiwan-korea-2024-4">packaging</a>," he said, referring to key components of the chipmaking process.Jeff Ferry, chief economist at the Coalition for a Prosperous America, a nonprofit that advocates for increasing domestic manufacturing, estimated that tariffs could create roughly 100,000 jobs at US chip manufacturers and their suppliers.He said this estimate was partly based on a <a target="_blank" class="" href="https://www.semiconductors.org/wp-content/uploads/2021/05/2021-Jobs-Report_2-pager.pdf">report</a> published in 2021 by the Semiconductor Industry Association — a trade association and lobbying group — that said a $50 billion investment would help create an estimated 10 additional chip factories in the US. That could add about 42,000 direct jobs at the companies building these factories and 101,500 indirect jobs at chipmakers' suppliers, per the report.Ferry said he thought chip tariffs could lead to the creation of roughly 10 additional factories, which led him to come to the 100,000 jobs estimate. In August, the White House <a target="_blank" href="https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/09/fact-sheet-two-years-after-the-chips-and-science-act-biden-%E2%81%A0harris-administration-celebrates-historic-achievements-in-bringing-semiconductor-supply-chains-home-creating-jobs-supporting-inn/">said</a> that investments supported by CHIPS Act funding would help create 115,000 construction and manufacturing jobs."Tariffs on chips, particularly legacy chips like those used in autos, could successfully shift production back to the US," Ferry said.Samsung did not respond to a request for comment. Intel and TSMC did not respond to a question about what impact a Trump administration tariff policy would have on each company's job creation plans in the US.An Intel spokesperson pointed to a <a target="_blank" href="https://www.intel.com/content/www/us/en/newsroom/news/us-chips-act-intel-direct-funding.html#gs.i5ie0q">press release</a> from March, which said the company's $100 billion investment in the US over the next five years is expected to create more than 10,000 jobs at Intel and nearly 20,000 construction jobs. TSMC pointed to a <a target="_blank" href="https://pr.tsmc.com/english/news/3122">press release</a> from April, that said TSMC's investments in three Arizona chip factories are expected to create roughly 6,000 company jobs, more than 20,000 construction jobs, and tens of thousands of indirect supplier and consumer jobs.Stephen Ezell, the vice president for global innovation policy at the Information Technology and Innovation Foundation, said that the effectiveness of a tariff on chips could be limited, in part because many chips aren't imported <a target="_blank" class="" href="https://www.usitc.gov/publications/332/executive_briefings/ebot_cellular_phones_and_covid.pdf">directly</a> into the US: He said they often come embedded into finished products like <a target="_blank" class="" href="https://www.usitc.gov/publications/332/executive_briefings/ebot_cellular_phones_and_covid.pdf">smartphones</a> or computers.For example, he said that in most cases, chips that TSMC manufactures in Taiwan for Apple are sent to <a target="_blank" class="" href="https://www.theatlantic.com/technology/archive/2022/12/tsmc-apple-memory-chip-production-us-china-taiwan-relations/672593/">China</a> or <a target="_blank" class="" href="https://www.cnbc.com/2024/04/10/apple-made-14-billion-worth-of-iphones-in-india-in-shift-from-china.html">India</a> to be incorporated into a product like an iPhone. Therefore, the chip wouldn't be subject to a US tariff but the iPhone would.When deciding whether to build a chip factory in the US, Ezell said several factors — including wage rates, the labor talent pool, and tax policy — would be bigger considerations for companies than the country's tariff policy. But if tariffs proved to be the deciding factor in a company's decision to invest in the US, then Ezell said the policy could arguably be credited with boosting employment in the semiconductor industry."If a company did decide not to launch a factory elsewhere and instead launch it in the United States, then yes, this dynamic could lead companies to hire more," he said.Do you work in the US semiconductor industry? Reach out to this reporter at <a target="_blank" href="mailto:jzinkula@businessinsider.com">jzinkula@businessinsider.com</a>

Trump's trade restrictions could be good for American semiconductor jobs

<ul class="summary-list"><li>TSMC has begun producing chips for Apple at its Phoenix fab, people familiar with the matter said.</li><li>This development bodes well for the future of the US semiconductor industry, to which the Biden administration pledged $52 billion.</li></ul>The US's efforts to produce more <a target="_blank" href="https://www.businessinsider.com/us-china-tech-war-computer-chips-semiconductor-plants-costing-americans-2023-1">semiconductor chips</a> have encountered some challenges over the past few years, but the tide may be turning.TSMC, the world's leading chipmaker, has begun producing A16 chips for Apple at one of its <a target="_blank" href="https://www.businessinsider.com/tsmc-phoenix-chip-semiconductor-factory-biden-global-economy-china-taiwan-2022-12">Phoenix semiconductor chip fabs</a> (or factories), two people familiar with the matter told Business Insider. One of the people said that full production levels have not yet been reached. Their identities are known to BI.<a target="_blank" class="" href="https://timculpan.substack.com/p/apple-mobile-processors-are-now-made">Tim Culpan</a>, an independent journalist who covers technology and is based in Taiwan, first reported the news last month.The chips, which Culpan reported are being produced in "small, but significant, numbers," mark a major development for the company, which <a target="_blank" href="https://pr.tsmc.com/english/news/2033">announced</a> plans in 2020 to invest billions of dollars in Arizona and create thousands of jobs. Additionally, it comes two years after Tim Cook, the CEO of Apple, announced that the company would be the "<a target="_blank" href="https://www.businessinsider.com/apple-tim-cook-america-us-made-chips-first-time-decade-2022-12">largest customer</a>" of TSMC's first Arizona fab and use US-made chips for the first time in nearly a decade.A TSMC spokesperson declined to comment on the company's US work with Apple. When asked about the progress on the company's first chip fab, the spokesperson said that the project is "proceeding as planned with good progression," and that the company is on track to be fully operational in the first half of 2025.Apple didn't respond to BI's request for comment.<h2 id="1819bf24-3dc2-49d1-a9d0-42044a61e24c">'A success story'</h2>Dylan Patel, a chief analyst at the semiconductor research and consulting firm SemiAnalysis, said stateside chip production for Apple is a key milestone."Despite many negative stories early on, this shows the fabs are on track and operating as expected — a success story," he told BI.Mark Muro, a senior fellow at the Brookings Institution, told BI that beginning the production of A16 chips — which have been used in some recent <a target="_blank" href="https://www.businessinsider.com/guides/tech/iphone-15-plus-review">iPhone models</a>, though not the new <a target="_blank" class="" href="https://www.businessinsider.com/guides/tech/iphone-16">iPhone 16</a> — is a very positive signal for the Apple-TSMC partnership."It suggests Apple has enough belief in the new US facility to dive right in with US production of one its most advanced mobile processors," he said, adding, "This is encouraging given some observers' skepticism US sites could reach TSMC standards anytime soon."TSMC's commitment to <a target="_blank" href="https://www.businessinsider.com/tsmc-arizona-semiconductor-chip-fab-taiwan-china-president-joe-biden-2024-4">building three</a> chip fabs on its Phoenix campus is key to the Biden-Harris administration's efforts to boost the US's production of the chips that power everything from iPhones to washing machines. In 2022, President Joe Biden signed the <a target="_blank" href="https://www.businessinsider.com/chips-act-bill-to-boost-us-chipmaking-competition-with-china-2022-7">CHIPS Act</a> into law, which included <a target="_blank" href="https://www.businessinsider.com/trump-taiwan-china-semiconductor-chips-us-economy-trade-biden-election-2024-7">$39 billion</a> in manufacturing incentives for chip production in the US. In addition to creating US jobs, the administration hopes to secure supply chains and make the US <a target="_blank" class="" href="https://www.businessinsider.com/asml-tsmc-semiconductor-chip-equipment-kill-switch-china-invade-taiwan-2024-5">less reliant</a> on advanced chips in Taiwan.<h2 id="8f73c768-4752-403c-b6e5-a20430cb553e">TSMC faced construction slowdowns and worker tensions in Arizona</h2>TSMC's investment in Arizona hasn't always been smooth.Last year, TSMC announced that the official opening of its first Arizona fab would be <a target="_blank" href="https://www.businessinsider.com/tsmc-taiwan-semiconductor-phoenix-arizona-factory-chipmaker-job-qualification-debate-2023-8">pushed back</a> from 2024 to 2025. And when the company announced plans to send technicians from Taiwan to train US workers, a local <a target="_blank" class="" href="https://www.businessinsider.com/tsmc-taiwan-semiconductor-phoenix-arizona-factory-chipmaker-job-qualification-debate-2023-8">Arizona labor union</a> protested due to concerns that American jobs would be threatened.Management and safety concerns have also led to some frustrations among TSMC's construction workforce in Arizona. Workers <a target="_blank" href="https://www.businessinsider.com/tsmc-phoenix-arizona-chip-factory-taiwan-semiconductor-management-safety-workers-2023-8">previously told BI</a> that managerial challenges had fueled construction delays, and some have accused the company of <a target="_blank" href="https://www.businessinsider.com/tsmc-phoenix-arizona-chip-factory-taiwan-semiconductor-management-safety-workers-2023-8">safety violations</a>. TSMC <a target="_blank" href="https://www.businessinsider.com/tsmc-phoenix-arizona-chip-factory-taiwan-semiconductor-management-safety-workers-2023-8">previously told BI</a> that it's committed to ensuring that its working conditions are safe.In 2022, TSMC's founder and former CEO Morris Chang told the Brookings Institute that the US's efforts to boost <a target="_blank" href="https://www.businessinsider.com/why-tsmc-chipmaker-investing-billions-us-cost-more-make-chips-2022-12">domestic chip production</a> would be "a wasteful, expensive exercise in futility," citing labor force and cost challenges.Despite these hiccups, TSMC said in April during an earnings call that the progress on its first Arizona fab was "<a target="_blank" href="https://www.businessinsider.com/tsmc-arizona-semiconductor-chip-fab-taiwan-china-president-joe-biden-2024-4">well on track</a>."TSMC's production of Apple chips is good news for Americans <a target="_blank" href="https://www.businessinsider.com/semiconductor-industry-jobs-salary-chips-phoenix-arizona-tsmc-students-2023-10">hoping to land jobs</a> in the industry, Patel said. That's because TSMC's early success suggests it will continue to invest in the US."This drives job growth not just at TSMC but for the entire ecosystem — fab construction, equipment vendors, etc. that are all needed to support the fab," Patel said. "While modern fabs are not especially labor intensive, they require highly-skilled workers and will operate for decades, meaning many high-quality, long-term jobs are being created."TSMC has said that it will <a target="_blank" href="https://www.businessinsider.com/tsmc-arizona-semiconductor-chip-fab-taiwan-china-president-joe-biden-2024-4">charge customers more</a> for chips made outside Taiwan due to higher manufacturing costs. But Patel said he doesn't expect this to have a material impact on the prices of Apple's products."US government subsidies were meant to offset differences in construction and other costs between Taiwan and the US to make the business viable for TSMC," he said, adding, "Neither Apple nor consumers should expect a price difference for these US-produced chips.Going forward, chip makers like TSMC will face another challenge once they're operating at full capacity: <a target="_blank" class="" href="https://www.businessinsider.com/semiconductor-certification-program-chipmaker-manufacturing-jobs-new-career-intel-tsmc-2023-8">finding workers</a>.According to a <a target="_blank" href="https://www.semiconductors.org/america-faces-significant-shortage-of-tech-workers-in-semiconductor-industry-and-throughout-u-s-economy/">report</a> published last year by the Semiconductor Industry Association, the US semiconductor industry faces a worker shortage of 67,000 workers by 2030, including technicians, computer scientists, and engineers. However, Patel said that he doesn't expect labor force challenges to materially impact production at TSMC specifically.Muro was also optimistic. He said he thinks TSMC's production of Apple chips would bode well for the future."This is an important signal that the American drive to re-shore high-quality chipmaking is well founded," he said.Do you work in the semiconductor industry and have a story to tell? Reach out to this reporter at <a target="_blank" href="mailto:jzinkula@businessinsider.com">jzinkula@businessinsider.com</a>.

Apple's Made-in-the-USA chips signal a turnaround for the US' big semiconductor bet

<ul class="summary-list"><li>A Chinese takeover of Taiwan risks investments there and far beyond.</li><li>A hedge fund turned to a tabletop wargame to see how the crisis could play out.</li></ul>As China's fleets and bombers stalk the narrow strait and <a target="_blank" class="" href="https://www.businessinsider.com/china-showed-how-easily-no-notice-it-can-surround-taiwan-2024-6">threaten Taiwan's</a> seven decades of de facto self-rule, a British hedge fund commissioned a wargame to answer an increasingly pressing question: What is the optimum strategy for investors if China invades?Taiwan is the <a target="_blank" href="https://www.cnbc.com/2021/03/16/2-charts-show-how-much-the-world-depends-on-taiwan-for-semiconductors.html">world's leading supplier</a> of the semiconductor chips essential to electronics of all kinds, from fighter jets and supercomputers to dishwashers, and a Chinese takeover of Taiwan's industry would immediately buzzcut exposed investors. But the wargame makes clear that would be the first wave in an economic tsunami."The conclusion was that most investing entities would take a huge hit and keep being hit for months to follow, with many likely collapsing," Finley Grimble, president of Knightsbridge Strategic Group, the British consultancy that designed and ran the game, told Business Insider. "Opportunities could follow a bit later though for those who survive."Wargaming is a common technique in government and military circles to explore issues and assess potential responses. But it also is becoming popular in business as a way to prepare for crises like this that would send tremors through the world's economy and short-circuit tech stocks.In the case of the British hedge fund, which Knightsbridge did not identify, the tabletop game began with <a target="_blank" href="https://www.businessinsider.com/ai-taiwan-china-chip-war-2024-6">China invading Taiwan</a> on May 2, 2025 — two years before a <a target="_blank" href="https://www.businessinsider.com/us-missing-how-china-could-seize-taiwan-without-invading-experts-2024-5">reported Chinese mandate</a> to be ready. The hedge fund players (played by actual officials of the hedge fund in question) responded by "liquidating as many of its investments as possible in all adjacent countries to the South China Sea, and rapidly reducing its exposure to investments reliant on South China Sea freedom of navigation," according to KSG's summary report.But this still left the fund with substantial exposure to its global investment, including those in the US and Europe. The next step was to shift investments toward US government bonds, buying US dollars, and investing in South America. "The major short- to medium-term decision taken was to pull out of high-tech companies given semiconductor chip shortages were likely on the horizon, which would harm the share price of tech giants," KSG noted.In the second phase of the game, soon after the <a target="_blank" href="https://www.businessinsider.com/red-flags-tell-us-when-chinas-ready-to-invade-taiwan-2024-4">Chinese invasion began</a>, US forces were said to have engaged and stopped the Chinese amphibious assault, though China continued to bombard Taiwan.In the economic sphere, the EU, as well as the US, Japan, South Korea and Australia imposed sanctions on China.<div type="image" title="Taiwanese soldiers fired artillery as part of August drills to defend their coast." height="1333" width="2000" msid="113147893" hostid="261" sizebytes="358550"></div>This caught the hedge fund players by surprise: they had assumed EU sanctions were unlikely because of the depth of <a target="_blank" href="https://www.businessinsider.com/xi-europe-tour-eu-companies-china-economy-investor-confidence-low-2024-5">China-Europe trade</a>, which reached $815 billion annually in 2023. The hedge fund "agreed that any room for avoiding a total divestment from China and the South China Sea was now completely lost, and market re-entry was probably many years away."The final phase of the wargame began a month into the war. Global trade was said to be in crisis, the US had imposed a blockade on goods headed toward China, and there was a global rush to buy gold as a safe haven, along with US Treasury bills and high-quality US dollar assets. There was also stress on the global financial systems, including more and larger stock margin calls, more hedging, stiffer demands for collateral, higher credit spreads and deteriorating credit quality."Experts in finance assessed that this scenario did not look so dissimilar to the early stages of the 2008 financial crisis, the impact of Covid-19, the First Gulf War, and the Russian invasion of Ukraine," KSG noted. To be sure, China's economy is nearly nine times the size of Russia's as estimated by GDP.The hedge fund responded by choosing to invest heavily in semiconductors manufactured in regions not affected by the war. The fund also boosted investments in the defense industry and, on the assumption that the war would drive up energy prices, also invested in oil and alternative energy.A post-game analysis by former British government economists and security experts, as well as a former investment banker, concluded that a <a target="_blank" href="https://www.businessinsider.com/china-taiwan-war-us-no-allies-2024-7">Chinese invasion of Taiwan</a> would devastate the world economy far more than even the <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/recession-vs-depression">2008 meltdown</a>.Governments would pump liquidity into their economies for years to come, including investing in semiconductor manufacturing. If an invasion of Taiwan resulted in sanctions on China, this might be a boon to Western manufacturers who would no longer have Chinese competition (though consumers might be unhappy as lack of competition drives up prices).An interesting side effect would be that Chinese investment in the so-called Global South — which includes Africa, the Middle East and Southeast Asia — would probably be slashed, leaving space for other lenders to step in. "This would provide potential opportunities for new players to emerge in the Global South, particularly if loans can be collateralized," Knightsbridge noted. "A major example of this would be mining in Zimbabwe."In the end, the value of business wargames is that they give companies and investors a chance to go beyond theory and explore the consequences of making various choices."It's easy to think about consequences in your own head, or in a regular meeting," Grimble said. "But a wargame allows for consequences to be examined, and that is vital for entities looking to invest enormous sums of money and compare options, or prepare mitigations and alternatives in a time of urgency."Michael Peck is a defense writer whose work has appeared in Forbes, Defense News, Foreign Policy magazine, and other publications. He holds an MA in political science from Rutgers Univ. Follow him on <a target="_blank" href="https://www.twitter.com/@mipeck1">Twitter</a> and <a target="_blank" href="https://www.linkedin.com/in/mipeck/">LinkedIn</a>.

Hedge fund turned to a wargame to plan for a Chinese invasion of Taiwan 

<ul class="summary-list"><li>Former President Trump's remarks about Taiwan have raised uncertainty within the chip industry.</li><li>In a recent Bloomberg Businessweek interview, he said Taiwan should pay the US for its defense.</li></ul>Former President Donald Trump during a recent interview with Bloomberg Businessweek waded into the US-Taiwan relationship head-on, suggesting he might upend their long-standing economic relationship. Trump said Taiwan took the US chips business and that it should pay the US for defense."They did take about 100% of our chip business. I think Taiwan should pay us for defense. You know, we're no different than an insurance company. Taiwan doesn't give us anything," Trump <a target="_blank" href="https://www.bloomberg.com/news/videos/2024-07-16/trump-suggests-taiwan-should-pay-us-for-protection-video">said in the interview</a> published Tuesday."Taiwan is 9,500 miles away," he added. "It's 68 miles away from China."China continues to view Taiwan as a breakaway province. But Taiwan has long defended its right to self-rule away from the grips of Beijing.Trump's stance could also have major implications for Taiwan's dominance in semiconductor-chip manufacturing should a conflict arise between Taiwan and China. Such a scenario would likely have a cataclysmic effect on the US economy if the global chip supply chain was disrupted.It is worth noting Trump's "make them pay" rhetoric isn't new, or unique to Taiwan. He's said <a target="_blank" class="" href="https://www.politico.com/news/2024/02/14/trump-nato-allies-00141590">similar things</a> about NATO for years, and he campaigned in 2016 on making Mexico pay for a border wall (Mexico <a target="_blank" class="" href="https://www.cnn.com/2023/10/30/politics/fact-check-trump-mexico-piece-border-wall/index.html">did not</a> pay for the wall).And there's also Trump's new running mate, <a target="_blank" class="" href="https://www.businessinsider.com/where-does-trump-vance-stand-on-china-tariffs-inflation-taxes-2024-7">JD Vance</a>. The Ohio senator, on paper at least, appears to have a different view on Taiwan and its importance from the former president's. A critic of US support of the war in Ukraine, Vance has <a target="_blank" class="" href="https://www.cnn.com/2024/07/18/china/trump-vance-china-taiwan-analysis-intl-hnk/index.html">called</a> China "the real issue" and said that key American weapons being used by Ukraine should be preserved in case war breaks out between China and Taiwan.President Joe Biden, for his part, has said the US would defend Taiwan "if there was an unprecedented attack" from China.<h2 id="5a29dc9f-c277-4f18-a2d4-89340e1321e8">The semiconductor influence</h2>Taiwan <a target="_blank" class="" href="https://foreignpolicy.com/2023/02/17/united-states-taiwan-china-semiconductors-silicon-shield-chips-act-biden/">manufactures</a> more than 60% of the world's semiconductors and produces about 92% of the globe's advanced semiconductors, Foreign Policy reported in February 2023.And Taiwan's microchip production is anchored by the Taiwan Semiconductor Manufacturing Co., a global powerhouse.A study authorized by the US State Department found that any temporary halt to Taiwan's chip production from a Chinese blockade could result in <a target="_blank" class="" href="https://www.ft.com/content/c0b815f3-fd3e-4807-8de7-6b5f72ea8ae5">roughly $2.5 trillion</a> in annual losses globally, according to the Financial Times.It's the sort of impact that would surely reverberate for years.Trump said in the Bloomberg interview that Taiwan had gotten rich as it "took" America's microchip business."How stupid are we?" he asked.The ex-president's remarks are significant because the US has a vested interest in preserving strong ties in the Indo-Pacific region given the disproportionate impact that Taiwan has on the US economy.Taiwanese chips are used in everything from cellphones and electric vehicles to microwaves and manufacturing equipment. This reality has made many US policymakers even more aware of Taiwan's huge role in America's economic vitality.<h2 id="ed214bc6-e698-4973-8df3-f8b541482b92">Becoming a major chip player once again</h2>The CHIPS and Science Act, which Congress passed and Biden signed into law in 2022, was <a target="_blank" class="" href="https://www.businessinsider.com/chips-act-bill-to-boost-us-chipmaking-competition-with-china-2022-7">crafted to boost semiconductor manufacturing</a> in America. The law set aside $39 billion in manufacturing incentives for chip production in the US.Biden heavily pushed the legislation as a way to bolster supply-chain resilience while keeping the US competitive against China.The Biden administration recently floated using <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-07-17/us-considers-tougher-trade-rules-against-companies-in-chip-crackdown-on-china">a stringent trade restriction</a> known as the foreign direct-product rule to block China from using advanced chipmaking tools, Bloomberg reported."The potential for more restrictions is real," CJ Muse, the senior managing director at Cantor Fitzgerald, <a target="_blank" class="" href="https://www.youtube.com/watch?v=dGraDgFLyiU">told CNBC</a>."The intent is really to limit China's ability to build leading-edge semiconductors, and I think that the efforts the Department of Commerce and BIS have put through have done that," he added, referring to the Bureau of Industry and Security.A recent report released by the <a target="_blank" class="" href="https://www.semiconductors.org/emerging-resilience-in-the-semiconductor-supply-chain/">Semiconductor Industry Association</a> said that America's share of global chip manufacturing was set to increase to 14% by 2032. Currently, the US has a 10% share, reflective of years of manufacturing operations being sent offshore — which put the country at a competitive disadvantage.But the US still faces an uncertain future regarding chip production should Trump sit in the White House again, as fears have risen of supply-chain disruptions if there's a conflict involving Taiwan.After Trump's latest remarks about Taiwan and the potential for tighter trade curbs on China, <a target="_blank" class="" href="https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-earnings-07-17-2024">global chip stocks fell</a>, with notable declines for Nvidia, TSMC, and Qualcomm, among others.<h2 id="884df14e-6a4a-4eb9-a0b0-72945b0099f3"></h2>

Trump's stance on Taiwan could be devastating for the US economy

<ul class="summary-list"><li>South Korean companies invested more in the US in 2023 than any other country, per UN data.</li><li>The Inflation Reduction Act and CHIPS Act offer financial incentives for American-manufactured EVs, batteries, and chips.</li></ul>South Korean companies are investing billions of dollars in the US to take advantage of two big laws meant to boost American manufacturing.According to a <a target="_blank" class="" href="https://www.ft.com/content/dbc8208c-7fe2-41bf-a50d-f66abc65fde6">Financial Times</a> analysis of United Nations data, South Korean companies invested $21.5 billion in US projects in 2023, more than any other country. South Korea overtook Taiwan, which held the top spot in 2022.Samsung, LG, and Hyundai are among the South Korean companies committing billions of dollars to build facilities in the US to manufacture electric vehicles, batteries, and semiconductor chips. Much of the money is flowing to <a target="_blank" class="" href="https://www.businessinsider.com/best-economy-us-south-texas-florida-houston-dallas-nashville-miami-2023-12">southern states</a>, boosting jobs in the so-called <a target="_blank" class="" href="https://www.businessinsider.com/georgia-electric-vehicle-battery-manufacturing-inflation-reduction-act-clean-energy-2024-9">Battery Belt</a>.Yeo Han-koo, former trade minister of the Republic of Korea and a senior fellow at the Peterson Institute of International Economics, told Business Insider that US and South Korean interests in emerging technologies are perfectly aligned.Amid geopolitical uncertainty, the Biden administration is aiming to decouple US <a target="_blank" href="https://www.businessinsider.com/us-china-trade-war-tariffs-economy-election-janet-yellen-manufacturing-2024-4">supply chains from China</a> to compete in the <a target="_blank" class="" href="https://www.businessinsider.com/china-electric-vehicles-government-subsidies-win-ev-race-byd-tesla-2024-6">EV and chips race</a>. Meanwhile, South Korea — a longtime US ally — aims to build its global profile in high-tech and auto manufacturing.In particular, Yeo said, the 2022 Inflation Reduction Act and CHIPS and Science Act provide financial incentives for companies to invest in green technology in the US, bolstering South Korean commitments."In addition to these new geopolitical factors, these massive subsidies and tax incentives from the IRA and the CHIPS and Science Act really provide a good motivation for these Korean companies to invest in the US," Yeo said.<h2 id="b759499f-886b-4c14-8bae-91a8ccc1e284">South Korean companies are creating green tech jobs in the US</h2>According to the Financial Times analysis, over half of South Korea's outbound investments went to the US in 2023, up from 18% in 2019. During that same time, South Korean outbound investment in China decreased from 11% to 1%.Over a third of Korean project announcements in the US in 2023 were in the automotive or electronics sectors, including a <a target="_blank" class="" href="https://www.businessinsider.com/georgia-electric-vehicle-battery-manufacturing-inflation-reduction-act-clean-energy-2024-9">Kia plant in Georgia</a> set to take advantage of the IRA's $7,500 tax credit for buyers of US-made EVs.Similarly, in February, Hyundai <a target="_blank" rel=" nofollow" class="" href="https://www.prnewswire.com/news-releases/hyundai-announces-new-production-start-date-at-metaplant-america-during-hyundai-day-in-georgia-302071754.html#:~:text=Hyundai%20Motor%20Group%20is%20investing,that%20will%20employ%203%2C500%20workers.">announced</a> over $7 billion in investment in production facilities in Georgia. The company estimates their investments will create nearly 40,000 jobs in the state.And South Korean investments span across multiple states, mainly in the South. Samsung <a target="_blank" href="https://www.americanprogress.org/article/new-samsung-semiconductor-plant-in-taylor-texas/#:~:text=Samsung%20invested%20approximately%20%2417%20billion,artificial%20intelligence%20(AI)%20purposes">invested</a> $17 billion in a semiconductor plant in Texas that is expected to create thousands of jobs. LG recently <a target="_blank" href="https://www.queencreekaz.gov/Home/Components/News/News/13041/13">invested</a> $5.5 billion in building a battery plant in Arizona.Additionally, SK Hynix, Inc. <a target="_blank" href="https://news.skhynix.com/sk-hynix-signs-investment-agreement-of-advanced-chip-packaging-with-indiana/">announced</a> a $3.87 billion plant in Indiana to produce chips for AI products. The plant is expected to create nearly 1,000 jobs by 2030.Yeo said South Korea has an interest in becoming a competing player in emerging technologies, and the US needs allies to bolster its manufacturing."Reviving US manufacturing will be one of the most important economic policy objectives, but I mean, the US cannot do it alone," Yeo said. "The US needs a kind of partner in rebuilding this manufacturing, especially in these emerging new industries and supply chains."In the past decade, South Korean companies have <a target="_blank" href="https://gov.texas.gov/uploads/files/business/SouthKorea-Profile.pdf">created</a> about 7,000 jobs in Texas and <a target="_blank" class="" href="https://iedc.in.gov/events/news/details/2024/03/04/indiana-to-promote-booming-battery-ev-ecosystems-to-industry-leaders-in-south-korea">nearly 8,000 jobs</a> in Indiana.As the US reenergizes its manufacturing industries, Biden's inflation-fighting laws include provisions excluding businesses with supply chains connected with "foreign entities of concern," like China, Yeo said, to guarantee competition."Once you get the US subsidies, you are limited in terms of your flexibility to invest in China," Yeo said.Those provisions have incentivized South Korean companies to divert from China and focus more on the US.In May, South Korea's Ministry of Trade, Industry and Energy announced it committed $7 billion toward moving its supply chains away from China to further comply with US rules, according to <a target="_blank" class="" href="https://www.wsj.com/business/south-korea-plans-7-billion-push-to-pivot-ev-battery-industry-away-from-china-1fa1f189">The Wall Street Journal</a>.Furthermore, as high-tech products like EV batteries become a primary focus for US manufacturing, it makes business sense for South Korean companies to invest in plants directly in the US, Yeo said."These batteries, for example, are very bulky products," Yeo said, referring to EV batteries, which he said are cumbersome to ship. "So I think in the case of the battery industry, I think it also makes commercial sense to locate those factories close to the final market or end users."South Korean companies like LG and Samsung are designed to be global, Yeo said, and the US is often a target destination for large corporations.According to World Bank <a target="_blank" class="" href="https://data.worldbank.org/indicator/SP.POP.TOTL?locations=US">data</a>, the US population is above 330 million, while South Korea's population is just above 50 million."The US is the biggest market right now, and also still, the US market is considered to be very sophisticated," Yeo said. "When these global companies roll out new products, new technologies, they need to test it in the US market."To be sure, Yeo said it's important to recognize that trade is a complicated picture. China has been and continues to be one of South Korea's largest trading partners. While this moment provides business opportunities for South Korean companies in the US, the looming geopolitical tension with China creates uncertainty."With this geopolitical tension arising between the US and China, a lot of Korean businesses who had invested in China and had big kind of China operation are really kind of being squeezed between the US and China," he said.South Korean companies are committing to the US right now, but Yeo said political uncertainty over the presidential election encourages caution for international business."Korean companies have a first-mover advantage at the moment, but now also they are facing potential risk, depending on the outcome of the November election in the US," Yeo said.Nonetheless, Yeo said these investments would likely not make business sense without the subsidies and incentives provided by the Biden Administration's focus on manufacturing."Because of this combination of all these factors you see right now," he said, "Korean investments are really flooding into the US market." Are you trying to get a job building EVs or AI chips? Reach out at <a target="_blank" class="" href="mailto:jtowfighi@businessinsider.com">jtowfighi@businessinsider.com</a>

South Korea is going big on American manufacturing. The Battery Belt could benefit the most.

<ul class="summary-list"><li>Trump told Bloomberg Businessweek that Taiwan has taken away the US's chip-manufacturing business.</li><li>Trump wants Taiwan, which China claims as its territory, to pay the US for protection.</li></ul>The US's relationship with Taiwan is likely to be a sore point should former President Donald Trump secure a second term in office.Trump, the Republican presidential nominee, told <a target="_blank" class="" href="https://www.bloomberg.com/features/2024-trump-interview-transcript/">Bloomberg Businessweek</a> that Taiwan's dominance in the chip industry made the island rich. He offered no evidence in the interview to support his claims about Taiwan."Taiwan took our chip business from us," he said to Businessweek in an interview before the failed assassination attempt on Saturday. "I mean, how stupid are we? They took all of our chip business. They're immensely wealthy."Taiwan is a semiconductor chip powerhouse. It produces 92% of the world's most advanced microchips, according to the US-based <a target="_blank" class="" href="https://www.semiconductors.org/wp-content/uploads/2021/05/BCG-x-SIA-Strengthening-the-Global-Semiconductor-Value-Chain-April-2021_1.pdf">Semiconductor Industry Association.</a>In 2021, Taiwan's chip industry generated $137 billion in output and accounted for nearly 25% of total global chip sales, according to a <a target="_blank" class="" href="https://www.usitc.gov/publications/332/working_papers/us_exposure_to_the_taiwanese_semiconductor_industry_11-21-2023_508.pdf">November report</a> from the US International Trade Commission.Taiwan's chipmakers benefit US companies. Taiwan Semiconductor Manufacturing Company is the world's largest contract chipmaker. The company supplies chips to end users in America like Apple, which uses them in their consumer products. The AI chipmaker Nvidia is also a big TSMC <a target="_blank" class="" href="https://www.businessinsider.com/nvidia-taiwan-tsmc-ai-chip-price-hike-value-jensen-huang-2024-6">customer</a>.However, Beijing claims self-governed Taiwan as its own territory and has been <a target="_blank" class="" href="https://www.csis.org/analysis/how-china-could-quarantine-taiwan-mapping-out-two-possible-scenarios">stepping up military activity</a> around the island in recent years. That has sparked fears of a Chinese invasion of the island that could majorly impact the <a target="_blank" class="" href="https://www.businessinsider.com/taiwan-war-impact-us-economic-growth-first-year-china-chips-2024-1">global economy</a> and chip supply.The US has been ramping up chip manufacturing at home to diversify some of its chip supply from Taiwan with the $52 billion <a target="_blank" rel=" nofollow" href="https://www.semiconductors.org/chips/">CHIPS for America Act</a> that was signed into law by President Joe Biden in August 2022.The US is still obliged by law to <a target="_blank" class="" href="https://www.congress.gov/bill/96th-congress/house-bill/2479/all-info">protect Taiwan</a> by providing the island with military means to defend itself."I think, Taiwan should pay us for defense," Trump told Bloomberg. "You know, we're no different than an insurance company. Taiwan doesn't give us anything."Taiwan-listed shares of the chip powerhouse TSMC stock fell as much as 3% on Thursday following Trump's complaints.In response to Trump's statement, <a target="_blank" class="" href="https://www.youtube.com/watch?v=1uTuXfKHscg">Taiwanese Premier Cho Jung-tai</a> said on Thursday that the US and Taiwan maintain a good relationship and that Taipei has strengthened its defense budget."We are willing to take on more responsibility to defend ourselves and ensure our security," Cho said at a scheduled press conference.<h2 id="b36675f7-162f-49b2-994e-1fda5ba113c6">China probably hasn't decided if it prefers Trump or Biden</h2>It's not the first time Trump has complained about Taiwan's dominance in the chip business. Last July, <a target="_blank" class="" href="https://www.youtube.com/watch?v=48bTwpGgYBA">he also griped to Fox News</a> about the same issue."Remember this, Taiwan took our business away. We should have stopped them, we should have taxed them, tariffed them," he said at the time.China earlier highlighted the US's potential turnaround from Biden's stance that the <a target="_blank" class="" href="https://www.businessinsider.com/white-house-clarifies-biden-suggestion-us-defend-taiwan-china-attack-2021-10">US would defend Taiwan</a> if it's attacked."The United States always pursues 'America First,' and Taiwan may change from a 'chess piece' to a 'discarded piece' at any time," Chen Binhua, a spokesman for China's <a target="_blank" class="" href="http://www.gwytb.gov.cn/m/speech/202401/t20240131_12597322.htm">Taiwan Affairs Office</a>, said in January.But it's likely <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-06-19/china-sees-no-upside-to-biden-or-trump-as-president-us-spies-say">China has not decided</a> whether it would prefer a Biden or Trump presidency, Yun Sun, a nonresident fellow at the <a target="_blank" class="" href="https://www.brookings.edu/articles/how-china-would-tackle-a-second-trump-term/">Brookings Institution</a>, wrote on May 31.After all, Trump's first term saw his administration lifting <a target="_blank" class="" href="https://www.reuters.com/article/us-usa-taiwan-diplomacy/pompeo-lifts-restrictions-on-us-taiwan-relationship-as-clock-runs-out-on-trump-administration-idUSKBN29E0Q6/">US government rules</a> restricting interactions between American and Taiwanese officials — a <a target="_blank" class="" href="https://www.state.gov/new-guidelines-for-u-s-government-interactions-with-taiwan-counterparts/">deepening of their relationship.</a>"China doesn't believe Trump wanted a war with China over Taiwan, but they do see his indulgence of his team on Taiwan as the result of his overall 'maximum pressure' campaign to force China to cave on other fronts, such as trade," Sun wrote.

Trump is furious Taiwan's chip business is doing so well

<ul class="summary-list"><li>SemiAnalysis has grown from three analysts to 12 experts across five countries in two years.</li><li>The firm provides deep insight into GPUs and AI models and has become essential for major companies.</li></ul>Nvidia CEO Jensen Huang isn't the only one who has gone from uber-nerd to <a target="_blank" class="" href="https://www.businessinsider.com/jensen-huang-signed-womans-chest-tech-conference-nvidia-rockstar-leather-2024-6">tech luminary</a> in the space of a few years. Dylan Patel may be less of a household name, but for those watching Huang's moves closely, Patel's firm SemiAnalysis has become a <a target="_blank" class="" href="https://www.businessinsider.com/nvidia-ai-chip-blackwell-delay-new-annual-product-launch-2024-8">central source</a> of intel.OpenAI cofounder Sam Altman even called him "<a target="_blank" class="" href="https://www.businessinsider.com/google-gemini-ai-model-smashes-gpt4-says-semianalysis-2023-8">that semianalysis guy</a>" in a post on X, formerly Twitter, last year. Patel responded with an edited image of Google CEO Sundar Pichai pouring milk into Altman's mouth while holding him by the hair. Is there any greater sign of tech prowess than a high-profile online feud?SemiAnalysis gets deep into the weeds on graphics processing units, from the <a target="_blank" class="" href="https://www.businessinsider.com/ai-taiwan-china-chip-war-2024-6">base of the supply chain</a> to the end-users building the AI models that require so many specialized chips. That exchange with Altman was just a year ago, but it might as well have been in a different lifetime.In the last two years, SemiAnalysis has grown from a team of three analysts in two countries to a team of 12 subject matter experts in the US, Japan, Singapore, Taiwan, and France."We had some major companies that were customers, but now almost every major company in the AI infrastructure, server, model, space from sub-components all the way through to clouds and hyperscalers have become customers, which is a big shift," Patel told Business Insider.The firm's newsletter, launched in 2020, and its blog have become mandatory reading since they connect the semiconductor industry to the tech it enables in a way few do.News that Nvidia's next chip launch, <a target="_blank" class="" href="https://www.businessinsider.com/nvidia-ai-chip-blackwell-delay-new-annual-product-launch-2024-8">Blackwell, would be delayed</a> stirred up many questions about how AI hardware from the largest player in the game is rolling out. Patel spoke to BI about the impact of the delay, and how to observe Nvidia like a pro.This Q&amp;A has been edited for clarity and length.BI: Where do you get your information?The team consists of people across the entire supply chain, geographically and technically. We have someone who previously worked as low as ASML (Advanced Semiconductor Materials Lithography), the largest equipment company, and then all the way through to companies upstream, such as former employees of Microsoft, Nvidia, etc. So we have the entire view of the supply chain, from manufacturing, up to models. Also, several people on the team are from hedge fund backgrounds.I think the team goes to more than 50 technical conferences across the entire stack — not just the trade shows, which are not really as valuable, but more the technical conferences where people are presenting papers and advancements in the field.When you establish all these research and consulting relationships, you end up with a large well of information. That is how we're able to get disparate pieces of information that may be known and even common in one part of the supply chain but don't spread far outside it. Engineering especially, is very horizontal. Trying to draw the lines between all the different parts of the stack is very important.BI: There was a recent report about Nvidia's next-generation<a target="_blank" href="https://www.businessinsider.com/nvidia-ai-chip-blackwell-delay-new-annual-product-launch-2024-8"> Blackwell chip being delayed</a>. How common is a delay like this in the semi-world?In semiconductor manufacturing, there's this loop of the design being sent to <a target="_blank" class="" href="https://www.businessinsider.com/chip-tsmc-taiwan-semiconductor-trillion-market-cap-nvidia-ai-asml-2024-7">TSMC</a>, which manufactures. Once you have the stencils, it's a multi-month process to produce chips. Then you send those wafers out to customers.Customers test them to make sure everything works. More often than not, it doesn't. Why? Take, for example, a modern iPhone chip. It has 25 billion transistors and 15 layers of metal. Twenty-five billion transistors are 25 billion on-off switches, and they're perfectly timed and organized so that everything you do on your iPhone happens.AI chips are even more complicated than that. It's impossible to perfectly simulate everything, so you are always going to have issues. Then they'll need to make a few modifications to the design and send it back. That has always happened. And the range of modifications can be major to minor.Nvidia has always had an incredibly aggressive timeline. They've always been really good about shipping either the first or second revision of the chip. Whereas, other companies can go through 12 revisions. Even big companies like AMD (Advanced Micro Devices) tend to go through two, or three, or four revisions.The fact that Nvidia wanted to ramp so fast — this Blackwell ramp was supposed to be the first chip with $100 billion in sales — meant there were some minor delays. It's just a few months at most.But because so many people are affected by that delay, it shakes the entire world. In the past, the customers affected by this would know, and it wouldn't shake up all the way to the top levels of every company.BI: What are your favorite non-revenue indicators to watch at Nvidia?One is the size and use of models.Meta releases a new model, and it's now 405 billion parameters, right? These new models continue to increase the demand for compute voraciously. Now that Meta released this new model, and now that everyone uses these open-source models and doesn't develop their own, everyone switches to this bigger, newer model, and that creates a significant increase in demand.On the flip side, all the way downstream, companies in Taiwan have to report their revenue monthly. You can see the exact ramp of everything as soon as you want to see it.So there's a lot of information all the way upstream in terms of the models and deployments, and all the way downstream to the various sub-component suppliers.The other place I like to look a lot is random suppliers that are very small in niche parts of the supply chain, or suppliers of suppliers.Maybe Nvidia suppliers are very hush-hush, but maybe TSMC's suppliers are very open about what TSMC is ordering and you can estimate what's going to happen to Nvidia's production capacity or ability to sell servers from there.BI: Assuming the initial Blackwell rollout will indeed be smaller than promised, what do you know about who gets to be first in line for the new chips? And why do they get to be first in line?How Nvidia decides who gets to be first in line is a very complicated decision matrix — especially now with the <a target="_blank" class="" href="https://www.businessinsider.com/nvidia-mergers-and-acquisition-startup-buying-spree-ftc-investigation-2024-8">investigation by the FTC</a>.There are all sorts of reports that if you purchase their networking equipment, they will push you first in line or similar allegations like that.So, the question is who are they going to prioritize? My sense is that customers who have no choice or are smaller and, therefore need more support from Nvidia would probably be de-prioritized relative to customers who are much larger and have options.For example, Microsoft and Meta are their two largest customers. They also have chip programs internally, but they're not as successful as, say, Amazon and especially Google. But they also went out and bought AMD GPUs. If you're Nvidia, it makes sense to prioritize your biggest customers because they're the ones who are going to purchase the most products. They have a backup plan of <a target="_blank" class="" href="https://www.businessinsider.com/companies-using-ai-bain-survey-roi-2024-6">buying from your competitor</a>, and they require the least support.The calculus around allocations is difficult. But it would make sense that they prioritize their biggest customers, who purchase from other people and may purchase their networking equipment, whereas companies like Amazon don't purchase their networking equipment. You can go down the list and think about why you would provide hardware to one customer over another. Got a tip or an insight to share? Contact Senior Reporter Emma Cosgrove at <a target="_blank" href="mailto:ecosgrove@businessinsider.com">ecosgrove@businessinsider.com</a> or use the secure messaging app Signal: 443-333-9088

How Analyst Dylan Patel gets inside Nvidia to make connections from the semiconductor industry to the tech it enables

<ul class="summary-list"><li>Taiwan's chip boom is expected to drive a surge in the number of millionaires on the island, according to UBS.</li><li>The island's semiconductor sector, led by TSMC, is bolstering its economy and exports.</li></ul>Taiwan's status as the world's chip hub has kept the island's economy resilient.The industry is so hot that Taiwan is expected to mint many new US-dollar millionaires in the next five years, according to <a target="_blank" href="https://www.ubs.com/content/dam/assets/wm/global/insights/doc/global-wealth-report.pdf">Swiss bank UBS' annual wealth report,</a> released on Wednesday.Taiwan was home to nearly 790,000 US dollar millionaires last year. This number could surge by 47% to about 1.16 million millionaires by 2028, UBS predicts, leading the 56 global markets the bank analyzed in its report.That said, the size of Taiwan's millionaire population pales when compared to the US.The US was home to nearly 22 million millionaires last year, per UBS. That number is expected to grow 16% to 25.5 million millionaires over the next five years.UBS attributes Taiwan's wealth growth to its semiconductor chip industry, which is "set to reap the rewards of the boom in artificial intelligence."Taiwan is home to <a target="_blank" rel="" href="https://markets.businessinsider.com/stocks/tsm-stock">Taiwan Semiconductor Manufacturing Company, or TSMC,</a> the world's largest contract chipmaker and the sole supplier of key advanced chips to Apple and Nvidia, among others.<h2 id="a8196cc2-9848-4900-b815-9efd1cf4b783">Chip rush boosts wealth but widens inequality</h2>Even though UBS expects a huge jump in the number of millionaires in Taiwan, much of the island's 23 million population is not likely to benefit from the AI craze.UBS' data shows wealth inequality widened by about 10% in Taiwan from 2008 to 2023.The median net worth in Taiwan stood at $110,521 per adult in 2023, according to UBS. The average net worth was nearly three times that amount at $302,551.This means people at the top of the scale got a lot richer than those further down the totem pole over that time period, skewing average wealth upward.<a target="_blank" href="https://ws.dgbas.gov.tw/Download.ashx?u=LzAwMS9VcGxvYWQvNDY0L3JlbGZpbGUvMTA4NTQvMjMzMTE4LzgxNDE1MGJjLTM4Y2MtNDkzMS05NGNlLWYwYTFjZTA2ZjFkYS5wZGY%3d&amp;n=MjAyMiBOQVRJT05BTCBXRUFMVEgucGRm&amp;icon=.pdf">Official data </a>from Taiwan confirms the trend, showing that the <a target="_blank" href="https://focustaiwan.tw/business/202404290021">wealth gap</a> between the top 20% and bottom 20% of households has widened fourfold over three decades.Taiwan's Gini coefficient, which measures inequality, also widened from 1991 to 2021, when the last two official wealth surveys were conducted.<h2 id="b4ffc276-07b7-40ba-81ba-877f8f9318f6">Taiwan's tech sector growth is outpacing the non-tech sector</h2>One key trend contributing to wealth inequality in Taiwan is that its tech industry is doing better than industries not related to tech.TSMC's performance has soared on the back of the AI rush, with its <a target="_blank" href="https://investor.tsmc.com/english/quarterly-results/2024/q2">second-quarter sales</a> growing 40% over a year ago — beating analyst expectations. On Monday, <a target="_blank" href="https://www.businessinsider.com/chip-tsmc-taiwan-semiconductor-trillion-market-cap-nvidia-ai-asml-2024-7">TSMC ADRs listed on the New York Stock</a> Exchange briefly crossed the $1 trillion valuation mark.It's not just TSMC. The rise of the chip behemoth has created an entire tech ecosystem in Taiwan, much of which is centered on hardware.This ecosystem has been driving Taiwan's economy even amid longstanding geopolitical uncertainty as China claims the island as its territory. The country's <a target="_blank" href="https://focustaiwan.tw/business/202404300023">GDP</a> grew 6.5% in the first quarter of the year from a year ago. This was boosted by exports of <a target="_blank" href="https://think.ing.com/snaps/taiwan-first-quarter-gdp-beat-forecasts-on-the-strength-of-net-exports/">machinery and electrical equipment, </a>which surged nearly 28% from a year ago. However, domestic demand growth was modest, growing just 1% over the same period.Ma Tieying, a senior economist at Singapore's DBS bank, wrote in a note on Wednesday that she expects the world's AI drive to continue fuelling demand for high-performance chips from Taiwan.However, recovery in non-tech traditional manufacturing is expected to continue to be a drag due to the economic slowdown in China, which accounts for about one-third of Taiwan's total exports, Ma added.

The AI chip race is minting thousands of new millionaires in Taiwan, but not everyone is benefiting

<ul class="summary-list"><li>Taiwan's economy is booming.</li><li>Its GDP rose by a better-than-expected 6.5% in the first quarter, data published on Tuesday showed.</li></ul>The ChatGPT-fueled artificial intelligence boom has helped Taiwan's economy expand more than expected.Gross Domestic Product (GDP) rose by 6.5% in the first three months of the year compared with the same quarter in 2023, the statistics bureau <a target="_blank" href="https://eng.stat.gov.tw/News_Content.aspx?n=2317&amp;s=233296">said on Tuesday.</a> That's the fastest expansion rate in nearly three years and ahead of the 6% figure economists polled by Bloomberg were expecting.The AI craze has been one of the key drivers of growth for Taiwan over the past year.Its overall exports jumped <a target="_blank" href="https://archive.is/Q7SRa">just under 19%</a> in March, with sales of AI-related hardware soaring more than 400%."The pace of growth may not always show an out-sized surprise, like March's, but we believe Taiwan's export demand will continue to get a meaningful boost from both AI-related investments and ongoing strength in [the] US economy," Bansi Madhavani, an economist at Australia's ANZ Banking Group, previously told Bloomberg.Taiwan is one of the world's biggest manufacturers of the microchips needed to power large language models (LLMs) like ChatGPT.According to data from <a target="_blank" href="https://www.citigroup.com/global/insights/global-insights/the-u-s-china-chip-war-who-dares-to-win">Citi</a>, Taiwan's TSMC produces 90% of the world's most advanced processor chips. The AI craze of the past year and a half has led to skyrocketing demand for these types of semiconductors and helped make TSMC the world's ninth most-valuable company worth almost $720 billion.Strong consumer spending also boosted Taiwan's growth in the first three months of the year, the statistics bureau said, with tourism, food and beverages, and the stock market all enjoying bounce-back quarters.Economists have warned that growth could slow over the rest of 2024, with Taipei estimating that GDP <a target="_blank" href="https://eng.stat.gov.tw/Point.aspx?sid=t.1&amp;n=4200&amp;sms=11713">will be up 3.4% by year-end</a>. That chimes with sluggish forecasts from TSMC and Intel, with both warning in recent weeks of a potential slowdown in semiconductor demand.The Taiwan Stock Exchange closed 0.5% lower on Tuesday as traders fretted that the AI rally might have peaked, while the New Taiwan dollar fell 0.4% against the US greenback, per data from Refinitiv.

Taiwan's economy is booming thanks to the AI craze

<keyword id="70910" type="CITY" weightage="20" keywordseo="Hyundai-motor">Hyundai Motor</keyword> and its affiliate <keyword id="6372046" type="ORGANIZATION" weightage="20" keywordseo="kia">Kia</keyword>, South Korea's two biggest carmakers, on Thursday reported strong second-quarter <keyword id="6357061" type="SPONSORED" weightage="20" keywordseo="earnings">earnings</keyword> on a base effect and strong sales of their high-end SUVs. <keyword id="596" type="CITY" weightage="20" keywordseo="Hyundai">Hyundai</keyword>'s net profit for the three months that ended in June jumped to 1.98 trillion won ($1.7 billion) from 377.27 billion won in the same period last year, the company said in a statement. The strong result was helped by last year's low base effect from the COVID-19 pandemic and robust demand for Hyundai's high-margin <keyword id="45454" type="COMPANY" weightage="20" keywordseo="SUV">SUV</keyword> models that helped offset output disruptions by chip shortages, according to Seo Gang-hyun, an executive in charge of the company's finance and accounting division. "Faced with worsening chip shortages in May and June, Hyundai was quick to change vehicles in production and lineups to minimize the impact from the parts problems. Such efforts allowed the company to navigate the chip shortage better than other carmakers," he said. A combination of its improved product mix, lower incentives and higher average selling prices, particularly in the world's most important U.S. market, also helped boost the quarterly profits, Hyundai said. Looking ahead, the company expected prolonged component-supply issues, rising raw material prices, and weak emerging market currencies to continue to weigh on earnings results in the third quarter, reports Yonhap news agency. The shortage in auto chips is expected to gradually improve from the third quarter, Hyundai said, adding it will seek partnerships with local chipmakers to reduce its reliance on foreign supplies. Analysts said the chip-supply issues will ease later this year given the recent forecast of improved supply by major supplier <keyword id="1642753" type="COMPANY" weightage="20" keywordseo="Taiwan-Semiconductor-Manufacturing-Co-">Taiwan Semiconductor Manufacturing Co.</keyword> (TSMC). To prop up sales in the second half, Hyundai plans to launch the GV70 SUV, the all-electric G80 sedan, its pure electric IONIQ 5 crossover utility vehicle, and the Santa Cruz pickup truck in the U.S. market. In the first six months, Hyundai and Kia, which together form the world's fifth-largest carmaker by sales, sold a combined 3.47 million vehicles, up 25 percent from 2.77 million units in the same period of last year. They aim to sell a total of 7.08 million autos this year, 1.7 percent lower than the 7.2 million units they sold last year. SEE ALSO - <a href="https://www.businessinsider.in/tech/mobile/news/apple-could-finally-bring-the-always-on-display-feature-on-the-iphone-13/articleshow/84542970.cms">Apple could finally bring the always-on display feature on the iPhone 13</a> <a href="https://www.businessinsider.in/stock-market/news/g-r-infraprojects-ipo-makes-a-strong-listing-on-exchanges-with-over-100-premium-shares-open-at-1700/articleshow/84542747.cms">G R Infraprojects IPO makes a strong listing on exchanges with over 100% premium, shares open at ₹1700</a>

Hyundai Motor and subsidiary Kia Motors report strong profit growth on increased sales of high — end SUVs

<ul class="summary-list"><li>Taiwan's worst earthquake in 25 years disrupted operations of Taiwan Semiconductor Manufacturing.</li><li>The 7.2-magnitude earthquake shows the vulnerability of TSMC, the world's top chipmaker, to natural or geopolitical events.</li></ul><a target="_blank" href="https://www.businessinsider.com/taiwan-earthquake-prompts-well-wishes-china-pla-references-2024-4">Taiwan experienced its worst earthquake</a> in 25 years on Wednesday morning, disrupting the operations of companies including <a target="_blank" href="https://www.businessinsider.com/tsmc-us-china-tensions-may-dictate-fate-of-global-economy-2022-10">Taiwan Semiconductor Manufacturing, or TSMC.</a>TSMC, which is based in the Taiwanese city of Hsinchu, told Business Insider that some of its fabs — microchip manufacturing plants — were evacuated for preventive measures, but that all its personnel were safe.Those who were evacuated were also starting to return to work as of Wednesday afternoon, the spokesperson said. However, work at some sites has been suspended and will only resume after inspections."The company is currently confirming the details of the impact," said the TSMC spokesperson. They added that initial inspections show the construction sites are "normal."The event highlights the vulnerability of the global microchip supply chain and of TSMC, one of the most important chip makers in the world.After all, TSMC isn't just any chipmaker. It's the world's largest chipmaker and is, by some estimates, the producer of <a target="_blank" href="https://www.citigroup.com/global/insights/global-insights/the-u-s-china-chip-war-who-dares-to-win">90% of the world's most advanced</a> processor chips.Taiwan is also home to smaller chip producers, so the island plays an outsized role in supplying semiconductors to companies around the world.If a big earthquake can disrupt TSMC, a more devastating event — such as a Chinese invasion of Taiwan, which Beijing claims as its own — would be far more damaging to already tight <a target="_blank" href="https://www.businessinsider.com/supply-chains-reasons-always-screwed-shipping-geopolitics-climate-big-ships-2023-12">global supply chains.</a><a target="_blank" href="https://www.businessinsider.com/taiwan-war-impact-us-economic-growth-first-year-china-chips-2024-1">US GDP could take a 6.7% hit</a> in the first year of conflict if Washington were to get drawn into a China-Taiwan war, according to a <a target="_blank" rel=" nofollow" href="https://www.bloomberg.com/news/features/2024-01-09/if-china-invades-taiwan-it-would-cost-world-economy-10-trillion">Bloomberg Economics</a> analysis. In the case of a Chinese blockade of the island, the US could see 3.3% shaved off its GDP in the first year, Bloomberg estimated.Overall, a war over Taiwan could hit the world's economy to the tune of $10 trillion — or about 10% of global GDP — Bloomberg forecast.To be sure, <a target="_blank" href="https://asia.nikkei.com/Business/Tech/Semiconductors/TSMC-opens-first-chip-plant-in-Japan-for-Sony-and-Renesas">TSMC is diversifying production</a> with a second facility in Arizona, and upcoming new plants in <a target="_blank" href="https://asia.nikkei.com/Business/Tech/Semiconductors/TSMC-opens-first-chip-plant-in-Japan-for-Sony-and-Renesas">Japan</a> and <a target="_blank" href="https://www.dw.com/en/taiwans-tsmc-to-build-semiconductor-factory-in-germany/a-66469463">Germany.</a> But facilities will take time to come online.The US is also taking steps to boost chip manufacturing at home, with the <a target="_blank" rel="" href="https://www.businessinsider.com/chips-act-bill-to-boost-us-chipmaking-competition-with-china-2022-7">CHIPS Act,</a> which provides $52 billion in subsidies for production, research, and workforce development.TSMC's shares on the Taiwan Stock Exchange closed 1.3% lower on Wednesday.April 3, 6:41 p.m. SGT: An earlier version of this story misstated the magnitude of the earthquake that struck Taiwan. It was 7.2, not 7.4.

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