Transcription
So we talked about the economic side of tariffs, and you mentioned the other red line and the three T's. Can we talk about Taiwan? So, how important is Taiwan to the Chinese economy and the global economy?
Taiwan has, among other things, TSMC, which is vitally important for the global economy. It's also very important for the Chinese leadership and the Chinese people. You don't want to ask what I think. Ask the Chinese young generation. They would one day like to see unification. It's part of the patriotic dream, if you will. So, and it's it's a chip right between the US and China. So, everybody is watching Taiwan.
But I'd say that this attention is not necessarily good for Taiwan because all this uncertainty, all the political risk has meant that investment there has dramatically been curtailed. And, um, mainland China is a very, very important economic partner to the Taiwanese economy. I think that I don't have a lot of views about around this, but I just say this. I think there's more political wisdom on the Chinese government's side than we assume outside of China. And that strategic ambiguity but also strategic patience, especially given China's economic situation currently, means that more likely or not, I think that if China does really well economically and Taiwan is not doing as well economically as we've seen that over time. This is still the best strategy from China's point of view, um, to resolve these differences. I think any military use and action would be actually quite detrimental to China.
So, what's a way to avoid military conflict here? It seems like a red line. Unification is the red line for, um, the United States, and it just feels like a very tense situation. So, is there a path forward here that avoids any military conflict where everybody's happy from an economics perspective, from a semiconductor manufacturer perspective also?
Well, first of all, you have to keep the communication channel open, right? There was a risk of that being shut off during the Biden administration, and that's highly, highly dangerous. You meaning US-China communication? Yeah.
There's also something that I think people miss, um, which is that the the soldiers in mainland China, that's part of the one-child policy generation, right? There's only one son. Families have only one son. And I think to assume that the Chinese people desire and would be able to forsake that generation for unification purposes or be able to tolerate lost lives for this, I think is also a bit of an exaggeration and stressed. And I think Chinese people also really, um, they really care about peace and stability. Chaos is just not part of what they think is good for them.
Um, the role that TSMC plays is so critical, given the choke point they have on the rest of the world, um, in the semiconductors industry, which we know is one of the most important industries, uh, sustaining the economy, not to mention things like AI and, um, technologies. Look, you know, the US has been trying to to build another, uh, TSMC outside of Taiwan. It's very, very, very slow, right? Um, there are a lot of cumulative, uh, uh, knowledge, experience, and skills that are involved. It's not that easy.
The Chinese don't want to see an eruption of TSMC either, um, because again, it's vitally important for everybody. Uh, whilst I don't think that this is really necessarily a bargaining chip because if you really see what the Chinese thinks about Taiwan, it goes beyond economics. It goes beyond the logical. It is about, um, you know, realizing a dream which even I, I, I tended to, um, not place enough importance. But when I talk to the young people in China, I realize that it's still their dream. It's just unfortunate that this dream is mixed up in the fact that Taiwan, with TSMC, has been incredibly good at manufacturing. This is like an interesting puzzle of why it's so difficult at low cost, at scale, to manufacture chips, and it's just incredible that they were able to do it. And it's an interesting puzzle for how China can do it domestically and how the US can do it domestically, and it seems like there's increasing urgency on that. And I think if we look out in the next 100 years, uh, the urgency is good because it's probably good for each individual country to be manufacturing the majority, majority of their chips, right? It just, it's less likely to lead to conflict.
Well, this is the trend that you need to manufacturing things that are important for national security. Uh, it's not efficient, but it's so-called strategically safer.