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Ken Griffin warns U.S. faces ‘immediate Great Depression’ if China seizes Taiwan’s semiconductor industry

Daniel Nenni

Admin
Staff member
24973f129bb30812e9ec2210b28ccb0f

Bryan van der Beek—Bloomberg via Getty Images

Citadel CEO Ken Griffin worries about America’s dependence on Taiwan’s semiconductor industry and that U.S. restrictions on selling advanced computer chips to China could make invading Taiwan more tempting to Beijing.

America is “utterly and totally dependent on the Taiwanese for modern semiconductors,” the billionaire hedge fund chief said at this week’s Bloomberg New Economy Forum in Singapore. “The United States has no ability to produce anywhere near the number of semiconductors it needs to run its economy.”

If China invades Taiwan and seizes its semiconductor industry, it would cause major problems in the U.S. economy, he said. China considers Taiwan its own, but the latter operates as an independent democracy and has never been controlled by Beijing.

“If we lose access to Taiwanese semiconductors, the hit to U.S. GDP is probably in the order of magnitude of 5% to 10%,” he said. “It's an immediate Great Depression.”
The likelihood of that scenario is anyone’s guess, but Griffin believes that recent U.S. restrictions on selling advanced semiconductors and equipment to China amounts to America “playing with fire.”

“You can argue that by depriving the Chinese of access to semiconductors, we up the risk that they seize Taiwan,” he said.

In October, the Biden administration instituted sweeping export controls, stating U.S. companies cannot sell to China advanced semiconductors or equipment for fabricating newer chips. It added that foreign firms cannot sell advanced semiconductors to China if the chips were developed using American-made technology, software, or equipment.

Later that month, Chinese President Xi Jinping stressed the need for technology “self-reliance,” deploying the phrase at least twice in his address to the 20th party congress in Beijing. In his 2017 address, he didn’t mention it once.

China has prioritized the development of artificial intelligence, for which it needs advanced semiconductors. The Brookings Institute warned in 2020 that “Chinese advances in autonomy and AI-enabled weapons systems could impact the military balance” with the U.S.

The U.S., too, is seeking more self-reliance in regard to computer chips. President Joe Biden signed legislation this summer, dubbed the CHIPS and Science Act, to boost the U.S. semiconductor industry. Intel plans to spend $20 billion on a massive new chipmaking hub in Ohio.

This month, ahead of Biden and Xi meeting on the sidelines of the G20 summit in Indonesia, Commerce Secretary Gina Raimondo addressed the importance of advanced semiconductor technology, citing national security concerns.

“China is crystal clear,” she said. “They will use this technology for surveillance. They will use this technology for cyber attacks. They will use this technology to, in any number of ways, harm us and our allies, or our ability to protect ourselves.”

With the U.S. and China engaged in a computer chips Cold War, Taiwan’s importance has come to the fore.

Secretary of State Antony Blinken recently warned that China, with Xi recently securing a third term, may try to step up its timeline to seize Taiwan, saying Beijing had made “a fundamental decision that the status quo was no longer acceptable.”

This story was originally featured on Fortune.com
 

triceratops24

New member
All these people ringing the alarm about China invading Taiwan drowns out what could happen in the Korean penninsula. With Kim Jong Un lobbing missiles in the Sea of Japan, that's another potential flashpoint. And Pyeongtaek, the site of Samsung's megafabs for DRAM, NAND and foundry is also home to a large US miltary base.
 

Mooredaddy

New member
24973f129bb30812e9ec2210b28ccb0f

Bryan van der Beek—Bloomberg via Getty Images

Citadel CEO Ken Griffin worries about America’s dependence on Taiwan’s semiconductor industry and that U.S. restrictions on selling advanced computer chips to China could make invading Taiwan more tempting to Beijing.

America is “utterly and totally dependent on the Taiwanese for modern semiconductors,” the billionaire hedge fund chief said at this week’s Bloomberg New Economy Forum in Singapore. “The United States has no ability to produce anywhere near the number of semiconductors it needs to run its economy.”

If China invades Taiwan and seizes its semiconductor industry, it would cause major problems in the U.S. economy, he said. China considers Taiwan its own, but the latter operates as an independent democracy and has never been controlled by Beijing.

“If we lose access to Taiwanese semiconductors, the hit to U.S. GDP is probably in the order of magnitude of 5% to 10%,” he said. “It's an immediate Great Depression.”
The likelihood of that scenario is anyone’s guess, but Griffin believes that recent U.S. restrictions on selling advanced semiconductors and equipment to China amounts to America “playing with fire.”

“You can argue that by depriving the Chinese of access to semiconductors, we up the risk that they seize Taiwan,” he said.

In October, the Biden administration instituted sweeping export controls, stating U.S. companies cannot sell to China advanced semiconductors or equipment for fabricating newer chips. It added that foreign firms cannot sell advanced semiconductors to China if the chips were developed using American-made technology, software, or equipment.

Later that month, Chinese President Xi Jinping stressed the need for technology “self-reliance,” deploying the phrase at least twice in his address to the 20th party congress in Beijing. In his 2017 address, he didn’t mention it once.

China has prioritized the development of artificial intelligence, for which it needs advanced semiconductors. The Brookings Institute warned in 2020 that “Chinese advances in autonomy and AI-enabled weapons systems could impact the military balance” with the U.S.

The U.S., too, is seeking more self-reliance in regard to computer chips. President Joe Biden signed legislation this summer, dubbed the CHIPS and Science Act, to boost the U.S. semiconductor industry. Intel plans to spend $20 billion on a massive new chipmaking hub in Ohio.

This month, ahead of Biden and Xi meeting on the sidelines of the G20 summit in Indonesia, Commerce Secretary Gina Raimondo addressed the importance of advanced semiconductor technology, citing national security concerns.

“China is crystal clear,” she said. “They will use this technology for surveillance. They will use this technology for cyber attacks. They will use this technology to, in any number of ways, harm us and our allies, or our ability to protect ourselves.”

With the U.S. and China engaged in a computer chips Cold War, Taiwan’s importance has come to the fore.

Secretary of State Antony Blinken recently warned that China, with Xi recently securing a third term, may try to step up its timeline to seize Taiwan, saying Beijing had made “a fundamental decision that the status quo was no longer acceptable.”

This story was originally featured on Fortune.com
Another wallstreet guy that doesn’t understand that TSMC and taiwans semi industry would be completely inoperable under Chinese control. The CCP may be evil but they aren’t stupid, they know this. The idea that China would invade Taiwan with one of its primary goals to utilize TSMC and others is absurd. Not only is TSMC and the Taiwanese semi ecosystem in a codependent relationship with the outside world but it also especially relies on American equipment, I.P and above all customers. The idea China could and is planning to essentially run TSMC as business as usual but just under new management doesn’t pass even a cursory examination.
 

Daniel Nenni

Admin
Staff member
All these people ringing the alarm about China invading Taiwan drowns out what could happen in the Korean penninsula. With Kim Jong Un lobbing missiles in the Sea of Japan, that's another potential flashpoint. And Pyeongtaek, the site of Samsung's megafabs for DRAM, NAND and foundry is also home to a large US miltary base.

I agree completely. I would be much more concerned about North Korea. I also think that the war in Ukraine has taught the world a lesson about the importance of peace. In the words of boxing legend Mike Tyson "Everyone has a plan until they get punched in the mouth".
 

Daniel Nenni

Admin
Staff member
Another wallstreet guy that doesn’t understand that TSMC and taiwans semi industry would be completely inoperable under Chinese control. The CCP may be evil but they aren’t stupid, they know this. The idea that China would invade Taiwan with one of its primary goals to utilize TSMC and others is absurd. Not only is TSMC and the Taiwanese semi ecosystem in a codependent relationship with the outside world but it also especially relies on American equipment, I.P and above all customers. The idea China could and is planning to essentially run TSMC as business as usual but just under new management doesn’t pass even a cursory examination.

It would be scorched earth strategy for China, absolutely.
 

hist78

Well-known member
Ken Griffin and Pat Gelsinger are in the same group of elites who like to warn the world about the potential semiconductor crisis that can be triggered by the potential PRC's aggression.

Both pointed their fingers to Taiwan and try to create an impression that a hard-working, peaceful and democratic Taiwan is the root cause.

They intentionally not to mention that both Citadel Investment and Intel are having billions dollar of revenue, investment, and operations/manufacturing in mainland China. If a war started, their billions dollar interest in China will be gone in no time. Why don't they reduce or eliminate their reliance on mainland China market?

Both Ken Griffin and Pat Gelsinger decided not to mention that any aggression started by CCP or North Korea (CCP 's proxy) will undoubtedly drag South Korea and Japan into the conflict. Does that mean US should start replicating South Korea and Japan's industrial and supply chain capabilities in Arizona or Ohio now?

Where is the redline to stop the aggressor? Taiwan Strait, Hawaii, or California coast?

Luckily US government and Congress are smart enough not to fall into this stupidness. They understand strong economic and military power from Taiwan, South Korea, and Japan are the foundation to prevent a war.

Additionally while Pat Gelsinger likes to point out that Taiwan is a dangerous place, he also likes people to forget that Intel's 14,000 employees and fabs in Israel are under constant rocket attacks for years. There were 1000+ rocket attacks in August 2022 alone. Should Intel yield to terrorists by moving Intel's operations out of Israel?


 

blueone

Well-known member
Additionally while Pat Gelsinger likes to point out that Taiwan is a dangerous place, he also likes people to forget that Intel's 14,000 employees and fabs in Israel are under constant rocket attacks for years. There were 1000+ rocket attacks in August 2022 alone. Should Intel yield to terrorists by moving Intel's operations out of Israel?


Well, yeah, but Hamas and the PLO are not remotely at the threat level to Israel that China is to Taiwan. I'm not trying to minimize the violence in Israel at all, I've been there many times, but I think you're stretching the similarity of the situations too far.
 

Mooredaddy

New member
Well, yeah, but Hamas and the PLO are not remotely at the threat level to Israel that China is to Taiwan. I'm not trying to minimize the violence in Israel at all, I've been there many times, but I think you're stretching the similarity of the situations too far.
I mean yeah maybe a bit, but let’s not forget Israel is locked in a regional conflict with a nation (Iran) that regularly writes “death to Israel” on the sides of ballistic missiles and makes not so veiled nuclear threats against it. Iran is 1000% developing a nuclear weapon and I believe they would use it against Israel if they had one. Israel knows this too and it’s not entirely unlikely a war breaks out between the two. Maybe even a nuclear war in the absolute worst case as Israel is widely believed to maintain a small nuclear arsenal is its own. Bottom line, Pat undoubtedly uses geopolitics to portray intel in a way he believes advantageous to influence ignorant lawmakers who don’t know any better. I don’t blame him but let’s call a spade a spade here.
 
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blueone

Well-known member
Bottom line, Pat undoubtedly uses geopolitics to portray intel in a way he believes advantageous to influence ignorant lawmakers who don’t know any better. I don’t blame him but let’s call a spade a spade here.
While I wouldn't bet on any member of Congress being able to describe the semiconductor ecosystem and its vulnerabilities, I can't believe that they don't know Israel is a major Intel design and manufacturing site. I also don't think Congress-people equate the Israeli situation with Taiwan; not even close, and rightfully so. Two completely different situations, IMO. Also, Israel is not seen to have a "small nuclear arsenal", it is thought they have between 90 and 400 nuclear warheads, and a triad (missiles, submarines, bombers) of delivery systems. It looks like Israel is closer to being a peer of France. It's interesting you bring up Israel... I was pointing out to someone earlier in the year that one could argue that between Intel's CPU core development being there, an Intel7 CPU fab near Jerusalem, and Nvidia's InfiniBand interconnect development being there, that Israeli technology is more important to the Top500 list of supercomputers than any other country, including the US. I often think many of us in the US have a skewed view of what's-what in the computing world. :)
 

hist78

Well-known member
Well, yeah, but Hamas and the PLO are not remotely at the threat level to Israel that China is to Taiwan. I'm not trying to minimize the violence in Israel at all, I've been there many times, but I think you're stretching the similarity of the situations too far.

@blueone

Please read my original post again, did I stretch anything too far?

I didn't try to treat them (Israel and Taiwan) in a similar situation or level. My point is Pat Gelsinger stretches the "dangerous" Taiwan talking points without considering Intel's own risk exposure, especially in mainland China and Israel. Among Intel's $79 billion 2021 revenue, mainland China provided about $23 billion and Taiwan did another $13 billion. If a war started in Taiwan Strait, Intel can be one of the companies that will be seriously impacted.

There are some additional facts I'd like to share.

1. In the past 60 years:
Wars and battles between Israel and Arabs: Too many, still on going

Wars and battles between ROC and PRC: Zero

2.In the past 60 years:
People died due to the Israel/Arab conflicts: Too many, still on going

People died due to the ROC/PRC conflicts: Zero

3.In the past 60 years:
Rockets/Missiles attacks on Israel: Too many, still on going

Rockets/Missiles attacks on PRC from ROC: Zero

Rockets/Missiles attacks on ROC from PRC: Zero
 

blueone

Well-known member
@blueone

Please read my original post again, did I stretch anything too far?

I didn't try to treat them (Israel and Taiwan) in a similar situation or level. My point is Pat Gelsinger stretches the "dangerous" Taiwan talking points without considering Intel's own risk exposure, especially in mainland China and Israel. Among Intel's $79 billion 2021 revenue, mainland China provided about $23 billion and Taiwan did another $13 billion. If a war started in Taiwan Strait, Intel can be one of the companies that will be seriously impacted.

There are some additional facts I'd like to share.

1. In the past 60 years:
Wars and battles between Israel and Arabs: Too many, still on going

Wars and battles between ROC and PRC: Zero

2.In the past 60 years:
People died due to the Israel/Arab conflicts: Too many, still on going

People died due to the ROC/PRC conflicts: Zero

3.In the past 60 years:
Rockets/Missiles attacks on Israel: Too many, still on going

Rockets/Missiles attacks on PRC from ROC: Zero

Rockets/Missiles attacks on ROC from PRC: Zero
Yes, I still think your original post tried to equate the two situations, and IMO they aren't vaguely the same. This statement is an exaggeration:
...Intel's 14,000 employees and fabs in Israel are under constant rocket attacks for years
Israel has suffered from episodic rocket attacks for a very long time, but your statement implies that Intel's employees and structures are specific targets, and that's not correct. Though I do remember Hamas hitting an Intel office in Haifa during the hostilities in 2006 (or thereabouts). My point is not to minimize what's been going on in Israel for a long time, but to put the issue into perspective regarding Intel. There is not a superpower 110 miles from Israel threatening to invade and take over the country, and militarily Israel and Taiwan are not comparable. I do agree that on a day-to-day basis that Taiwan is arguably a safer place to live than Israel.
 

lilo777

Active member
Ken Griffin and Pat Gelsinger are in the same group of elites who like to warn the world about the potential semiconductor crisis that can be triggered by the potential PRC's aggression.

Both pointed their fingers to Taiwan and try to create an impression that a hard-working, peaceful and democratic Taiwan is the root cause.

They intentionally not to mention that both Citadel Investment and Intel are having billions dollar of revenue, investment, and operations/manufacturing in mainland China. If a war started, their billions dollar interest in China will be gone in no time. Why don't they reduce or eliminate their reliance on mainland China market?

Both Ken Griffin and Pat Gelsinger decided not to mention that any aggression started by CCP or North Korea (CCP 's proxy) will undoubtedly drag South Korea and Japan into the conflict. Does that mean US should start replicating South Korea and Japan's industrial and supply chain capabilities in Arizona or Ohio now?

Where is the redline to stop the aggressor? Taiwan Strait, Hawaii, or California coast?

Luckily US government and Congress are smart enough not to fall into this stupidness. They understand strong economic and military power from Taiwan, South Korea, and Japan are the foundation to prevent a war.

Additionally while Pat Gelsinger likes to point out that Taiwan is a dangerous place, he also likes people to forget that Intel's 14,000 employees and fabs in Israel are under constant rocket attacks for years. There were 1000+ rocket attacks in August 2022 alone. Should Intel yield to terrorists by moving Intel's operations out of Israel?


You clearly distorted US government position on Taiwan. US Dependence on Taiwan Chips Is ‘Untenable,’ Raimondo Says
If anything their position is essentially identical.
Also, the statement like "Where is the redline to stop the aggressor? Taiwan Strait, Hawaii, or California coast?" is total nonsense. Since when is China threatening California? The idea that US should defend TSMC like they would defend California is absurd.
 

cliff

Member
Good discussion. I haven't figured out if I agree with all of you or none of you, but dictators seem to be men of action. Why risk takeovers, earthquakes, sabotage, etc? Companies should second source.
 

Paul2

Active member
It would be scorched earth strategy for China, absolutely.

Take a note, Russians too tried to not to touch Ukrainian industry at the beginning, and especially their coveted steelworks. The moment a prospect of them losing became apparent, they went 180° on that in no time.
 

Paul2

Active member
Well, yeah, but Hamas and the PLO are not remotely at the threat level to Israel that China is to Taiwan. I'm not trying to minimize the violence in Israel at all, I've been there many times, but I think you're stretching the similarity of the situations too far.

People will say Iran now, but Israel has a way bigger threat right on the border. A young nation of very angry 100 millions, chock full of latest US weapons thanks to 3 clueless presidents in a row. If Egypt will militarise seriously this time, not even the nuclear weapons will be able to shift the balance of power.

Egyptians can really do it, being a nation of almost 100 million... but they do not. The don't not because they think they have no chance to win, but because they are stared down by an opponent who will fight even if he will lose, and demonstrating it given any opportunity.

Similarly, for as long as matric fail in Beijing thinks that invasion of Taiwan, Japan, or Korea will waste his economy, and military, or he risks Taiwanese cruise missile coming down on him personally, his fear will outweigh his other naughty tendencies.

Israel is deterring Egyptians by staring it down, Taiwan is deterring mainland China by staring it down. US, Koreans, and Japanese should do the same. Current American deceptive timidity is inviting Beijing into taking more, and more risks. This is what really needs to be changed. This is all very simple, but the kind of people who want to sound sophisticated confuse it all up, and embarrass themselves.
 
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benb

Active member
It’s all good points, about Israel. I agree with Kenny G about the impact of war being instant depression. Not just for the US, but China too.

Taiwan is important to the US and China because it controls a lot of waterways that could blockade China or prevent a blockade depending on who controls it. Bottling up China makes controlling the Pacific much easier, and controlling the Pacific prevents another Pearl Harbor, so it’s core to US security. I think the US will defend Taiwan like it’s Ukraine. Which is to say, not engage directly in war with Beijing.
 
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