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The World’s AI Is Controlled by a Single Company That You’ve Never Heard Of

More than 90% of the world’s most advanced chips and nearly 54% of all of the world’s chips are manufactured by a single company.

Semiconductor chips are the most advanced human invention that can be mass-produced. It requires the world’s most advanced machines, skilled labour, billions of dollars in investment, and atomic-level precision.

One country, and one company in particular, placed its bet on semiconductor manufacturing back in the 1980s. They were right.

But the country is also located in one of the most heated geopolitical regions in the world.

The country is Taiwan and the company is the Taiwan Semiconductor Manufacturing Company (TSMC).

In 2014, the CEO of Nvidia, Jensen Huang said this:

Nvidia’s H100s, Google’s TPUs, AMD’s GPUs, and chips for every single Apple product among others are all manufactured by TSMC. In fact, in the entire world, there is only one other company capable of manufacturing 3 nm chips (the most advanced chips) - Samsung. Comparing Samsung’s production capacity to TSMC’s is like comparing an ant to an elephant.

Taiwan has become a flashpoint for US-China relations. Beijing has vowed to eventually unify Taiwan with the mainland, using force if necessary. A Chinese invasion of Taiwan might be a “when” question and not an “if” question.

The United States’ dependence on TSMC heightens its motivation to defend Taiwan from a Chinese attack. In August 2022, the US passed a $280 billion bill to encourage domestic chip manufacturing. This included subsidies for TSMC to build a chip plant in Phoenix, Arizona, with production scheduled to begin in early 2025. This would still be much smaller than what TSMC does in Taiwan and the most advanced manufacturing will stay in Taiwan. TSMC is also setting up plants in Dresden, Germany and Kumamoto, Japan.

TSMC is like a “silicon shield“ for Taiwan. China will not attack Taiwan because just like the rest of the world, China also significantly depends on the chips produced by Taiwan. But nobody can really predict how long this silicon shield can last. Beijing is now working to boost its own chips industry, including through expanded production by Huawei.

If you’ve watched Dune, then the semiconductor chips is the ‘spice’ and Taiwan is ‘Arrakis’.

The only difference is that this ‘spice’ can be manufactured at other places but how much time, investment and political stability it would require is something very difficult to estimate, probably impossible. All experts agree that the reduction of reliance on TSMC can not be done fast enough.

The US and its allies will, most probably, try everything in their power to prevent an invasion of Taiwan, much more strongly than they tried (or did not) with Ukraine.

In the worst case, the US might blow up TSMC just like the British did with the French Fleet during World War 2. The British bombardment of the Mers-el-Kebir base killed 1,297 French servicemen, sank a battleship and damaged five other ships, for a British loss of five aircraft shot down and two crewmen killed. This was done due to British fears of the fleet being used by Germany and Italy.

A long halt in production at TSMC will bring down the global progress of AI and supercomputing. In both cases, a Chinese invasion or US bombardment, the world will be held back by years.

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