Not really, it's usually the least profitable part of the supply chain.
That American businesses would gladly hand over their profits to poorer countries is irrational at face value.
TSMC is more than a manufacturer, they are a provider of very sophisticated in-demand tech for which the manufacturing process itself - is high tech, high stakes, high barriers to entry.
They are a little bit like Boeing in that the 'making' part is really hard. Less so like Flextronics.
Depending on how countries react to this, we could very well be in the opposite situation in 3 years, where we have a vast glut of chips and parts of every kind.
TSMC is not going to charge their customers 'prevailing market value' i.e. they could spot price at 5x their current prices, because it'd be gauging and the supply change would react long term to that 'bad behaviour' by TSMC. Big supply chain relationships are longer term so those things matter.
Because of the huge players involved with enough cash do influence (i.e. Auto, Apple, Samgsung) maybe we're in for a strategic alignment beyond just a fab shop in Texas.
One big caveat to all of this is that though manufacturing itself is low profit, a lot of things around that can become profitable. Making moulds, adjusting designs, managing supply chains, optimizing designs etc. - all of this becomes 'know how' that moves over to the manufacturing side and if they are smart about it, they'll leverage it.
Also, manufacturers can possibly develop some market power which they can try to flex as well.
Hopefully we see a shift to more high quality intelligent manufacturing in the Western world by leveraging tech, robots etc. and convincing consumers to pay higher prices for some things.
Not really, it's usually the least profitable part of the supply chain.
That American businesses would gladly hand over their profits to poorer countries is irrational at face value.
TSMC is more than a manufacturer, they are a provider of very sophisticated in-demand tech for which the manufacturing process itself - is high tech, high stakes, high barriers to entry.
They are a little bit like Boeing in that the 'making' part is really hard. Less so like Flextronics.
Depending on how countries react to this, we could very well be in the opposite situation in 3 years, where we have a vast glut of chips and parts of every kind.
TSMC is not going to charge their customers 'prevailing market value' i.e. they could spot price at 5x their current prices, because it'd be gauging and the supply change would react long term to that 'bad behaviour' by TSMC. Big supply chain relationships are longer term so those things matter.
Because of the huge players involved with enough cash do influence (i.e. Auto, Apple, Samgsung) maybe we're in for a strategic alignment beyond just a fab shop in Texas.
One big caveat to all of this is that though manufacturing itself is low profit, a lot of things around that can become profitable. Making moulds, adjusting designs, managing supply chains, optimizing designs etc. - all of this becomes 'know how' that moves over to the manufacturing side and if they are smart about it, they'll leverage it.
Also, manufacturers can possibly develop some market power which they can try to flex as well.
Hopefully we see a shift to more high quality intelligent manufacturing in the Western world by leveraging tech, robots etc. and convincing consumers to pay higher prices for some things.