This is the 19th installment of 774: Weekly lessons from history about science, technology, and innovation.
Next Week:
The Waffle House Index
This Week:
Delicate Giants: An Unexpected Update
Last week I spoke about a particular weakness in the shipping industry. I wrote that if a particular shipping company could not operate that “the list of companies who also have their business immobilized would be difficult to quantify.” The good folks over at the Suez Canal have taken the time to deliver a real world experiment about the potential financial runoff for us.
The Ever Given, as you likely know by now, was traveling from Singapore to Rotterdam by way of the Suez Canal. It’s the fastest route to get things from Asia to Europe if you’re traveling by boat (your other options would be to sail around the bottom of Africa by Cape of Good Hope or brave the Northwest Passage through the Canadian Arctic Archipelago). The fact that there aren’t many expedient ways to get from Asia to Europe by sea drove a lot of exploration 500 years ago. The Ever Given getting caught by a gust of 30 mph wind and wedging itself into the shallow banks of the canal have left the world with a very 16th century set of problems. The passage from the Red Sea to the Mediterranean is completely blocked and the daily average of 50 ships passing through the canal has dropped to 0. When isthatshipstillstuck.com reports that that ship is not still stuck, the world will have a much better idea of the exact financial runoff of extreme maritime catastrophes.
Who Here Can Build Semiconductors?
It’s fun to imagine going back in time and showing past humans some of the crazy technology that very normal people get to use in the future. If you could avoid being burned as a witch, it would be really interesting to take a polaroid camera back to the 1600s, or to gather some 10th century farmers to watch King Kong and explain that what was on the screen didn’t actually happen, and the big monkey is just CGI. As fun as it would be to show this modern technology to past peoples, the second they inevitably asked how it worked, I would probably be labeled a witch because I would have no satisfactory explanation. There’s a shocking mismatch between what humans collectively have accomplished and what each of us has the knowledge and capability to do. Sure, there are some people who could be dropped in Venice in 700 and manage to scrounge together some materials and dazzle the Venetians with a simple experiment, but the overwhelming majority of people would probably just end up working as a gondolier.
It’s almost worrying how reliant life is on technology that so few people are capable of replicating. But it’s probably not a very big deal, because we aren’t going to wake up one morning with all of our technology magically gone, and it will be a while until humans can travel through time. What is possible, though, is that all at once our ability to create new technology could be stymied for a short amount of time.
The most ubiquitous technology today (e.g. phones, laptops, pretty much any electronics) is made possible by one single invention: the semiconductor. Semiconductors are materials that fall in the middle of the electricity conducting spectrum between conductors, like copper wire, and insulators, like rubber. These semiconductors, namely silicon, can have just a few atoms of an impurity added to them that can exponentially alter their conductivity. Semiconductors can be used to create circuit elements, such as the transistors that amplify current, that are unbelievably small. Prior to semiconductors, vacuum tubes were utilized for conduction which is why early computers, TVs, and radios were so bulky. Semiconductors are why so much of our high powered technology can be so small.
Small electronics are ubiquitous; their production is anything but. The factories that create semiconductors are called foundries. One lone foundry has long dominated the industry and has been the single manufacturer for all of the leading semiconductor designers throughout the world.
Taiwan Semiconductor Manufacturing Company (TSMC) was founded in 1987. It quickly grew to be the primary manufacturer of American designed semiconductors. The semiconductor supply chain starts primarily in the United States, Japan, and Korea where engineers design increasingly smaller and more powerful chips. The production of these chips is then outsourced to Taiwan and the completed chips are shipped back to their respective designers where they are tested. Once completed, they are handed off to any company manufacturing electronics. For example, Apple fields almost all of its semiconductors from TSMC through this chain of events.
Now the production of semiconductors isn’t a tightly held trade secret. There’s nothing stopping a large foundry from being built in Calgary, but at the moment there are relatively few foundries that aren’t located on the island of Taiwan. Additionally, it takes quite a bit of time to build up the infrastructure necessary to produce chips en masse. This was proven recently when the United States banned U.S. designed chips from being sold by TSMC to China and Huawei Technologies. In the case of an embargo such as this, China would normally substitute the good in question with a comparable product from other countries, but not with semiconductor chips. The limited number of foundries meant that all China could do in response to the embargo was slow down production of its electronics.
In the near future, the number of geographic regions where chips are produced will grow. Arizona should be getting a TSMC foundry in the future, as is Austin, Texas thanks to Samsung. But at the moment the world is precariously dependent on Taiwan to meet the ever increasing demand for high powered chips.
There are two events that could stress this choke point and prevent the new iPhone from being released as soon as Apple would like. Taiwan occupies a dangerous position on the Pacific Ring of Fire, the 25,000 mile perimeter of the Pacific Ocean marked by frequent volcanic activity. The island experiences around 2,200 earthquakes every year. Just two days before I wrote this there was an earthquake off of the coast of Taiwan that registered a 4.6 on the Richter scale (a little less seismic energy than was released by the bomb on Nagasaki). Like any shaky place, most of the earthquakes are negligible, but there are occasional disasters. The last disastrous earthquake in Taiwan took place on September 21, 1999, killing 2,415 people and causing $300 billion in property damage.
*Seismic activity in Taiwan
While the year-to-year likelihood of an earthquake of that magnitude is rather unlikely, the potential negative runoff would have nasty effects for the people of Taiwan and every person depending on the ready availability of semiconductors across the planet.
The other event that could interrupt the production of most of the world’s computing capabilities is based on direct threats posed from China. China asserts that Taiwan is not a sovereign nation, but is instead the same country that operates under different systems of government, similar to the way that Hong Kong was run after the British left in 1997. Taiwan disagrees. After Chiang Kai-shek founded his government on Taiwanese shores, the island has treated China with some amount of contempt. Taiwan has stated in no uncertain terms that they will not acquiesce to Xi Jinping. China has countered saying that if provoked, they will “achieve reunification through military means.” Modern fears of an invasion of Taiwan are seven decades in the making. Admiral Philip Davidson, the highest ranking U.S. officer in the Pacific, says that he expects the threat to manifest in the next six years. Only time will tell how well placed these concerns have been. If Admiral Davidson is correct, and China attempts “reunification through military means” sooner rather than later, the global supply computer chips will be extremely stressed. If the facilities of Taiwan Semiconductor Manufacturers were taken over by China or destroyed in a defense of Taiwan, the entire economy of new electronics could grind to a halt.
Scary thought! The U.S. needs to shore up so many different supply chains. More so now than ever!