I used to worry that Chinese industry would leave the West in the dust, says Thomas Friedman in The New York Times. “But I worry a little less now.” To understand why, look at Taiwan and the microchip. Taiwan has the world’s largest contract manufacturer of microchips – TSMC. The company has a global market share of more than 50%, is the main supplier for Apple and makes some of the most cutting-edge technology going. China, just 100 miles away across the straits, has nothing even remotely comparable. So “what is the secret of TSMC’s sauce that China cannot replicate”? Trust.
As in so many industries, when it comes to microchips the best technologies are the most complex. They require countless parts and equipment. No one country has the best of every category, “so you need a lot of trusted partners”. Taiwan has these in the Netherlands and the US. But, thanks to Xi Jinping’s bullying, China does not. Trying to solve this problem by seizing Taiwan to get hold of TSMC would be “a fool’s errand” for Beijing. It’s this sort of aggression that drives other countries away. Those trusty international suppliers would withdraw. Xi should think carefully. One day his bullying will come back to bite him.