This is an audio transcript of the FT news briefing Podcast Episode: ‘TSMC’s Chip Challenge’
jess smith
Good morning for the Financial Times. Today is Monday November 7th and this is your FT News Briefing.
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The European Central Bank is in a clash with one of Italy’s largest lenders. In addition to struggling with geopolitics, Taiwanese semiconductor manufacturer TSMC also faces a technological challenge. We’ll also explore how the US Supreme Court’s abortion ruling could complicate corporate efforts to support female employees. I’m Jess Smith, representing Marc Filippino, and here’s the news you need to get your day off to a great start.
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The European Central Bank is preparing for a recession and taking a tougher stance on lenders’ capital plans. It’s not happy with how much cash one of Italy’s biggest lenders, UniCredit, plans to hand out to shareholders. UniCredit said in a letter to the ECB that it had sufficient capital and a higher payment to shareholders would not significantly weaken its balance sheet. In addition to this point of tension, the European Central Bank is also annoyed that UniCredit has not yet left Russia. UniCredit is one of only two European banks still doing business in Russia. The ECB sees this as an undesirable source of risk.
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The world’s leading semiconductor manufacturer is Taiwan Semiconductor Manufacturing Company or TSMC. Despite its location on an island amid military tensions between the US and China, an island constantly threatened by Chinese invasion, it has become dominant. And yet it continues to maintain a clear lead over its global competitors. This is FT’s China correspondent, Kathrin Hille.
Catherine Hille
They surpassed Intel I think in 2017 or so for cutting edge production technology. Samsung has tried to get ahead of them, but so far it hasn’t succeeded. So you’re conservative, but like to be very down-to-earth. And I mean manufacturing is exactly what they do. So they single-mindedly focus on that.
jess smith
Kathrin says geopolitics is a major concern for the company, especially as the US and other countries consider moving chip production back home. But the other big challenge has more to do with physics.
Catherine Hille
It’s about how small the transistors can be made.
jess smith
Transistors are the tiny switches that regulate the flow of electrical current on a chip, and it’s becoming increasingly difficult to further shrink them, pack more onto the silicon chip, and deliver more computing power.
Catherine Hille
This isn’t something that popped up suddenly. It’s something that’s been going on for quite some time. And chip makers, not just TSMC but others as well, have experimented with many ways to meet or circumvent this challenge. But the challenge is getting bigger. This is the moment when many chipmaker executives are saying that transistors may not be the only solution anymore. So what’s happening is that not only have they made transistors smaller, but they’ve also started to change the architecture of the chips in other ways, in terms of things that they used to place next to each other. In a simpler design, they started stacking on top of each other, and then they try to bring things that were in different separate chips closer together. They also actually drill holes through the silicon and put some of the connections through and attach them to the back of the silicon chip.
jess smith
Back to TSMC’s greatest challenge, what is the ultimate goal?
Catherine Hille
Well, since the beginning of the semiconductor industry, the goal has been a combination of speed and power consumption to increase computing power. So, a few decades ago, Gordon Moore, the co-founder of Fairchild Semiconductor and Intel, discovered that you could actually increase computing power by a certain amount in a given amount of time, and he then envisioned that this would allow industry to build devices with Pushing this achievement forward time just seemed like science fiction or a dream like personal cell phones or similar have now become an integral part of our lives. The way forward, of course, is that now we’re looking at things like artificial intelligence and supercomputers, but also data centers that do all these computations that then make things like weather forecasting and weapon systems work. Of course, electric vehicles and self-driving vehicles are a big growth market. This now means that industry must deliver an ever-increasing amount of computing power, while simultaneously reducing power consumption. So even if chipmakers can’t deliver the same amount of performance gain, it would also be a huge leap forward for them or the customer if they could just lower power consumption for the same amount of processing power.
jess smith
Kathrin, after doing all the reporting for this story, after delving into the guts of chip fabrication and all the challenges TSMC faces, what impressed you the most?
Catherine Hille
What I found most fascinating is that even the people who have been doing this for a long, long time are really still researching. When they started, maybe some of them were electrical engineers. And now they have to start looking at materials science, and some of it has to do with chemicals. And I found it really amazing that they can keep innovating at this rate and really explore these new areas that maybe some of them weren’t really trained for. These companies are able to find this potential for innovation in entirely new areas.
jess smith
Kathrin Hille is the FT’s China correspondent. Thanks Catherine.
Catherine Hille
Thank you, too.
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jess smith
Many US corporations are working to make their workplaces more women-friendly. Better parental leave, breastfeeding rooms, accommodation for menopausal symptoms, for example. But this year, when the US Supreme Court overturned abortion rights and left it up to states, big companies like Amazon and Citigroup said they would help employees travel to another state if they needed an abortion. The FT’s Brooke Masters says it’s actually a much more complicated matter.
Brooke Masters
This is a serious can of worms. This is probably the most contentious issue in America right now.
jess smith
Brooke is our US Investments and Industries Editor. She joined me to talk more about it. And we should remind listeners outside of the US that employee health is an issue for companies here, as many Americans buy their health insurance through their company.
Brooke Masters
And the reason companies feel they need to talk about it is because of those who rely on a well-trained workforce and are struggling to recruit. They are under pressure from their employees, particularly their female employees, but also from men who care about women’s rights to support women and ensure they have access to a healthcare procedure that is legal in most states .
jess smith
Why is the abortion issue making it more complicated for companies to address the health needs of their female employees?
Brooke Masters
It complicates it because the employer has to choose what is covered. And although insurance is usually outsourced, you file your claims directly with the insurance company. I don’t realize how confidential these records really are. And with the travel expenses, you know, helping get someone from Texas to New York to have an abortion, because those are the kinds of states that are involved, that’s probably almost certainly going to be direct by the employer or through some processed external service in which the employer has a say. So there’s absolutely every reason to believe it’s not particularly private.
jess smith
And what does the Supreme Court ruling on abortion mean for workers? I mean, say, when they need time off to get out of the state?
Brooke Masters
In theory, this is a health issue and should be treated confidentially. The reality is that anyone who’s ever worked in a big, nosy workplace knows that when you tell someone you have breast cancer, it gets out. I assume that will come out too. And given that abortion is associated in some people’s minds with things like casual sex or neglect, it can’t be the easiest thing to commit to as an employee. I mean, maybe five, ten years ago, people wouldn’t even admit they were on antidepressants for fear it would affect their bosses’ views of them. This will definitely be controversial because many Americans think this is a mortal sin and they really look down on people. I think if you are a woman who needs an abortion and needs to go abroad, I would think very, very carefully about whether you really want that financial help from your employer.
jess smith
But at the end of the day, I mean, despite these complications, aren’t the companies we’re talking about just trying to better support their female employees?
Brooke Masters
I think a lot of employers see it that way, it’s part of a larger campaign to make their jobs more attractive to female employees and also to curb the big decline in the middle class because there’s a huge decline in the age of child rearing. And for companies that have come out and said they will support women, you see that especially in things like technology and finance. You see efforts to address things like menopause and IVF and the kind of things that allow people to stay in the workplace. So it’s, yeah, it’s definitely part of a bigger effort to be kinder. And if abortion ultimately becomes less controversial and part of this overall workplace design, it would lower the temperature and make it easier for employees to seek help when they need it.
jess smith
Brooke Masters is the FT’s US Investments and Industries Editor. Thank you Brooke
Brooke Masters
Thanks for the invitation.
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jess smith
You can read more about all of these stories on FT.com. This was your daily FT News Briefing. Check back tomorrow for the latest business news.
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