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Ukraine may be the Gray-zone in the headlines right now, but Taiwan is the more significant strategic hybrid warfare battlefield, in no small part due to its global leadership in semiconductor manufacturing. Considering the hype cycle around all things Quantum, you would think it would be positive, sound strategic news that Taiwanese leaders recently announced a strategic initiative focused on quantum computing. The Taiwan News and Focus Taiwan (CNA English News) translations are tough, but here are the basics of the Taiwan Quantum Initiative as reported in Mandarin Chinese by the aforementioned Taiwanese local press outlets:
The Taiwanese Premier, it seems, believes the Quantum Hype. We are applying a healthy cynicism to quantum lately and we are not as bullish on Quantum strategically as the Taiwanese leader. Why? We came out of our recent Stratigame and a recent OODA Network Member call heavily influenced by some of the more informed analyses of quantum by OODA Network Members. We took a fresh look and in a nutshell: Quantum is not MySpace and some elements of quantum innovation as marketed by upstarts in the space may well be straight-up vaporware slash cold fusion. And we should differentiate between a few categories of quantum: The quantum computing marketplace of startups and unicorn valuations is what we are making reference to here. We are not referring to Quantum Cryptography and the battle for Quantum Supremacy, which is real. Or the ‘long view’ quantum applications that hold promise for scientists and engineers on a very long time horizon with very specialized quantum capabilities.
We have three working assumptions (blindspots really) for our analysis of this quantum strategy by Taiwan:
A) It is difficult to determine how big a piece of the Taiwanese R&D and Emerging Technologies budget is represented by this $288 million dollar commitment and how much it takes resources away from other potential technology initiatives (if any);
B) We are assuming that it will shift a percentage of high skilled workers into a quantum-focused training commitment, at the expense of other high-tech disciplines that, we argue, have more tactical importance for Taiwan than quantum computing; and
C) For now, we have no way of determining if these state-sponsored monies will be organized into a startup ecosystem with talent making the individual choices to join high risk, early-stage companies, or if the funding will lean towards the more hard science development of hardware and software applications on a much longer time horizon, with lower risk choices for a newly trained, smaller, more focused, Taiwanese quantum workforce employed in government-sponsored “skunkworks” with an eye towards “moonshot”.
With our working assumptions in mind, the following are the three reasons we would dissuade Taiwan’s leadership from focusing too many strategic financial and talent resources on quantum computing at the expense of putting resources into a broader, more tactical in focus portfolio to address these potential black swans and/or gray rhinos:
“Taiwan was the largest buyer of semiconductor equipment in the third quarter of this year, as domestic firms expanded production capacity and upgraded technologies to improve global competitiveness…Taiwan purchased US$7.33 billion worth of semiconductor equipment in the July-September period. Among the Taiwanese semiconductor suppliers gearing up to expand, Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, which commands an over 50 percent share in the global market, has set out plans to invest US$30 billion in capital expenditure in 2021 as it develops its advanced 3-nanometer process with the aim of starting commercial production in 2022. Over the next three years, TSMC’s investments are expected to total US$100 billion.
In the third quarter, the total spending in semiconductor equipment worldwide hit a record high of US$26.8 billion, up 8 percent from a quarter earlier and also up 38 percent from a year earlier. The third quarter marked the fifth consecutive quarter of record-breaking global spending. China was bumped down into second place in the spending rankings after purchasing US$7.27 billion in semiconductor equipment in the third quarter, down 12 percent from a quarter earlier but up 29 percent from a year earlier. South Korea came in third, unchanged from a quarter earlier, as its semiconductor equipment spending reached US$5.58 billion, down 16 percent from a quarter earlier, SEMI added. North America and Japan claimed fourth and fifth place in the third quarter, respectively, after they purchased US$2.29 billion and US$2.11 billion in semiconductor equipment in the third quarter, up 36 percent and 19 percent from a quarter earlier, according to SEMI. In a research report released in July, SEMI forecast semiconductor equipment shipments will hit a new record high of US$95.3 billion in 2021, up 34 percent from a year earlier. SEMI said South Korea, Taiwan, and China will be the top three equipment spenders in 2021.”
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