I see the point being made here, and yeah 5%-20% extra for what amounts to insurance against geopolitics isn't too bad, but doesn't this all fall apart when China catches up?

That 5%-20% is worth it now because no one else can fabricate competing chips. In a competitive market, 5%-20% can be the difference between having the price edge or not. I understand why the USA wants TSMC to manufacture outside of Taiwan, but perhaps it makes sense to move it not the USA but, say, Mexico?

Chinese car companies seem to be slowly but surely rolling American car companies in international markets with great value at low prices. The move in this market evidently isn't to move manufacturing away from Mexico at a 5%-20% increase in price.

In the chip market there's less immediate competition, but I can only imagine it'll come. Hopefully economies of scale would have removed this extra 5%-20% by the time China catches up?

> I see the point being made here, and yeah 5%-20% extra for what amounts to insurance against geopolitics isn't too bad

Well that is an insurance only for the US. As a european, I feel safer, or at best neutral, knowing my ships are made in the Taiwan rather than the US, so having them more 5-20% more expensive is not competitive.

With all their antagonizing of allies, and predatory privacy laws, and repeated espionage on allies, the US has disintegrated any trust other parties have to buy things made there.

With China, the issue isn't really the quality of the product. It's the geopolitical issues.

Japan, Korea, Taiwan, and other countries even Philippines and Vietnam don't want to depend too much on China. A lot of island disputes and so on and so forth.

My guess right now is that China will never catch up because Europe, US, Australia, and many other developing countries will avoid depending on China critically. This doesn't mean 0% would buy from China but it'll never become a critical dependency.

Where will they get the water in Mexico?