The author of best-selling book Chip War explains why efforts to rely less on companies like Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC) won’t work.
Prolific technology entrepreneur Sir Peter Maire has shot down an American expert’s suggestion that governments could stockpile semiconductors to insure against the event of escalated tension in the Taiwan Strait.
“I can assure you that the last thing I would ever do is suggest to our Government to stockpile semiconductors,”the Navman founder told the Herald following a Markets with Madison episode about the semiconductor supply chain.
In the episode, when asked what New Zealand’s Government should do to prepare for any supply disruption, Chip War author and historian Chris Miller said governments were considering stockpiling semiconductors, also known as chips.
“As tensions rise in east Asia ... I can’t simply assume we’ll have access to the chips that we need,” Miller said.
Maire said in an email that stockpiling would be a pointless exercise, because chips were frequently updated by their manufacturers and therefore expired.
“Any new product will take two to three years to develop, so the parts you stockpile now will likely be obsolete before you ever get to consume them. Semiconductor technology ages rapidly.
“Experienced manufacturers when selecting components always consider life span risk and try not to get boxed in by selecting an absolute single source.”
Sir Peter Maire founded technology businesses Navman and Invenco, and backed companies Rakon and Orion Health.
Maire said he knew “a thing or two about developing hardware-based semiconductor products” - he founded GPS system Navman in 1987 and later Invenco, a petroleum payments technology business which he sold for $127 million last year.
Elaborating over the phone, he recalled Navman having about four serious instances when the semiconductors they used were discontinued - the industry term being “go end of life”.
The company had to order about $1m worth of the chips to bridge the transition to a new design. That was the only sort of stockpiling ever undertaken.
Lots of smaller, less crucial parts were often discontinued, he explained, but they were produced by multiple companies and close-enough equivalents could easily be found.
Navman considered using Nvidia chips for its navigation products but thought the company might not survive, he laughed.
“They were harder to deal with, they didn’t have decent distribution partners outside of Asia.”
He went with Intel instead, which launched Navman into car navigation in 2002, he said.
A business he was involved in through his investment firm Tahia Investments, listed company Rakon, which manufactures crystal components for telecommunications equipment, built a factory in Chengdu, China.
He said his time there showed him how embedded Taiwanese and Chinese businesses were.
For that reason, he did not think geopolitical tensions between them would escalate.
“There’s too much to lose for both of them.
“They’ll always rattle their sabres at each other... But, at the end of the day they’re [China] the biggest capitalists, aren’t they?”
Maire was a former board member of New Zealand Trade and Enterprise (NZTE) and founding board member of Crown entity Callaghan Innovation, which provides grants to early-stage technology companies.
Madison Reidy is the host of New Zealand’s only financial markets show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
