Microsoft on Wednesday announced Majorana 1, its first quantum computing chip.

The achievement comes after the company has spent nearly two decades of research in the field.

Technologists believe quantum computers could one day efficiently solve problems that would be taxing if not impossible for classical computers. Today’s computers use bits that can be either on or off while quantum computers employ quantum bits, or qubits, that can operate in both states simultaneously.

Google and IBM have also developed quantum processors, as have smaller companies IonQ and Rigetti Computing. Microsoft’s quantum chip employs eight topological qubits using indium arsenide, which is a semiconductor, and aluminum, which is a superconductor. A new paper in the journal Nature describes the chip in detail.

Microsoft won’t be allowing clients to use its Majorana 1 chip through the company’s Azure public cloud, as it plans to do with its custom artificial intelligence chip, Maia 100. Instead, Majorana 1 is a step toward a goal of a million qubits on a chip, following extensive physics research.

Rather than rely on Taiwan Semiconductor or another company for fabrication, Microsoft is manufacturing the components of Majorana 1 itself in the U.S. That’s possible because the work is unfolding at a small scale.

“We want to get to a few hundred qubits before we start talking about commercial reliability,” Jason Zander, a Microsoft executive vice president, told CNBC.

In the meantime, the company will engage with national laboratories and universities on research using Majorana 1.

Despite the focus on research, investors are fascinated by quantum.

IonQ shares went up 237% in 2024, and Rigetti gained nearly 1,500%. The two generated a combined $14.8 million in third-quarter revenue. Further gains came in January, after Microsoft issued a blog post declaring that 2025 is “the year to become quantum-ready.”

Microsoft’s Azure Quantum cloud service, which lets developers experiment with programs and algorithms, offers access to chips from IonQ and Rigetti. It’s possible that a Microsoft quantum chip might become available through Azure before 2030, Zander said.

“There’s a lot of speculation that we’re decades off from this,” he said. “We believe it’s more like years.”

Rather than exist as a stand-alone category, quantum computing might end up boosting other parts of Microsoft. For example, there’s Microsoft’s AI business, which has an annualized revenue run rate that exceeds $13 billion. Quantum computers could be used to build data used to train AI models, Zander said.

“Now you can ask it to invent some new molecule, invent some new drug, something that really would have been impossible to do before,” Zander said.

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Warren Buffett has advice for all parents “whether they are of modest or staggering wealth”: let your kids read your will before you sign it.

“Be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death,” Buffett wrote in a letter Monday. The “Oracle of Omaha,” who has amassed a $150 billion personal fortune, has three children.

“If any have questions or suggestions, listen carefully and adopt those found sensible,” Buffett said in the letter. “You don’t want your children asking ‘Why?’ in respect to testamentary decisions when you are no longer able to respond.”

‘Tough conversations’ that ‘strengthen relationships’

Douglas Boneparth, a certified financial planner, agreed with Buffett’s advice to reveal your estate plan.

“These are tough conversations to have, but they’re meaningful and when approached correctly, can strengthen relationships,” said Boneparth, who is founder and president of Bone Fide Wealth in New York City and a member of CNBC’s Advisor Council.

You want your children to have realistic expectations about their inheritance, Boneparth said.

“Kids’ imagination can run wild with what they think they should be getting,” he said. As a result, you should be as clear and thorough as possible about who will receive what and why.

People might worry about hurting their kids’ feelings, or hearing from one that they think something is unfair. Well, that’s exactly why you want to discuss it, and not “punt that mess for when you’re not around,” Boneparth said.

In his letter, Buffett recalled that over the years he witnessed “many families driven apart after the posthumous dictates of the will left beneficiaries confused and sometimes angry. Jealousies, along with actual or imagined slights during childhood, became magnified.”

If the inheritance is not split equally between siblings, you’ll want to explain why, Boneparth said. Maybe one child will receive more because another got help with a down payment on a house or attended a far more expensive college, he said. A child with a spending problem might inherit a trust, Boneparth added, in which they receive their bequest in regular installments.

If one child is in a much better financial situation than another, you might explore with the more comfortable one if they’d be OK with you leaving them less, said CFP Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida.

You might ask the well-off child, McClanahan said, “‘Do you really care how I leave our assets? Because your brother is an artist and could use a little more help.'”

“That way that child is not slighted when they actually find out,” she said.

In Buffett’s letter, he writes: “There is nothing wrong with my having to defend my thoughts. My dad did the same with me.”

When ‘sharing that information can be damaging’

Buffett’s point that adult children should be invited to weigh in on the will is usually a good one, said McClanahan, who is also a member of CNBC’s Advisor Council.

“When you’re creating your estate document, ask your children in advance what’s important to them,” McClanahan said. “That way, you can keep that in mind.”

In rare cases, it’s best for parents to withhold certain information in their will, McClanahan said.

For example, she would recommend a parent be more cautious if a child has exploited them financially. Meanwhile, if a child is irresponsible with jobs or money, learning that they stand to inherit a lot may further erode their work ethic and ambition, McClanahan said.

“If you have children who are not mature, sharing that information can be damaging,” she said, adding that she may recommend clients in these situations write a letter to their children, which they won’t see until after they’ve died, explaining their estate decisions.

“Every family is different,” McClanahan said. “That’s why there should be no set rule.” source

Bernie Marcus, Home Depot cofounder and Trump mega-donor, dies aged 95

Company announces death of billionaire who contributed millions to Republican party and former president

Bernard Marcus, the former pharmacist who became a billionaire by co-founding Home Depot Inc., the world’s largest home-improvement retailer, has died. He was 95.

Introduction
Investment decisions require a lot of research and analysis to ensure that there is the right mix of investments in one’s portfolio. This will ensure the maximization of returns for the investor in the long run. Investors also have to keep in mind that the cost of investment is not too high which may eventually reduce their returns. Investors can choose many investment products based on various parameters like investment budget, returns expectation, risk factors, etc. However, broadly speaking, there are essentially two forms of making investments: active investing and passive investing.

Given below is a brief explanation about the two and the pros and cons of each mode of investments.
Active investing
Active investing is essentially when the investor uses an active investment strategy to generate higher returns. There are two ways of active investment strategy
– Investment in actively managed funds (like mutual funds) where the fund managers are the decision makers
– Investment by the investors themselves using thorough market research and analysis.

Active investing is investment in actively managed funds or stocks and securities that aims at providing maximum returns to the investors, i.e., more than the market returns. This is based on using various investment strategies and knowing when to enter and exit the market to achieve maximum returns. The risk factor in active investing is quite high and hence, the investors have to be cautious about their investments. It is usually ideal for investors having a high risk appetite. Some examples of active funds are mutual funds, leveraged funds, equity funds, etc.

Passive investing
Passive investing is a relatively safer mode of investing in the stock market. Passive investing is investments in essentially passively managed funds. These funds usually follow an underlying index or asset for their returns. Unlike actively managed funds, there is no pressure for outperforming the market and generating higher returns. The returns through passive investing are a replication of the underlying index or asset or security which the fund tracks for its performance. Some examples of passive investing are below and you can also buy on your own and hold long term.

ETFs and Index Funds.
What are the points to be considered while choosing active or passive investing?
Investors have to consider a few points that will help them in choosing between active and passive investment strategies. These points explain the nature of these investment strategies and help them in making better investment decisions.

a. Category of funds you are investing in
The funds that the investor’s choose for investment are based on their investment strategy. Funds like mutual funds, individual stocks or equity funds, hedge funds require active participation of the fund manager to generate higher returns than market and maximize investor’s wealth.
Funds like ETFs, index funds, fund of funds are classic examples of passive investing. These funds may not generate returns higher than the market but they are considered relatively safe and stable investments thereby making them a great addition to the investor’s portfolio.

b. Past performance
Past performance is often used as a benchmark by investors while making investment decisions. While this is an important consideration, it is not advisable to base investment decisions solely on the past performance of an investment product. Actively managed funds have recently had a tough time in generating returns higher than the market but have still managed to outperform passively managed funds in the long run.

c. Costs involved in investment
The investment budget is one of the major points of considerations that determine the investment strategy. Active investing requires the active participation of fund managers and a team of analysts that use various technical and fundamental analysis tools that help in generating higher returns for the investors. This ultimately leads to an increase in the costs of investment.

Passive investing on the other hand does not require such heavy influence of the fund managers and an extensive team of analysts for managing the investments. This has a direct influence on the cost of investments and reduces them significantly. Hence it is a better investment strategy for investors having a limited budget.

d. Control over the investment portfolio
Active investment strategy provides the investors with the benefit of choosing their investments in their portfolio. Investors can select the investments based on careful research and analysis and matching their investment horizon, investment budget risk return expectations.
Passive investing does not provide this option to the investors. The portfolio of the passively managed funds is structured based on the index, asset, or security that it tracks. The assets in the portfolio are usually in the same weightage as the index. Hence, there is no scope for customization of the portfolio which can be availed in actively managed funds.

e. Transparency in investments
Active investing provides the details of all the investments at regular intervals. However, investors may not get the details of the investment portfolio at any point in time. Passive investing on the other hand involves a portfolio of assets that have assets in the same proportion as in the underlying index it tracks. Hence the investors can be aware of their investments and the underlying assets at any point in time.

f. Ability to diverse
Diversification is one of the most important tools for investors to maximize their returns and reduce their risks. Investors in active investing strategy can pick and choose their investments across various categories and assets as well as across different sectors or industries. This gives them the advantage of healthy diversification in their portfolio leading to higher returns. The benefit of diversification is not available in the case of passive investing. Investors cannot choose or alter the assets in the underlying index. Hence, diversification in passive investing is limited to the extent of the different assets under an index or the few sectors that are part of the index.

Conclusion – what to choose?
As discussed above, both actively investing and passive investing have their advantages and disadvantages. Therefore, there is virtually no concept of an ideal investing strategy. This is because what may be a better investment strategy for one investor may not be for another. Hence, the most appropriate scenario may be a mix of actively managed funds and passively managed funds in one’s investment portfolio to generate maximum returns and also a cost effective investment.

FAQs1. What is a more transparent form of investing among actively managed funds and passively managed funds?
A. Securities in passively managed funds are in the same weightage as that of their underlying index. Whereas, actively managed funds are curated based on the assessment and expertise of the professional fund managers. Also, the portfolio information in passively managed funds is disclosed more frequently as compared to actively managed funds. Hence, passively managed funds are considered to be more transparent.

2. What is the expense ratio for passively managed funds?
A. The expense ratio for passively managed funds is relatively lower than actively managed funds which are more or less up to 1%.

3. Which funds are more tax efficient?
A. Passively managed funds are usually considered to be more tax efficient as compared to actively managed funds.

4. What is the ideal portfolio of investments for an investor?
A. The most ideal portfolio for an investor is a correct mix of actively managed funds and passively managed funds to maximize the returns at relatively lower risk and expenses.

Passive investing is an investment strategy to maximize returns by minimizing buying and selling. Index investing is one common passive investing strategy whereby investors purchase a representative benchmark, such as the S&P 500 index, and hold it over a long time. Passive investing can be contrasted with active investing.

Understanding Passive Investing

Passive investing methods seek to avoid the fees and limited performance that may occur with frequent trading. The goal of passive investing is to build wealth gradually. Also known as a buy-and-hold strategy, passive investing means purchasing a security to own it long-term. Unlike active traders, passive investors do not seek to profit from short-term price fluctuations or market timing. The market posts positive returns over time is the underlying assumption of passive investment strategy.

Passive managers generally believe it is difficult to out-think the market, so they try to match market or sector performance. Passive investing attempts to replicate market performance by constructing well-diversified portfolios of single stocks, which if done individually, would require extensive research. The introduction of index funds in the 1970s1 made achieving returns in line with the market much easier. In the 1990s,2 exchange-traded funds, or ETFs, that track major indices, such as the SPDR S&P 500 ETF (SPY), simplified the process even further by allowing investors to trade index funds as though they were stocks.

Maintaining a well-diversified portfolio is important to successful investing, and passive investing via indexing is enables investors to achieve diversification. Index funds spread risk broadly in holding a representative sample of the securities in their target benchmarks. Index funds track a target benchmark or index rather than seeking winners. Thus, they avoid constantly buying and selling securities. As a result, they have lower fees and operating expenses than actively managed funds.

An index fund offers simplicity as an easy way to invest in a chosen market because it seeks to track an index. There is no need to select and monitor individual managers, or chose among investment themes.

However, passive investing is subject to total market risk. Index funds track the entire market, so when the overall stock market or bond prices fall, so do index funds. Another risk is the lack of flexibility. Index fund managers usually are prohibited from using defensive measures such as reducing a position in shares, even if the manager thinks share prices will decline. Passively managed index funds face performance constraints as they are designed to provide returns that closely track their benchmark index, rather than seek outperformance. They rarely beat the return on the index, and usually return slightly less due to operating costs.

Some of the key benefits of passive investing are:

• Ultra-low fees: There’s nobody picking stocks, so oversight is much less expensive. Passive funds follow the index they use as their benchmark.
• Transparency: It’s always clear which assets are in an index fund.
• Tax efficiency: Their buy-and-hold strategy doesn’t typically result in a massive capital gains tax for the year.
• Simplicity: Owning an index, or group of indices, is far easier to implement and comprehend than a dynamic strategy that requires constant research and adjustment.

Proponents of active investing would say that passive strategies have these weaknesses:

• Too many limitations: Passive funds are limited to a specific index or predetermined set of investments with little to no variance. Thus, investors are locked into those holdings, no matter what happens in the market.
• Smaller potential returns: By definition, passive funds will pretty much never beat the market, even during times of turmoil, as their core holdings are locked in to track the market. Sometimes, a passive fund may beat the market by a little, but it will never post the big returns active managers crave unless the market itself booms. Active managers, on the other hand, can bring bigger rewards (see below), although those rewards come with greater risk as well.

Fees for funds vary. Actively managed funds typically have higher operating costs than passively managed funds, but it is always important to check fees before choosing an investment fund.3

Active Investing: Benefits and Limitations

To contrast the pros and cons of passive investing, active investing also have its benefits and limitations to consider:

• Flexibility: Active investors aren’t required to follow a specific index. They can buy those “diamond in the rough” stocks they believe they’ve found.
• Hedging: Active managers can also hedge their bets using various techniques such as short sales or put options, and they’re able to exit specific stocks or sectors when the risks become too big. Passive investors are stuck with the stocks that the index they track holds, regardless of how they are doing.
• Tax management: Even though this strategy could trigger a capital gains tax, advisors can tailor tax management strategies to individual investors, such as by selling investments that are losing money to offset the taxes on the big winners.

But active strategies have these shortcomings:

• Very expensive: Fees are higher because all that active buying and selling triggers transaction costs, not to mention that you’re paying the salaries of the analyst team researching equity picks. All those fees over decades of investing can kill returns. In 2020, the average fee for actively managed mutual funds was 0.71% while fees for passively managed funds were an average of 0.06%. 4
• Active risk: Active managers are free to buy any investment they think would bring high returns, which is great when the analysts are right but detrimental when they’re wrong.
• Poor track record: The data show that very few actively managed portfolios beat their passive benchmarks, especially after taxes and fees are accounted for. Indeed, over medium to long time frames, only a small handful of actively managed mutual funds surpass their benchmark index.

 

How can you start passive investing?

Purchasing an index fund is a common passive investment strategy. Index funds are designed to mirror the activity of a market index, such as the Russell 2000 Index.5 Index funds are designed to maximize returns in the long run by purchasing and selling less often than actively managed funds.

Exchange-traded funds (ETFs) are another common choice for passive investors. ETFs can be passively or actively managed. Index-based ETFs, like index funds, track the activity of a securities index.6

 

What are the costs associated with passive investment?

Passive investing is often less expensive than active investing because fund managers are not picking stocks or bonds. Passive funds allow a particular index to guide which securities are traded, which means there is not the added expense of research analysts.

Even passively managed funds will charge fees.7 Whenever deciding what kind of fund to invest in, investigate the associated costs.

 

What kind of returns can you expect from passive investing versus active investing?

Actively investment aims to drive up returns by pursuing frequent trading, but these returns are diminished by the fees associated with professional management and frequent buying and selling. Research shows that few actively managed funds give investors returns above benchmark over long periods of time.8

Passive investing targets strong returns in the long term by minimizing the amount of buying and selling, but it is unlikely to beat the market and result in outsized returns in the short term. Active investment can bring those bigger returns, but it also comes with greater risks than passive investment.

 

The Bottom Line

Passive investing has pros and cons when contrasted with active investing. This strategy can be come with fewer fees and increased tax efficiency, but it can be limited and result in smaller short-term returns compared to active investing. Passive investment can be an attractive option for hands-off investors who want to see returns with less risk over a longer period of time.

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Since taking over three years ago, Levin has faced complaints that he is exploiting the magazine’s brand for profit without regard to its storied history in cannabis culture. His stoner street cred in doubt, Levin made a show of getting high as he fielded questions from potential investors.

“I can’t read your name because my eyes are going out after this bong,” the private equity tycoon told one questioner, before taking another hit to toast the impending legalization of medical cannabis in Virginia. Tracking stock sales in real time, he offered to smoke once more to mark the next investor who ponied up cash for shares online. Before anyone on the call could take him up on it, Levin went for it anyways.

“It didn’t even take someone investing to get me to take a bong hit,” he explained.

A few weeks later, the company blew a Securities and Exchange Commission deadline for disclosing its financial condition, forcing the stock offering to come to a halt.

High Times, long the biggest name in American weed, has fallen on hard times. Since its founding in 1974, the marijuana magazine of record has attracted a devoted audience not just among stoners who got high for fun, but also among growers and activists, who saw cannabis as a lifestyle and a cause.

For generations of readers it was “a voice in the wilderness,” explained former editor David Bienenstock, “talking about the damage of the drug war, talking about the racism of the drug war, talking about the medicinal benefits of the plant, teaching people all over the country and around the world how to grow this plant and pushing that culture forward.”

Constantly running afoul of authorities, the magazine became an icon of the counterculture and an indispensable guide to the underground world of cannabis. It also survived the suicide of its outlaw founder, the war on drugs, and three federal grand jury investigations.

But now that cannabis has become legal across much of the country, High Times finds itself in a different kind of trouble.

A review of SEC disclosures and court filings as well as dozens of interviews with former staffers and others with insight into its operations paint a picture of a company that has traded in its credibility in cannabis circles to chase big “green rush” profits that have not materialized.

Less than a decade ago, High Times was entering a golden age, poised to reap the rewards of the mainstreaming of weed, and riding the strength of a wildly successful events business anchored by its Cannabis Cup competitions. But the 2016 death of its longtime chairman Michael Kennedy unsettled the delicate balance of power within what had been, essentially, a family business. Levin’s private equity firm Oreva Capital led an acquisition of the company a year later, with participation from reggae star Damian Marley. High Times’ moves since then — to expand its live events, run its own dispensaries and open a delivery service — were supposed to position it as a 21st century media brand and a leading player in the growing business of legal pot.

The mid-May investor webinar started out unremarkably, with discussion of the company’s debt load, its prospects for an initial public offering and its plans for a stock split. Things took a turn when the string of financial jargon briefly gave way to the sound of bubbling water.

High Times chairman Adam Levin was hitting a bong.

Instead, there have been layoffs and resignations. Publication of its flagship print magazine has ground to a halt, and lawsuits have been piling up.

This latest chapter of High Times’ storied existence closely tracks that of the broader cannabis industry. The initial promise of the green rush has, in many quarters, given way to disappointment that legal cannabis has become a mercenary business, failing to benefit minority communities that have suffered from the drug war or even offer enticing returns to professional investors.

“High Times has become very emblematic of the corporatization of cannabis,” said a former editor, one of several departed employees who spoke on the condition of anonymity, citing a non-disparagement agreement. “I can think of no better symbol than what has happened to it.”

The company has been selling stock to consumers at $11 a share, while disclosures show that savvier institutional investors have secured stock deals for an effective price that is much lower. The company has also repeatedly delayed plans for an IPO, raising the prospect that its stock might never trade publicly.

In several cases, High Times has announced acquisitions and collaborations, only to have other parties involved dispute the announcements or to have the deals quietly called off.

The CEO and minority owner of one Los Angeles dispensary said he was shocked to see High Times announce it had acquired a majority stake in his business, because, he claimed, the acquisition is not valid without his approval. “This dude Adam, he’s dreaming,” said the CEO, Alexis Bronson, who added that Levin stormed out of a recent meeting about the disputed acquisition.

The magazine has also been gaining a reputation in the industry for its sharp elbows.

In one case, the founder of a popular cannabis festival claims High Times intentionally drove him out of business, maneuvering behind the scenes to prevent his event from taking place, a charge that Levin denies.

The company’s new approach has alienated everyone from old-school stoners to former Mexican President Vicente Fox, who resigned from the High Times board early this year over concerns about the repeated delay of its planned IPO, according to his senior adviser, Juan Garcia. “Being a former head of state, we couldn’t let him get splattered with any malfeasance,” Garcia said.

Levin, who agreed to answer emailed questions, argued that he has set the company on a path to success in a challenging business environment and said he is looking to have the company’s stock trade publicly by October. “I understand that there will be those that believe High Times has lost its way,” he said. “This industry is cutthroat at times.”

The magazine’s road to this point has been a long, strange trip through 50 years of American history.

In the second half of the 20th century, the national culture turned to sex, drugs and rock ’n roll, and it got the magazines to match: Playboy, Rolling Stone and High Times.

The origins of the pro-drug periodical trace that cultural shift: from conformity to disillusionment to hope that consciousness-raising substances could usher in a world of peace and free love.

Born Gary Goodson in 1945 and raised in Phoenix, High Times’ founder was the son of a military contractor who died young in a car accident. Goodson studied business at the University of Utah in the early ’60s, but he increasingly strayed from his straitlaced trajectory over the course of that decade.

By the time he went off to college, advances in printing technology had dramatically reduced the cost of periodical publishing, and small, independent outlets were sprouting up across the country. When Goodson wasn’t studying business, he was heading off campus to hang out at the socialist Utah Free Press, a typically subversive organ of a growing underground press movement.

The underground press, in turn, fed a burgeoning counterculture that opposed violence and traditional mores.

The attraction of this counterculture only grew as Goodson’s peers began packing off to Vietnam to fight a war they did not believe in and psychoactive drug use became a political statement in favor of peace.

For America’s alienated youth, radical publications provided an outlet for their disgust with the status quo. “While people are being beaten, starved, and killed,” Goodson once said, by way of indicting mainstream papers, “you fill the pages of your rags with the news of bake sales and debutante balls.”

As President Lyndon Johnson ramped up American involvement in Vietnam, Goodson entered the Air Guard and learned to fly, but he soon left to enlist in the counterculture full time, returning to Phoenix to set up his own radical magazine, Orpheus. He supported the publication by smuggling weed, both by land and, thanks to his military training, by air. To avoid embarrassing his family, he began going by the name Thomas King Forcade.

Standing 5’7” and weighing just 120 pounds, Forcade made up for his slight frame with an outsized personal style: He grew his hair to shoulder length, sported a Fu Manchu mustache and crowned his smuggler chic look with wide brimmed hats. Occasionally, he wore a cape.

By the late ’60s, J. Edgar Hoover’s FBI came to view the underground press as a national security threat, and it helped local police harass publications across the country. An undercover narcotics agent infiltrated Orpheus and, in 1969, police raided its headquarters.

Fed up, Forcade left Phoenix and began running the Underground Press Syndicate, a network of alternative publications. The job put him squarely on the federal government’s radar.

In 1970, he was called to Washington and hauled before the President’s Commission on Obscenity and Pornography. He used his prepared remarks to condemn the “uptight Smokey the Bears of the totalitarian forest” who had summoned him and declared, “The only obscenity is censorship!” Then he withdrew a pie from his briefcase and smashed it in the face of a commissioner on live television.

Three years later, a grand jury indicted Forcade for an alleged plot to bomb the prior year’s Republican National Convention in Miami Beach.

He was acquitted after a two-day trial, but by then the war on the underground press had taken its toll. “With obscenity busts, they get your money,” Forcade once explained. “With drug busts, they get your people; with intimidation, they get your printer … and if you can still manage somehow to get out a sheet, their distribution monopolies … keep it from ever getting to the people.”

The underground press was waning, but Forcade was determined to keep its spirit alive. The next year, at 28, he started High Times out of a basement in Manhattan’s Greenwich Village.

Interviewed later by his wife, Gabrielle Schang, Forcade said the magazine’s founding was inspired by “a combination of nitrous oxide [also known as laughing gas] and fear.” He explained that after his acquittal, “I went into a long period of self-examination to determine what I wanted to do next. The ‘movement’ was over and I needed something to keep from killing myself out of boredom. And so, aided by many tanks of nitrous-oxide, I came up with High Times.”

Bienenstock, the former High Times editor, who researched Forcade’s life for his podcast, Great Moments in Weed History, said Forcade also wanted to build a publication that could withstand government suppression. “High Times was his attempt to start something new that was so far outside of the system that it wouldn’t be responsive to those pressures.”

For a drug smuggler and underground press activist, starting High Times was the logical next step. “To him,” Bienenstock said, “this was all part of one assault on a system that he saw as irredeemably corrupt.”

The first issue of the drug-centric magazine was intended as a spoof of Playboy, with a centerfold close-up shot of a marijuana flower in place of the older magazine’s pictures of naked women. To get the magazine out, Forcade distributed it through the dealers he sold his smuggled weed to.

The publication elevated an illicit pastime into a full-blown subculture.

“It united stoners all around the world,” the actor Tommy Chong has said. “We always knew that there were other stoners out there, but until High Times magazine came along, no publication had devoted everything to the weed.”

It was an instant hit, and its circulation quickly climbed into the hundreds of thousands. “High Times was a rocket. It was the Playboy of pot. It was the Playboy of drugs,” gushed Steve Bloom, who joined the magazine in the ’80s and rose to be its top editor.

At its outset, the magazine was something of a smuggler’s bible, full of tips and tricks for profitably moving the plant across borders. The weed coverage mingled with general interest reportage from around the world. Early issues included Bob Marley’s first-ever magazine cover, an interview with the Dalai Lama in India, and a conversation between Truman Capote and Andy Warhol.

The magazine published investigative work about the Mexican government’s spraying of the toxic pesticide paraquat on marijuana fields as part of its U.S.-backed eradication efforts, a policy that was possibly poisoning American smokers. The reporting by Craig Copetas spurred a Senate investigation and helped catalyze some of the earliest opposition to the federal government’s war in Latin America.

Much like its drug-fueled contemporary, Saturday Night Live, which premiered in 1975, High Times’ frantic first years were, according to Bloom, among its best.

“I understand the newsroom was pretty much cocaine, pot and nitrous everywhere” he said. “The quality of the magazine was completely top notch.”

To keep the wheels moving, each receptionist at the magazine’s office was assigned a back-up, in case they incapacitated themselves by smoking too much on the job.

The rocket ride did not last. In 1978, Forcade committed suicide at the age of 33 by shooting himself in the head. It was the end of an era. Forcade’s staff marked it with a gathering at Windows on the World at the top of the World Trade Center, where they rolled his ashes up in a joint and smoked him.

By the time of Forcade’s death, American culture was shifting again, with cocaine becoming the drug of choice everywhere from night clubs to high-powered investment banks. Set adrift by the loss of its visionary founder, High Times went along for the ride.

It ran articles like “Two lady coke dealers tell all” and “Freebase: The truth about smoking cocaine” and reprinted a 1917 essay by the English occultist Aleister Crowley opposing prohibition of the drug. The December 1980 cover featured a mostly off-camera Santa Claus holding out several lines of coke on a tray for a woman in a skimpy nightgown. One Star Wars-style centerfold featured clumps of cocaine superimposed into the vacuum of space like an asteroid field, complete with a futuristic spaceship firing lasers.

But over the course of the ’80s it became clear that cocaine was an inherently more dangerous substance than marijuana and that the traffic in it was more violent. The magazine shifted focus back to weed.

On the theory that it would be much harder for the government to eradicate the plant if people could cultivate it themselves at home, High Times put a new emphasis on growing your own. It also became more conventionally political under a new editor, Steve Hager, organizing rallies and agitating for hemp legalization.

Distressed High Times Suddenly Closes California Dispensaries

Some employees said wages, health insurance were not paid

High Times Holding Co., the publisher of the eponymous recreational drug magazine and media brands, has suddenly shut down at least three of its branded revenue-generating dispensaries in California.

Cannabis operations in Blythe, San Bernardino and Coalinga are permanently closed as of March 25. The closures come after months of failing to pay taxes, rent and health insurance premiums, according to dispensary employees and communications seen by CRB Monitor.

Former employees, who spoke on condition of anonymity because they had signed non-disclosure agreements, said they were offered no severance and some were owed back pay. Some took cannabis products from the stores as recompense, while others said they were not able to get needed medication in March because health insurance premiums had not been paid. They also said that High Times’ senior management, led by Executive Chairman Adam Levin and his half-brother and Operations Chief Maxx Abramowitz, gave the workers no notice of the impending closures, a possible violation of California’s WARN Act , which requires a company to give employees 60 days notice when a company-wide layoff is planned.

High Times bought the dispensary licenses and building leases in June 2020, in a deal with Washington-based Have A Heart and Florida-based Harvest Health & Recreation. Harvest paid $85.8 million in March 2020 for the HAH business, then turned about and sold the California locations to High Times a few months later for $80 million in cash and stock. The deal followed a series of breach-of-contract lawsuits and hearings with city officials before Levin succeeded in transferring the dispensary licenses partially into his name. A review of the dispensary licenses with the California licensing authority shows they are also still in the name of former Have A Heart founder Ryan Kunkel.

According to internal emails seen by CRB Monitor, High Times outside counsel Sharmi Shaw has told the state Department of Cannabis Control (DCC) that the company planned to surrender the licenses for the Coalinga store, set to expire on April 3, as well as those for the other two stores coming up for renewal. The Blythe dispensary license expires May 19, and the San Bernardino expires June 13, according to DCC records.

Shaw also stated to the DCC that the store’s inventory had been returned to distributors. But according to social media posts and interviews with several Coalinga employees, workers took some of the product in compensation for unpaid wages.

$100K tax liens

California state Uniform Commercial Code (UCC) records show the San Bernardino store, HAH 3 LLC, has at least two tax liens filed against it by the state, with a total unpaid tax bill of $103,000 as of September 2023. On February 28, the San Bernardino and Blythe buildings’ construction company, La Rocca Builders, also filed a judgment lien against the company.

High Times raised more than $35 million in a lightly regulated Reg A+ public offering in 2020 and promptly went on a buying spree in hopes to build a vertically-integrated cannabis production, processing and retail operation stretching from California to Arizona, Nevada, Illinois and Florida, at the height of the “Green Rush” heyday when cannabis asset prices were at their peak.

According to SEC filings made by the company last year, the company had taken secured loans from a venture fund called ExWorks for at least $28 million that had gone unpaid and resulted in litigation. All three closed locations also have UCC liens filed against them by ExWorks. High Times initially borrowed $11.5 million via a credit facility from ExWorks in 2017, which was later refinanced in 2018 into a $18.8 million senior secured convertible note carrying a $60,000 monthly interest payment, according to SEC filings. Levin offered a personal guarantee on the loan at the time.

Control in dispute

Who actually legally controls the dispensaries’ licenses is also up in the air now as ExWorks is also insolvent and has been assigned a receiver out of Chicago named Steven Kunkel, according to public filings and communication seen by CRB Monitor.

The SEC qualified High Times’ Reg A+ mini-IPO in 2018, in which unlisted shares were marketed to readers of its famed magazine and participants in its well-known Cannabis Cup events. But the SEC hit the brakes on the campaign in mid-2020 when High Times failed after several extensions to file timely audited annual reports. The last audited annual financials were filed in 2018, and the company was never taken public. In September 2023, High Times sold a piece of its brand licensing properties to Canadian-based Lucy Scientific.

Last September, Adam Levin was accused by the SEC of securities fraud involving a scheme to conceal paid promotions of a securities offering from at least April 2020 through August 2021. Levin was also accused of selling the Reg A+ offering after the SEC told him to halt it, according to the enforcement action. High Times settled with the SEC without admitting or denying guilt and agreed to pay a fine of $558,071.

High Times and Adam Levin did not respond to a request for comment as of press time. source

Hightimes Holding, other cannabis publishers may be shutting down

The cannabis industry may be booming, but publishers looking to cash in keep going up in smoke.

Hightimes Holding, which publishes the 45-year-old High Times magazine, warned shareholders in its latest SEC filing that it may not be able to continue operations.

“Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the company’s ability to continue as a going concern for one year from the issuance of the financial statements,” the company said.

High Times has snapped up rival publications, including Dope, Culture and Green Rush Daily, and runs marijuana-themed concerts and events, but its crowdsourced IPO has stalled. It recently hired Toronto-based Lazer & Lazer to search for a new backer as it tries to dig out of $105.2 million in debts.

In its most recent earnings report, Hightimes Holding incurred a net loss of $11.9 million for the six months ended June 30, 2019, on revenue of $10.7 million.

High Times is not alone. Civilized, which counted comedian Chelsea Handler as an investor has been taken over by New Frontier Data after burning through about $10 million in investment money, according to cannabis.net.

The website MassRoots, which raised over $20 million and managed to pull off a successful IPO in the past, has apparently gone dark in recent weeks, according to a report on cannabis.net. Its stock was trading at one third of a penny in the over-the-counter market on Thursday. MassRoots said on Nov. 15 that it was unable to file its third-quarter earnings report in a timely fashion. In the last quarterly report for the three months ending June 30, the company posted a net loss of $774,638 on net revenue of only $18,366.

CEO Isaac Dietrich insisted to Marijuana Business Daily recently that “our website will be back online shortly.” But when Media Ink tried calling the phone number listed in SEC documents, we heard a recording saying the call could not be completed. Dietrich had not responded to e-mails by press time. source

At the Optical Fiber Communications Conference (OFC) 2024, Intel gave us a particularly interesting glimpse at what could be the future of chip and interconnect design. The Optical Compute Interconnect (OCI) chiplet integrates a Photonics Integrated Circuit (PIC) with an electrical IC. The chiplet was packaged with an Intel CPU and shown running live data.

Intel believes this technology is a game changer as it meets increasing demand for higher bandwidth across greater distances, while using less power. Of course, the initial applications will be used for AI infrastructure and HPC environments, where scalability concerns across racks and clusters are becoming increasingly apparent in large scale deployments.

Intel’s press release included the following statement: “As an analogy, replacing electrical I/O with optical I/O in CPUs and GPUs to transfer data is like going from using horse-drawn carriages to distribute goods, limited in capacity and range, to using cars and trucks that can deliver much larger quantities of goods over much longer distances. This level of improved performance and energy cost is what optical I/O solutions like Intel’s OCI chiplet emerging bring to AI scaling.” That tells us where Intel believes the future of interconnect technology lies.

Although the OCI is a prototype, it already supports up to 4 terabits per second (Tbps) bidirectional data transfer across distances as far as 100 meters. Importantly, the technology is compatible with PCIe 5.0, making it relatively easy to integrate into existing PCIe compatible infrastructure.

In terms of power savings, Intel claims its solution is much more efficient, consuming only 5 pico-joules (pJ) per bit compared to pluggable optical transceiver modules at about 15 pJ/bit.

The OCI chiplet can be integrated with future CPUs, GPUs and SoCs. Should the technology reach the consumer space in the years ahead—and if it takes off in the enterprise space there’s little reason to doubt it will—then PCs in the years ahead could look very different.

Imagine being able to install a GPU that doesn’t require a PCIe slot. You could install it anywhere in a compatible case, and connect it to a motherboard via a cable without any loss of performance. That should lead to improved cooling performance and potentially simpler (and cheaper) motherboard designs.

Intel says it has developed a new silicon photonics fabrication process and it expects the technology to scale from the 4 Tbps range to tens of Tbps in the future. Chips with optical interconnects and glass substrates likely just got a step closer. source

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Intel Demonstrates First Fully Integrated Optical I/O Chiplet

Intel’s optical compute interconnect chiplet is expected to revolutionize high-speed data processing for AI infrastructure.

 

What’s New: Intel Corporation has achieved a revolutionary milestone in integrated photonics technology for high-speed data transmission. At the Optical Fiber Communication Conference (OFC) 2024, Intel’s Integrated Photonics Solutions (IPS) Group demonstrated the industry’s most advanced and first-ever fully integrated optical compute interconnect (OCI) chiplet co-packaged with an Intel CPU and running live data. Intel’s OCI chiplet represents a leap forward in high-bandwidth interconnect by enabling co-packaged optical input/output (I/O) in emerging AI infrastructure for data centers and high performance computing (HPC) applications.

 

“The ever-increasing movement of data from server to server is straining the capabilities of today’s data center infrastructure, and current solutions are rapidly approaching the practical limits of electrical I/O performance. However, Intel’s groundbreaking achievement empowers customers to seamlessly integrate co-packaged silicon photonics interconnect solutions into next-generation compute systems. Our OCI chiplet boosts bandwidth, reduces power consumption and increases reach, enabling ML workload acceleration that promises to revolutionize high-performance AI infrastructure.”

 

What It Does: This first OCI chiplet is designed to support 64 channels of 32 gigabits per second (Gbps) data transmission in each direction on up to 100 meters of fiber optics and is expected to address AI infrastructure’s growing demands for higher bandwidth, lower power consumption and longer reach. It enables future scalability of CPU/GPU cluster connectivity and novel compute architectures, including coherent memory expansion and resource disaggregation.

Why It Matters: AI-based applications are increasingly deployed globally, and recent developments in large language models (LLM) and generative AI are accelerating that trend. Larger and more efficient machine learning (ML) models will play a key role in addressing the emerging requirements of AI acceleration workloads. The need to scale future computing platforms for AI is driving exponential growth in I/O bandwidth and longer reach to support larger processing unit (CPU/GPU/IPU) clusters and architectures with more efficient resource utilization, such as xPU disaggregation and memory pooling.

Electrical I/O (i.e., copper trace connectivity) supports high bandwidth density and low power, but only offers short reaches of about one meter or less. Pluggable optical transceiver modules used in data centers and early AI clusters can increase reach at cost and power levels that are not sustainable with the scaling requirements of AI workloads. A co-packaged xPU optical I/O solution can support higher bandwidths with improved power efficiency, low latency and longer reach – exactly what AI/ML infrastructure scaling requires.

As an analogy, replacing electrical I/O with optical I/O in CPUs and GPUs to transfer data is like going from using horse-drawn carriages to distribute goods, limited in capacity and range, to using cars and trucks that can deliver much larger quantities of goods over much longer distances. This level of improved performance and energy cost is what optical I/O solutions like Intel’s OCI chiplet emerging bring to AI scaling.

 

Intel Corporation’s Integrated Photonics Solutions (IPS) Group has demonstrated the industry’s first fully integrated optical compute interconnect (OCI) chiplet co-packaged with an Intel CPU and running live data. Intel’s OCI chiplet enables co-packaged optical input/output in emerging AI infrastructure for data centers and high performance computing applications. (Credit: Intel Corporation)

Intel Corporation’s Integrated Photonics Solutions (IPS) Group has demonstrated the industry’s first fully integrated optical compute interconnect (OCI) chiplet co-packaged with an Intel CPU and running live data. Intel’s OCI chiplet enables co-packaged optical input/output in emerging AI infrastructure for data centers and high performance computing applications. (Credit: Intel Corporation)

How It Works: The fully Integrated OCI chiplet leverages Intel’s field-proven silicon photonics technology and integrates a silicon photonics integrated circuit (PIC), which includes on-chip lasers and optical amplifiers, with an electrical IC. The OCI chiplet demonstrated at OFC was co-packaged with an Intel CPU but can also be integrated with next-generation CPUs, GPUs, IPUs and other system-on-chips (SoCs).

This first OCI implementation supports up to 4 terabits per second (Tbps) bidirectional data transfer, compatible with peripheral component interconnect express (PCIe) Gen5. The live optical link demonstration showcases a transmitter (Tx) and receiver (Rx) connection between two CPU platforms over a single-mode fiber (SMF) patch cord. The CPUs generated and measured the optical Bit Error Rate (BER), and the demo showcases the Tx optical spectrum with 8 wavelengths at 200 gigahertz (GHz) spacing on a single fiber, along with a 32 Gbps Tx eye diagram illustrating strong signal quality.

The current chiplet supports 64 channels of 32 Gbps data in each direction up to 100 meters (though practical applications may be limited to tens of meters due to time-of-flight latency), utilizing eight fiber pairs, each carrying eight dense wavelength division multiplexing (DWDM) wavelengths. The co-packaged solution is also remarkably energy efficient, consuming only 5 pico-Joules (pJ) per bit compared to pluggable optical transceiver modules at about 15 pJ/bit. This level of hyper-efficiency is critical for data centers and high-performance computing environments and could help address AI’s unsustainable power requirements.

About Intel’s Leadership in Silicon Photonics: As a market leader in silicon photonics, Intel leverages more than 25 years of internal research from Intel Labs, which pioneered integrated photonics. Intel was the first company to develop and ship silicon photonics-based connectivity products with industry-leading reliability at high volume to major cloud service providers.

Intel’s main differentiator is unparalleled integration using hybrid laser-on-wafer technology and direct integration, which yield higher reliability and lower costs. This unique approach enables Intel to deliver superior performance while maintaining efficiency. Intel’s robust, high-volume platform boasts shipping over 8 million PICs with over 32 million integrated on-chip lasers, showing a laser failures-in-time (FIT) rate of less than 0.1, a widely utilized measure of reliability that represents failure rates and how many failures occur.

These PICs were packaged in pluggable transceiver modules, deployed in large data center networks at major hyperscale cloud service providers for 100, 200, and 400 Gbps applications. Next generation, 200G/lane PICs to support emerging 800 Gbps and 1.6 Tbps applications are under development.

Intel is also implementing a new silicon photonics fab process node with state-of-the-art device performance, higher density, better coupling and vastly improved economics. Intel continues to make advancements in on-chip laser and semiconductor optical amplifier (SOA) performance, cost (greater than 40% die area reduction) and power (greater than 15% reduction).

What’s Next: Intel’s current OCI chiplet is a prototype. Intel is working with select customers to co-package OCI with their SoCs as an optical I/O solution.

Intel’s OCI chiplet represents a leap forward in high-speed data transmission. As the AI infrastructure landscape evolves, Intel remains at the forefront, driving innovation and shaping the future of connectivity.

More Context: Intel Silicon Photonics (Intel.com)

Editor’s Note: On June 28, 2024, an acronym incorrectly referencing “state-of-the-art” was removed and corrected in this story.

Few companies are as important to today’s world as Taiwan Semiconductor Manufacturing (NYSE: TSM). It produces the chips that go into devices that power artificial intelligence (AI) models, iPhones, and nearly any other application with a microchip. Taiwan Semiconductor is a leading business in this field, but it’s not done growing.

Currently, Taiwan Semiconductor is valued at $845 billion, making it the ninth-largest company in the world. However, by the time 2025 comes around, it could easily cross the $1 trillion point in value.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $740,688!*

Taiwan Semiconductor is a class-leading chip foundry

Part of Taiwan Semiconductor’s success is its position in the chip market. As a foundry that sells its capabilities and manufacturing prowess to businesses that need chips, it doesn’t have to worry about marketing its products; it leaves that to its customers. In many cases, Taiwan Semiconductor produces chips for companies that are competing against each other, like Nvidia and Advanced Micro Devices.

But these competitors go to the same place because of Taiwan Semiconductor’s leading technology. Right now, TSMC boasts industry-leading 3 nanometer (nm) technology. This measurement describes the distance between conductive paths, and 3nm is incredibly small. For reference, a human hair is between 80,000 and 100,000 nanometers wide. The smaller the distance between these traces, the more transistors a client can pack onto the chips. This allows customers to configure their chip to be more efficient, powerful, or a combination of both.

But Taiwan Semiconductor isn’t stopping there. It’s already working on its 2nm node, which is expected to launch in 2025. Management stated that the demand for its 2nm chip is greater than its 3nm or 5nm at this stage in development, which is fantastic news for shareholders.

Taiwan Semiconductor is already at the top of the chip world with its innovative technology, and investors should be excited to invest in its culture of continuous improvement.

But what will it take for Taiwan Semiconductor to become a $1 trillion company?

Taiwan Semiconductor’s road to a $1 trillion valuation is clear

In Q1, TSMC’s revenue increased by 13% year over year in U.S. dollars, but Q2 revenue is expected to grow by 27%. This revenue acceleration is key in Taiwan Semiconductor’s growth trajectory, as 2023 wasn’t its best year.

Wall Street analysts expect strong growth throughout this year and next, with revenue increasing 23% in 2024 and 22% in 2025. With the average analyst projecting $103.3 billion in revenue by the end of 2025, Taiwan Semiconductor emerged as one of the most dominant companies in the world.

While profit margins can fluctuate significantly in the chip industry (due to it being cyclical), Taiwan Semiconductor steadily produced strong profit margins.

Even if you pencil in a slight profitability decrease to a 35% profit margin by the end of 2025, Taiwan Semiconductor would be producing $36.2 billion in profits.

If you divide the target market cap of $1 trillion by the estimated 2025 profits, you get Taiwan Semiconductor’s price-to-earnings (P/E) ratio. This would yield a P/E of 27.6, which isn’t cheap. However, that P/E is in line with what investors have seen over the past five years and cheaper than where it is today.

As a result, if Taiwan Semiconductor hits the target that analysts think it can, it should easily be a $1 trillion company by the end of 2025. However, I think that would just be the beginning for a juggernaut like Taiwan Semiconductor, as its chips are widely used in the industry.

Because of that, I think Taiwan Semiconductor is an excellent stock to buy now, as its culture of continuous improvement will create a demand for new chips every couple of years.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $740,688!*

 source

What You Need to Know About Taiwan and Semiconductors

In 2020, COVID hit the global economy like a ton of bricks. Lockdowns induced a global slowdown and disrupted supply chains. Not only toilet paper but also semiconductors were in short supply.

A 2021 commentary by the Boston Consulting Group (BCG) tells us that the US is the leader in research and development. Thanks to its top-class universities, fantastic talent pool, vast capital, innovative culture and extraordinary ecosystem, the US dominates “electronic design automation (EDA), core intellectual property (IP), chip design, and advanced manufacturing equipment.”

When it comes to manufacturing, which is referred to as fabrication in the industry, East Asia is top dog. Gone are the days of Fairchild when a group of eight brilliant engineers could walk off to launch the modern semiconductor industry in Silicon Valley. Now, manufacturing semiconductors needs massive capital investments. New foundries can “cost between $10-$20 billion and can take three to five years to build.”

To run such a capital-intensive industry, government backing helps. So does robust infrastructure and a skilled workforce. BCG rightly tells us that East Asia has all these ingredients to make its semiconductor industry thrive. China, South Korea, Japan and Taiwan have followed strong industrial policies, backing the semiconductor industry as a national priority. The US, where this industry began, now makes a mere 12% of the world’s semiconductors.

Taiwan’s Extraordinary Success in Semiconductors

In assembly, packaging and testing, China leads because of its cost advantage. Its neighbors make more advanced stuff. As per BCG, “all of the world’s most advanced semiconductor manufacturing capacity—in nodes below 10 nanometers—is currently located in South Korea (8%) and Taiwan (92%).” According to some, Taiwan is the Mecca of the semiconductor industry.

The biggest success story in the country is Taiwan Semiconductor Manufacturing Company (TSMC). It is the largest contract chipmaker in the world. In 2021, Kathrin Hille of The Financial Times reported about a TSMC plant that would make 3 nanometer semiconductor chips, which would be 70% faster and more power efficient than the most advanced in production at the time. TSMC has a history of making big investments that take a while to generate returns. In 2021, it budgeted $25-28 billion for capital investment. Competitors in the US have struggled to keep up because Wall Street forces them to focus on quarterly earnings and, until the 2022 CHIPS Act, the government offered few goodies.

TSMC has also invested wisely. It has plowed money into developing cutting-edge technology. The company has constructed giant fabrication plants, known as “fabs.” Hille’s 2021 reportage described a fab that measured 160,000 square meters, the equivalent of 22 football (soccer) fields. TSMC has not only focused on economy of scale but also efficiency of operations. The company achieves 95% yield in its factories. This means that 19 out of the 20 chips it makes are perfect.

The success of TSMC and other Taiwanese semiconductor companies owes a great deal to the national culture. Taiwan’s rigorous education system churns out high-quality electrical engineers and excellent technicians. The proverbial East Asian work ethic also helps. Employees work extraordinarily hard to maintain high production standards.

So far, location has helped too. Since Deng Xiaoping’s 1978 economic reforms, China has grown spectacularly. After joining the World Trade Organization in 2001, the Middle Kingdom has become the factory of the world. It is the largest manufacturer of electronics. As China’s next door neighbor, Taiwan’s location made the country an ideal location for semiconductor manufacturing and a strategic hub for the industry.

Geopolitical Typhoons Threaten Taiwan

Taiwan’s location and success are both a blessing and a curse. As mentioned above, location played a part in Taiwanese success. It has played a part in making the country integral to the semiconductor global supply chain. This global reliance on Taiwan might compel the US to support this breakaway island more robustly against China. Yet this threat comes precisely because Taiwan is next door to China and the legacy of a civil war that began in the 1930s divides the two.

In 1949, the Chinese Communist Party (CCP) emerged triumphant. Its rival, the Kuomintang (KMT), fled Mainland China and took refuge in Taiwan, which they named as the Republic of China (ROC). The CCP-led People’s Republic of China (PRC) believes in the One-China principle and seeks eventual “unification” with ROC. In Beijing’s eyes, Taiwan is a renegade province that must return to the fold just as Hong Kong.

Increasingly, the Taiwanese do not find reunification a palatable idea. The 1992 Consensus that kept tempers under control is now fraying. This agreement allowed the CCP and KMT to kick into the long grass the tricky question of which of their two governments was the legitimate, exclusive representative of “China.” Instead, both of them focused on more immediate practical matters.

Unlike China, Taiwan is a rambunctious democracy of 23 million people. In 2016, President Tsai Ing-wen, led her Democratic Progressive Party (DPP) to victory. She has refused to endorse the 1992 Consensus. This has caused great offense to President Xi Jinping who has brought back a Mao-style personality cult to China. Under him, China has become ultranationalist and hyper-aggressive. In recent years, Beijing’s “wolf warrior” diplomacy has unleashed a torrent of online abuse, misinformation and disinformation. The temperature in the Taiwan Strait has been rising.

Top analysts in the US have been worrying about the superpower’s reliance on Taiwan. They argue this semiconductor superpower is a single point of failure. Therefore, the US must develop its semiconductor industry again. President Joe Biden and the Congress have taken note. As referred to earlier, the CHIPS Act was enacted last year. In the words of the White House, this legislation will “lower costs, create jobs, strengthen supply chains, and counter China.”

It is not only the US that is spending tens of billions of dollars on semiconductor production. The EU is also getting into the act. Japan and South Korea are investing as well. The 800-pound gorilla in the room is China. Beijing is putting in hundreds of billions of dollars to move up the semiconductor industry value chain—make complex high-value chips, not just simpler low-value ones. Such massive investments by competitor nations could threaten Taiwan’s current top dog status in the semiconductor industry.

There is another wrinkle for Taiwanese industry. The US has instituted a series of measures to choke off China’s access to cutting-edge semiconductor chips, technology and manufacturing equipment. Historians have drawn parallels between this measure to the US 1939-41 sanctions on Japan. As per Niall Ferguson, these “sanctions so boxed in the imperial government that in the end there seemed no better option than to gamble on surprise attack.” Cutting off China from semiconductor capability “is a lot like cutting Japan off from oil in 1941.” Beijing’s incentives to attack its island neighbor for its semiconductor fab plants have just increased and so have Taiwan’s headaches. source