Michmutters

“He was right, because many more Australians have got direct and indirect interests into corporations.

“But where he was wrong on that is that democracy usually gives you a vote – and the thing that’s been lost is the vote.”

Gonski says the big plus in having wider ownership of companies through super funds brings with it a challenge of how to keep people informed without the regular updates to the ASX under continuous disclosure rules.

Sydney Airport has continued to publish annual reports that are lodged with the Australian Securities and Investments Commission, but the level of information sharing is severely diminished.

Playing the long game

Gonski says the single biggest advantage of a private company compared with a public one is the ability of the board and management to think long-term.

He says his experience on the boards of Singapore Telecommunications and Singapore Airlines gave him a new perspective on strategic thinking at board level.

“Coming back from working with those Asian companies… I was stunned how short-term we were in our thinking.

“We had, in many of the companies I was involved in, dividend policies which often affected the long-term investment horizon of the company. But … companies in Asia, and often in America as well, don’t pay as big dividends and therefore can reinvest and build for the longer term.”

Sydney Airport’s move to appoint Gonski follows the decision by the Blackstone-owned Crown Resorts to appoint Ian Silk chairman of Crown Melbourne, John Borghetti chairman of Crown Sydney, and John Van Der Wielen chairman of Crown Perth.

Blackstone said these appointments were part of the transformation of Crown to “operate at the highest standards of compliance, governance, and integrity”.

Silk, Borghetti and Van Der Wielen are filling roles that are very different from the roles played by chairmen of public companies.

The chairman of a public company, for example, must primarily consider the interests of the shareholders, followed by the interests of other stakeholders.

It is arguable that Gonski at Sydney Airport and Silk, Borghetti and Van Der Wielen at Crown must consider the interests of all stakeholders ahead of the interests of the shareholders.

The chairman of the Crown Resorts head stock is Blackstone representative Bill McBeath.

The owners of Sydney Airport and Crown Resorts have taken a different approach compared with the owners of other high-profile, ASX-listed companies that have been taken private.

Electricity and gas network owner AusNet, which was bought by Sunsuper and four Canadian pension funds in October 2021, does not have an independent chairman.

The chairman of Virgin Australia is Ryan Cotton, who works for Bain Capital, the private equity group that bought Virgin in September 2020.

The Japanese-owned Toll Holdings, which used to have an independent chairman in Ray Horsburgh, now has a former managing director, Thomas Knudsen, filling the chairman’s role.

One aspect of Nancy Pelosi’s trip to Taiwan that has been largely overlooked is her meeting with Mark Lui, chairman of the Taiwan Semiconductor Manufacturing Corporation (TSMC). Pelosi’s trip coincided with US efforts to convince TSMC – the world’s largest chip manufacturer, on which the US is heavily dependent – ​​to establish a manufacturing base in the US and to stop making advanced chips for Chinese companies.

US support for Taiwan has historically been based on Washington’s opposition to communist rule in Beijing, and Taiwan’s resistance to absorption by China. But in recent years, Taiwan’s autonomy has become a vital geopolitical interest for the US because of the island’s dominance of the semiconductor manufacturing market.

Semiconductors – also known as computer chips or just chips – are integral to all the networked devices that have become embedded into our lives. They also have advanced military applications.

Transformational, super-fast 5G internet is enabling a world of connected devices of every kind (the “Internet of Things”) and a new generation of networked weapons. With this in mind, US officials began to realize during the Trump administration that US semiconductor design companies, such as Intel, were heavily dependent on Asian-based supply chains for the manufacturing of their products.

In particular, Taiwan’s position in the world of semiconductor manufacturing is a bit like Saudi Arabia’s status in OPEC. TSMC has a 53% market share of the global foundry market (factories contracted to make chips designed in other countries). Other Taiwan-based manufacturers claim a further 10% of the market.

As a result, the Biden administration’s 100-Day Supply Chain Review Report says, “The United States is heavily dependent on a single company – TSMC – for producing its leading-edge chips.” The fact that only TSMC and Samsung (South Korea) can make the most advanced semiconductors (five nanometres in size) “puts at risk the ability to supply current and future [US] national security and critical infrastructure needs”.

This means that China’s long-term goal of reunifying with Taiwan is now more threatening to US interests. In the 1971 Shanghai Communique and the 1979 Taiwan Relations Act, the US recognized that people in both mainland China and Taiwan believed that there was “One China” and that they both belonged to it. But for the US it is unthinkable that TSMC could one day be in territory controlled by Beijing.

‘techwar’

For this reason, the US has been trying to attract TSMC to the US to increase domestic chip production capacity. In 2021, with the support of the Biden administration, the company bought a site in Arizona on which to build a US foundry. This is scheduled to be completed in 2024.

The US Congress has just passed the Chips and Science Act, which provides US$52 billion (£43 billion) in subsidies to support semiconductor manufacturing in the US. But companies will only receive Chips Act funding if they agree not to manufacture advanced semiconductors for Chinese companies.

This means that TSMC and others may well have to choose between doing business in China and in the US because the cost of manufacturing in the US is deemed to be too high without government subsidies.

This is all part of a broader “tech war” between the US and China, in which the US is aiming to constrain China’s technological development and prevent it from exercising a global tech leadership role.

In 2020, the Trump administration imposed crushing sanctions on the Chinese tech giant Huawei that were designed to cut the company off from TSMC, on which it was reliant for the production of high-end semiconductors needed for its 5G infrastructure business.

Huawei was the world’s leading supplier of 5G network equipment but the US feared its Chinese origins posed a security risk (although this claim has been questioned). The sanctions are still in place because both Republicans and Democrats want to stop other countries from using Huawei’s 5G equipment.

The British government had initially decided to use Huawei equipment in certain parts of the UK’s 5G network. The Trump administration’s sanctions forced London to reverse that decision.

A key US goal appears to be ending its dependency on supply chains in China or Taiwan for “emerging and foundational technologies”, which includes advanced semiconductors needed for 5G systems, but may include other advanced tech in the future.

Pelosi’s trip to Taiwan was about more than just Taiwan’s critical place in the “tech war”. But the dominance of its most important company has given the island a new and critical geopolitical importance that is likely to heighten existing tensions between the US and China over the status of the island. It has also intensified US efforts to “reshore” its semiconductor supply chain.