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Bloomberg: Global chips are overly reliant on Taiwan, which deserves vigilance

According to Bloomberg, a series of recent events has made global leaders realize that they are too dependent on Taiwanese semiconductors, which is not a good signal.

The report pointed out that Taiwan, China, is favored for its ability to manufacture advanced computer chips. This is mainly due to TSMC. The company is the world’s largest wafer foundry and Apple’s preferred producer of chips for smartphones, artificial intelligence and high-performance computing.

In the past, Taiwan’s role in the world economy has been largely unknown until recently due to a shortage of chips in the auto industry, from parking sensors to reducing emissions. With automakers including Germany’s Volkswagen AG, U.S. Ford Motor Co. and Japan’s Toyota Motor Corp. forced to halt production and idle factories, the importance of Taiwan has suddenly become impossible to ignore.

U.S., European and Japanese automakers are lobbying their governments for help, asking Taiwan and TSMC to step in. German Chancellor Angela Merkel and French President Emmanuel Macron last year discussed the possibility of a shortage and agreed on the need to speed up the European push, according to a French official with knowledge of the matter.

The demands of the auto industry illustrate the control TSMC, and Taiwan as a whole, have over the semiconductor business, which also represents a bottleneck in the global supply chain, adding new urgency to plans from Tokyo to Washington and Beijing to increase self-reliance.

By dominating the outsourced chip-making model developed in the United States, Taiwan “may be the most critical bug in the entire semiconductor value chain,” said Jan-Peter Kleinhans, director of the technology and geopolitics program at Berlin-based think tank Stiftung Neue Verantwortung.

The Trump administration has taken advantage of this by restricting mainland Chinese companies’ access to modified technology. By banning the use of all U.S. chip technology, including designs, it has cut off TSMC and other foundries from supplying semiconductors to Huawei Technologies, hampering the growth of China’s largest technology company.

It is also in talks with Taiwan Semiconductor Manufacturing Company (TSMC) to build a $12 billion chip manufacturing plant in Arizona. South Korea’s Samsung Electronics Co. will follow after investing $10 billion in Austin, Texas.

The US CHIPS Act, introduced to Congress last year, was designed to encourage more factories in the United States. Texas Republican Michael McCaul plans to reintroduce a bipartisan bill this year in hopes of $25 billion in federal funding and tax breaks. In a statement, McCall said he was working with colleagues in the House and Senate “to sign the remaining provisions of CHIPS into law as quickly as possible in a prioritized manner.”

A foreign affairs committee staffer said there had been news that Intel Corp, once an industry leader, was considering outsourcing the production of some of its chips to TSMC, as the company’s former CEO emphasized the need to enable cutting-edge manufacturing. US manufacturer.

The EU aims to strengthen the bloc’s “technological sovereignty” through an alliance initially armed with up to 30 billion euros ($36 billion) of public-private investment to boost Europe’s share of the global chip market from less than 10 percent now Raised to 20% (no target date).

He also encouraged Taiwan, China, to increase investment in the Group of 27, with some success. Hsinchu-based Universal Wafer just raised its bid for Germany’s Siltronic AG, valuing the company at 4.4 billion euros, a takeover that would make the company the world’s largest silicon wafer maker by revenue .

This is not to say that Taiwan is the only player in the semiconductor supply chain. The US still dominates, especially in chip design and Electronic software tools. ASML Holding NV in the Netherlands has a monopoly on the machines needed to make the best chips; Japan is a major supplier of equipment, chemicals and silicon wafers.

But TSMC is increasingly entering its own territory as the focus shifts to smaller, more powerful chips that require less energy. It has helped Taiwan form a comprehensive ecosystem around it: ASE Technology Holding is the world’s largest chip assembler, and MediaTek has become the largest smartphone chipset supplier.

Tokyo is also trying to attract TSMC to set up in Japan. 110 billion yen ($1 billion) was earmarked for R&D investment last year, and another 90 billion yen is earmarked for TSMC in 2021, while reports suggest the company is considering setting up a company in Japan.

“TSMC is becoming more and more dominant,” said Kazumi Nishikawa, an official in charge of technical issues at Japan’s Ministry of Economy, Trade and Industry. “To this end, everyone in the chip industry has to find a way to deal with it.”

China is providing huge financial and technical assistance to the chip industry and other key technologies in its five-year plan proposed in October, however, even that money cannot free them from the need for Taiwan. Indeed, China has long been looking for chip-making talent. But with Washington hindering China’s progress.

TSMC’s capital spending this year is as high as $28 billion, suggesting it will maintain its lead.

Mathieu Duchatel, head of the Asia program at the Montaigne Institut Montaigne in Paris, said Taiwan has enormous strategic value in the global chip supply chain.

ASML CEO Peter Wennink told Bloomberg TV that while there are many moves to recoup domestic chip manufacturing, we think it is very optimistic if the supply chain for complex products such as semiconductors is to change in the short term. . “If you’re going to reallocate semiconductor manufacturing capacity, manufacturing capacity, you have to think about years,” he said.

At the same time, Joerger, President of the European Union Chamber of Commerce in China? At the same time, geopolitics means chip shortages are likely to be more common, said Joerg Wuttke, chief executive of the company.

“It’s actually due to export controls, a sudden supply chain disruption due to government intervention, not just due to capacity issues,” he told Bloomberg Television. “So better be prepared.”

 

  

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