At the forefront of the dispute between U.S e China, Taiwan he delivered a defensive masterstroke, making himself indispensable for both sides.
By mastering the manufacture of the most advanced semiconductors, the Taiwan Semiconductor Manufacturing Company (TSMC) won one technology which is crucial for high-end digital devices and weapons, accounting for more than 90% of the global production of these chips, according to estimates by the industry.
Both countries are currently heavily dependent on the small island that is at the center of their increasingly tense rivalry.
For Washington, allowing an increasingly powerful China to control TSMC factories in a conflict would threaten America’s military and technological leadership.
However, if Beijing invades the island, there is no guarantee that it will be able to leave the factories intact, which would cut supplies of chips to its vast electronics industry.
Even if Taiwan’s chip factories survive an eventual takeover by China, they would almost certainly be excluded from a global supply chain essential to their production.
Washington persuaded TSMC to open a factory in the US that will produce advanced semiconductors and is preparing to invest billions in rebuilding its domestic chip industry.
Beijing is also investing heavily, but its chip industry lags about a decade behind Taiwan in many key areas.
In an interview, the ministro da Economia de Taiwan, Wang Mei-hua, told Reuters in September that the industry is deeply intertwined with the island’s future.
“It’s not just about our economic security,” she said. “It’s connected to our national security too.”
The danger for Taiwan is that TSMC factories are in the line of fire. The facilities are located in the narrow plain along the west coast of Taiwan, about 130 kilometers away from China.
Most are near the so-called red beaches, considered by military strategists as likely landing sites for a Chinese invasion.
TSMC’s headquarters and the cluster of factories around it in Hsinchu, in northwestern Taiwan, are just 12 kilometers off the coast.
Asked about the threat to the island’s factories, the Ministry of Economy Taiwan said that “in the last 50 years, China has never given up trying to use force to control Taiwan, but its goal is not the semiconductor industry.” Taiwan, he added, has the ability to “face and manage this risk.”
TSMC did not respond to specific questions about the exposure of its factories. In a statement, he highlighted that the chip industry is global and has design, raw materials, equipment and other services from different regions and many specialized companies. “Therefore, rather than one company or region, global collaboration is vital to the success of the semiconductor industry,” the company said.
american anxiety
As China intensifies its military intimidation of Taiwan, Washington is signaling anxiety about US dependence on the island’s chips.
“The big concern in Washington is that Beijing will gain control of Taiwan’s semiconductor capacity,” said Martijn Rasser, a former senior intelligence officer and analyst at the US Central Intelligence Agency.
Much is at stake for Beijing as well, as the loss of Taiwan’s chips would pose problems for the Chinese industry, which accounts for 60% of global semiconductor demand, according to an October 2020 report by the Research Service of China. Congress.
More than 90% of semiconductors used in China are imported or manufactured locally by foreign suppliers, the report said.
Taiwan is a critical supplier. In the first quarter of this year, nearly half of Taiwan’s exports to China, the island’s biggest trading partner, were semiconductors – a 33 percent increase over the same period last year, according to data from the Taiwan Ministry of Economy. Island.
The global shortage of chips caused by supply disruptions amid the Covid-19 pandemic is giving a taste of the devastation a conflict in Taiwan would wreak.
The loss of Taiwan’s single-year production would disrupt the international electronics supply chain, according to an April report by the Boston Consulting Group and the Semiconductor Industry Association, the lobbying of the US chip industry.
The North American semiconductor industry remains dominant in many ways through its leadership in research, development and design. It accounts for nearly half of the revenues of a global industry valued at $452 billion this year. But the country has largely outsourced the manufacture of advanced chips, mainly to Taiwan.
Challenge to China
The US and its allies have for decades imposed chip technology barriers on China, primarily with the aim of curbing Beijing’s advanced weapons development.
The country maintains a list of chip technologies that require an export license and restricts foreign sales of technology to China’s leading chip maker, Semiconductor Manufacturing International Corporation. SMIC did not respond to Reuters’ questions.
A key tool in this containment strategy: the Wassenaar Arrangement, a voluntary pact between 42 nations to curb the spread of “dual-use” technology, with both commercial and military applications. Under Wassenaar, Washington and its allies harmonized controls on the flow of chip technology to China.
The most significant restriction is on equipment that uses extreme ultraviolet light (EUV) beams, used at the forefront of semiconductor manufacturing because it allows chipmakers to build faster and more powerful microprocessors and memory chips.
According to Kevin Wolf, a former assistant secretary of commerce in the Barack Obama administration, the EUV restrictions are intended to block China’s efforts to produce 5-nanometer chips – the most modern of these today – or even semiconductors more advanced in development.
A Joe Biden government analysis of the vulnerability of the US supply chain showed in June that Beijing was directing $100 billion in subsidies to its chip industry, including the development of 60 new factories.
China also faces a talent gap. The country recruited engineers and technicians from Taiwan, South Korea and the USA. But these efforts have yet to yield much progress. Companies like TSMC have huge teams of experts for a wide range of processes. The poaching of individual experts can only yield gains in niche trades, industry executives say.
These elite professionals are Taiwan’s chip industry’s most important asset, says retired naval captain Chang Ching, a researcher at the Society for Strategic Studies in Taipei. “If it invades Taiwan, the communist army will do its best to protect people working in the technology sector,” he said.
TSMC has started experimental production of what will be its most advanced chip, using so-called 3-nanometer technology, and launched a research and development unit to produce 2-nanometer chips.
By 2025, domestic and foreign companies plan to invest more than 3 trillion Taiwan dollars ($108 billion) in Taiwan’s chip industry, according to Kung Ming-hsin, head of the island’s economic planning agency, the Council of National Development.
After this flaunting of factories and equipment, Kung said, “Taiwan’s semiconductor industry will have very few competitors.”
Source From: Moneytimes
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