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Industry watch: Intel's acquisition of Tower heating up semiconductor race

Colley Hwang, DIGITIMES, Taipei 0

The Israeli government will not object to Intel's plan to purchase Israel-based Tower Semiconductor for US$5.4 billion, as this is an expansion of Intel's investment in Israel. If we consider issues such as car connectivity and information security, Israel may be the next major semiconductor hub, in addition to Taiwan. What the Americans are looking for is a stable supply chain. They do not necessarily want to beat TSMC, but they want to have a stable and reliable production system beyond TSMC.

About 12 years ago, I delivered a lecture in Israel and during the stay I got to meet with the president of Tower in Haifa. At the time, the company was called TowerJazz. Known for its expertise in RF, Tower is only ninth in the global pure-play foundry rankings. And people may not know that Taiwan-based Macronix is a shareholder of Tower, and Macronix chairman Miin Wu has been on Tower's board of directors for many years. Wu says he used to have to travel to Israel for Tower affairs once evey six months. What brings Tower and Macronix together?

From the perspective of future cars and IoV, Israeli companies, such as Mobileye, have unique competitiveness. Many Israeli technology companies are listed in the US. Their usual strategy is to sell their businesses at premium prices just before their technologies mature. Israel is also one of the countries with more than 10 unicorn firms, in addition to the US, China, India, the UK and South Korea.

Just as Intel announced its plan to acquire Tower, Japan's leading automotive components company, Denso also disclosed its participation in TSMC's plans to build a fab in Japan. Headquartered in Kyoto, Denso is one of the world's top suppliers of automotive components, and Kyoto, like Israel, is home to many of the world's top technology companies, such as Rohm Semiconductor, Nintendo and Murata Manufacturing. Feeling insecure amid the global semiconductor crunch industry, Japanese are now recruiting the help of TSMC in a bid to re-stablish a "sense of security." They want a safe and reliable supply chain. Since the trade disputes between Japan and South Korea in July 2019, Taiwan's role as a "harmless partner" is being highlighted.

There are signs of a tug-of-war between techno-nationalism and ideology. China claims Taiwan should be on its side because their peoples belong to the same race and speak the same language. But Westerners believe Taiwan is a democratic and free society. But what determines Taiwan's fate may not be the intentions of its peple, but rather geopolitics, international situations.

This is a serious matter. We are now seeing that TSMC and other technology companies are starting to pay attention to geopolitics. TSMC is recruiting PhDs in politics and economics to help with its understanding of international politics, industry analysis and data interpretation. This is a good thing. Cross-industry and cross-domain expertise is becoming more and more important. The bosses of several big companies have already discussed their India strategies with me. And Japan-Korea, US-Japan and US-Korea relations are things one must know well, apart from cross-strait relations.

Are there no places for people who study social sciences in technology companies? In today's geopolitical world, I hope Taiwanese companies can rethink the value of social sciences: We need to understand both the technology and international reality.

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.
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