US legislators have passed the US$52 billion Chips Act. However, some commentators have claimed what the US is doing is perhaps too little, too late.
It is speculated that American chip manufacturers such as Intel, Micron and Texas Instrument (TI) might get the largest share of the Chips Act subsidies. However, their fab expansions have been put on hold waiting for the passage of the bill. US president Joe Biden is expected to sign it into law soon, but it will take at least two to three years for these companies' new facilities to be completed and equipment installed before test productions can start. As for the money to build supply chains in America, TSMC founder Morris Chang has already warned that the US$52 billion subsidy is not going to be enough.
DIGITIMES Asia learned from information from its sources that SMIC has already been mass producing 7nm chips with DUV machines, and has also started proof of concept (POC) on 5nm chip production using the equipment currently available - despite the US ban on semiconductor tool suppliers from shipping advanced equipment to China's top foundry house.
"Huawei has also announced that its (5G) smartphones will be available by the end of 2022, this means the yield (of chips made by DUV) is already good enough for shipping to smartphone customers," the sources told DIGITIMES Asia. "You will see that by the end of the year or next."
Although the US has made clear in the Chips Act that recipients of the subsidies are prohibited from building new manufacturing capacity for "certain advanced semiconductors in specific countries that present a national security threat to the United States," China has been luring experienced semiconductor talent from Taiwan, South Korea and Japan to assist its semiconductor industry with salaries tripling or even quadrupling the levels in those Asian economies.
What does the US have to counter that competition? Last week, a Bloomberg report cited semiconductor equipment makers as saying that the US Department of Commerce has expanded the ban of semiconductor equipment by prohibiting manufacturers from selling anything more advanced than 14 nanometers to China. Experts warned that the move not only will impact China's chip makers, but will also harm the US and South Korean DRAM and logic IC manufacturers who have invested heavily in China.
On the other hand, the US is also doing R&D in 2nm chip technology with Japan, in an effort to decrease reliance on Taiwan. US commerce secretary Gina Raimondo said that if the US no longer had access to the chips currently being made in Taiwan, it would mean "a deep and immediate recession" for the US.
"The war can only create problem for all three sides (the US, China and Taiwan)," said Mark Liu, chairman of TSMC - the world's number one pure-play foundry - in a recent interview with CNN.
"We hope we don't get discriminated just because we are (geographically) close to China," said Liu, stressing that nobody in the business world wants to see a war. "No matter how the relations between the US and China gets, Taiwan is by itself a vibrant and democratic society, and TSMC wants to unleash innovation for the world and into the future."
If what the US does is already too little, too late, the last thing the US government should do is to make Taiwan feel marginalized. Instead of continuing the fear-inducing rhetoric, it is time for the US to wake up to the fact that the competition is head on, and it cannot do without the partnerships of allies upholding the same universal values.
The semiconductor industry has already been developed into a highly globalized sector yet with high degree of professional division of labor. If the US wants to defend its access to the chips, the last thing it should do is to make Taiwan feel marginalized and discriminated.
By making Taiwan feel it is a dangerous place and should be guarded against, the US is likely to push some of Taiwan's most talented engineers away to China - that is definitely not what it would like to see in the first place. On the contrary, the world needs Taiwan, as well as South Korea and Japan more than ever to work with the US and Europe to help advance the technologies and the applications because these countries have some of the best engineers to build chips badly needed for digital transformation. What is the point talking about the scenario of losing Taiwan unless the US is already losing its will to keep Taiwan safe from the aggression of any hostile country?
Mark Liu stressed the importance of education and talent as well as stability and economic vibrancy for Taiwan's success in creating a semiconductor industry, while saying that TSMC has been successful because it treats the semiconductor technology as "a business," "a science," relentless collaboration with partners and never just assembly work. The recipe of TSMC's secret sauce to success is exactly what the US should take heed: it needs to create an ecosystem for chip supply chains to flourish in the US as well as the close collaborations from all of the partners to make it work.
It is never too late for the US to begin investing in its own education and talent by attracting investments from foreign companies. It is never too late for America to create healthy market demands for chips in its infrastructure and products through developing regulations that are conducive to developing environmentally friendly industries. After all, that is exactly what China did to become what it is today.
