Page 11 - Chip Scale Review_November December_2022-digital

Add it ionally, t hese seem i ngly China is not going to sit by idly and will Finally, there is the added argument
protectionist moves on the part of the continue to explore ways to catch up. that these efforts to increase domestic
U.S., EU, and Japan seem to include a What China has been able to achieve on manufact u r ing will be exercises
certain level of international cooperation. many fronts in a relatively short period of in futility. Today, American core
In May of 2022, President Biden and time is a testament to its national resolve, c o m p e t e n c y l i e s o n t h e d e s i g n
PM Kishida agreed to explore joint U.S.- discipline and ability. It will continue side, whereas the state-of-the-art
Japan development of next-generation to compete, at least on manufacturing semiconductor manufacturing has
semiconductors. In October, there was at the lower end of the semiconductor moved to Asia, specifically Taiwan and
a “Chip 4” meeting, led by the U.S., manufacturing technology spectrum. South Korea, for advanced wafer nodes,
which included Taiwan, Japan and South Such products are, and will continue to and Southeast Asian nations for back-
Korea to discuss possible cooperation be, widely used in many applications. end assembly and test. It will take the
regarding semiconductor supply chain U.S. over two years to catch up with
resilience. These moves toward gaining A new era of competitiveness the likes of TSMC and Samsung on the
strategic autonomy in semiconductor The new focus on manufacturing advanced wafer nodes. After letting
manufacturing seem be less of isolated through sovereign investment in the the semiconductor manufacturing
protectionism and effectively more U.S., Europe and Japan in the front competency slowly erode away starting
of a “collective and coordinated” end, with a similar focus of southeast from the late 90s, the U.S. and Japan
protectionism. If done through proper Asian countries in the back end, along now lack the required talent pool to
international cooperation, it can create with China’s burning ambition to catch manufacture advanced semiconductors
a competitive global landscape that up in the technology, could usher in a within their shores—this will take years
will, in turn, allow healthy progression new level of market competitiveness to cultivate. Additionally, the funding
of technology development and cost the world hasn’t witnessed in decades. required for U.S., EU and Japan to gain
competitiveness. And such healthy competition is always back the market share they once had
There is nothing fundamentally a good thing for innovation and cost- would require substantially more capital
wrong or immoral about an honest effort effective solutions that help propel the than what the CHIPS Act has allocated.
to boost the internal manufacturing broader global market economy, and that For example, the U.S. will have to spend
capability for any nation. Government ultimately, benefits the consumer. about US$300 billion to get back the 37%
incentives such as the CHIPS Act are T h e U . S . e f f o r t t o i m p e d e market share it once had. Similarly, the
a common way to achieve this boost China’s ability to access advanced EU will require a capital expenditure of
when significant capital is involved to semiconductor technology is a matter of US$164 billion to achieve its 20% share
entice companies to set up domestic concern for many nations. Most of the of semiconductor production. If these
manufacturing plants. While the U.S., players in the Asia region are playing gaps in funding are to be filled from
EU and Japan have newly enacted such it “safe” by trying not to displease the private sector, the government will
subsidies, China has been doing this for either superpower to ensure access need to continually ensure such support.
almost a decade starting with its 2014 to both the advanced technologies This may prove to be a difficult path if
National Integrated-Circuit Plan and and the China market. Additionally, the political interest in achieving these
Fund, which was endowed with US$150 many countries in the Asia Pacific goals starts to wane—one of the risks of
billion from central and provincial region such as Thailand, Malaysia, democratic societies.
governments. Their latest 14th Five-Year Philippines, Singapore and Vietnam These “CHIPS Act” initiatives by
Plan includes significant government are likely to reap benefit as companies, governments already seem to be paying
focus and funding for the advancement worried about future sanctions, may some dividends in terms of ushering in
of domestic semiconductor development want to start or increase production in investment from the private sector. Intel,
and production—the Shanghai municipal these countries, especially in the back- TSMC, GlobalFoundries and Samsung
government alone is supposed to fund end sectors of assembly and test, so as have all announced new wafer fab
RMB 300 billion towards the initiative. to diversify away from China. Along facilities in the U.S. through the next few
China is not alone in providing such this line, India seems to have renewed years in Ohio, Arizona, Texas, and up-
subsidies. Last year, South Korea its ambition to become a major player state New York. This includes a 5nm
announced tax credits up to 50% of in the semiconductor manufacturing technology fab by TSMC. STMicro and
investment in semiconductor research space, and in a true sense of support, GlobalFoundries just recently signed a
and development creating a US$450 the gover nment is putting money memorandum of understanding to build a
billion investment from local companies. behind its mouth this time around. new fab in Crolles, France at a cost of €5.7
The third argument that these moves The country is counting on benefiting billion. Intel recently unveiled its massive
are geopolitically motivated to a large from the West’s increasing concern €80 billion investment plan in Europe
extent is undeniable. Despite all the on relying too much on China and starting with two fabs in Magdeburg,
political rhetoric and trade sanctions, trying to become a key semiconductor Germany at a cost of €33 billion.
the world finds itself in the awkward manufacturing hub even though it will Earlier this year, encouraged by METI’s
position of not being able to ignore the take at least a decade, if not longer, commitment to domestic semiconductor
huge China market—the largest market to do so. It is telling that, for the first growth, TSMC planned its first ever wafer
for semiconductors by sales commanding time, some of Apple’s iPhone 14s are fab plant in Kumamoto in Kyushu Island,
about a 35% share. At the same time, assembled in India. a joint venture with SONY and Denso.

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