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Weaponizing semiconductors can spell disaster

The CHIPS and Science Act is portrayed as a $52 billion package aimed at boosting semiconductor manufacturing in the United States.

ANN/China Daily |

US President Joe Biden,  has signed into law the CHIPS and Science Act of 2022, which appears to be a prelude to efforts to weaponize the global information and communications technology supply chains. As part of its efforts to weaponize ICT, the US will force the Republic of Korea to make a final decision at a meeting in the coming days on whether it wants to join the US-led “Chip 4 alliance”. The CHIPS and Science Act is portrayed as a $52 billion package aimed at boosting semiconductor manufacturing in the United States.

But the underlying strategic objective is geopolitical. Today, Asia dominates global semiconductor manufacturing. Although a top exporter, the US semiconductor industry no longer controls the global chip supply chains. However, it still accounts for more than 80 percent of the world’s chip design equipment, 50 percent of intellectual property for chip designs, and half of the global chip manufacturing equipment.

To dominate the semiconductor sector, which also enables advanced military technology, the Biden administration seeks to restore the US’ superiority in semiconductors. The problem is that no single country can any longer control the global supply chains. Hence, the efforts to weaponize the system in order to “counter” China. The United States, the ROK and Japan, along with the Taiwan region, supply most of the world’s semiconductors, whereas the Chinese mainland accounts for the highest demand in the industry.

The Biden team would like to keep it that way. In order to restore the US’ supremacy, the Biden administration needs to neutralize future rivals. That’s likely why Washington is also considering restricting US chip-making equipment from being exported to Chinese memory chip makers. Such restrictions are designed to hurt China and its progress in advanced technology, but they would also harm the ROK’s Samsung and SK Hynix, which have memory chip operations in China. Japanese semiconductor rivals to US companies were already derailed in the 1980s trade wars.

Unsurprisingly, Chinese critics of the “CHIP 4 alliance” call it a “hongmen banquet” ~ a well-known Chinese expression for a feast that’s organized as a trap for the invitees. At present, six US-headquartered or foreign-owned semiconductor companies have 20 fabrication facilities in America. The ROK’s Samsung is building a $17 billion fabrication facility in Texas, while the Taiwan Semiconductor Manufacturing Company is investing $12 billion in a plant in Arizona.

The real costs are likely to be far higher, as they have already acknowledged. Besides, the CHIPS act bars recipients of US government funds from expanding or upgrading their advanced chip capacity on the mainland, which has led the ROK firms to review their mainland operations. That leaves Taiwan.

Hence, US House Speaker Nancy Pelosi’s visit to Taiwan on Aug 2, for which the way was paved by the Taiwan lobby (Taipei Economic and Cultural Representative Office), Pelosi’s generous supporter that also helped push through the recent $5 billion weapons sales to Taiwan. In Taiwan, Pelosi insisted on a meeting with Mark Liu, CEO of the TSMC, the largest contract chip maker. She reportedly said she hopes the TSMC will side with the US.

A version of this story appears in the print edition of theSeptember 2, 2022, issue.