0x06 Chipping Away
Korea's Chip4 quandary, CHIPS and Science Act 2022, and Corruption Investigations in China
Three major updates from the world of semiconductor geopolitics since August 6, 2022
1. CHIPS and Science Act is signed into law by the US President
After months of debate and discussion, the US President passed the CHIPS and Science Act of 2022 on August 10, 2022. This Act should be read by anyone interested in technology geopolitics, as it squarely identifies geopolitics as the prime reason. A few points to note:
This Act says that countries receiving incentives for semiconductor manufacturing are forbidden from investing in advanced manufacturing in PRC. However, they can invest in legacy nodes in PRC. Essentially, companies will have to seek a waiver for investments in China with proof that these won't challenge the US technological advantage.
For basic science research, it places restrictions on eligibility for National Science Foundation R&D funding for institutions that host or support Confucius institutes.
A company of the PRC cannot participate in the Manufacturing USA Program without a waiver.
There are a whole lot of reporting requirements for institutions dealing with "foreign countries of concern" - China, Russia, Iran, and North Korea.
From the US national security point of view, thi investment will deliver the best results if it is able to attract the likes of TSMC to begin manufacturing at sub 5nm levels there. On its part, TSMC is unlikely to relocate its most advanced facilities unless PRC moves toward a forceful reunification.
People in India might find this press statement by Anthony Blinken useful:
The bill establishes an International Technology Security and Innovation Fund, including $100 million annually over five years for the State Department, which will allow us to support secure semiconductor supply chains as well as the development and adoption of secure telecommunications networks. This fund will help deepen efforts with key allies and partners in alignment with this historic domestic investment in these critical technology areas. The legislation is an important step to further prepare our economy for the 21st century and strengthen our regional supply chain diplomacy, including through the U.S.-EU Trade and Technology Council, the Indo-Pacific Economic Framework, and the Americas Partnership for Economic Prosperity.
For more:
A helpful summary of the bill is here
This interview with Alan O Sykes is helpful in understanding various aspects of the law.
Nature has an article on the Science-related funding part of the Act.
2. The concern in South Korea
The internal debate in South Korea on semiconductor alliances is reaching a culmination. On the one hand, semiconductor equipment exports to its largest market, China, fell by half over the last year. On the other, there are concerns that joining the Chip4 alliance with the US, Taiwan, and Japan might invite a political and economic retaliation from China. At this point, South Korea might, on balance, ditch the Chinese market in return for closer cooperation under Chip4. As for India, this is a great opportunity to woo South Korean firms. They are looking for another big market, with exports to China on the decline.
For more, read this article in The Korea Times by Kim Yoo-chul.
3. Purges reach China's Big Fund
Ding Wen, President of China National IC Industry Investment Fund, is being investigated by the Central Commission for Discipline Inspection (CCDI) over graft charges. Several other executives of the fund have also been under the scanner earlier. Interestingly, Ding's name still appears on the SemiconChina website, but the details page has been taken down after the news of his investigation was made public. This indicates that the investigation sprung up a surprise.
For more, read Zeyi Yang's article in MIT Technology Review.