Taiwan’s chipmaker TSMC plans to expend into Japan

Taiwan’s TSMC is set to open its latest chipmaking foundry on Japan’s Kyushu island on February 24th, according to chairman Mark Liu. This move is part of the company’s plan to expand its global manufacturing footprint. TSMC, which serves clients such as Apple and Nvidia, controls over half of the world’s silicon wafer production.

During an investors’ call, chairman Mark Liu revealed that the long-awaited Japan foundry will utilize advanced process technology, including 12- and 16-nanometre and 28- and 22-nanometre process technology. The official opening ceremony will take place on February 24th, while volume production is expected to commence in the fourth quarter of 2024.

In November, Japan’s government announced plans to spend $13 billion to enhance domestic semiconductor production and generative AI technology, including a second TSMC plant in Kumamoto. While discussions with the Japanese government are ongoing, no definitive decision has been reached yet.

Apart from the Japan foundry, TSMC also plans to build its first fab in Europe, in Dresden, Germany, with construction expected to commence in the fourth quarter of this year. The TSCM CEO C.C. Wei remains optimistic about the company’s growth, citing the increasing demand for generative AI technology that depends on high-quality silicon wafers.

Japan wants to triple sales of microchips by 2030

The Japanese government aims to triple sales of domestically made microchips by 2030, as part of its efforts to reduce reliance on foreign technology. The goal is to achieve greater self-sufficiency in technology, particularly in light of supply chain disruptions caused by the COVID-19 pandemic, Russia’s invasion of Ukraine, and China’s growing economic power.

According to data from SEMI, a global association of chipmaking equipment producers, to achieve this goal, Japan is anticipated to invest US$7 billion in fabrication equipment next year, representing an 82% increase from the current year, and making it the world’s largest increase in this category.

The initiative is part of a larger effort by Japan to strengthen its technology sector and compete with other major players in the industry, including the USA, Taiwan and China. Japan’s semiconductor industry has faced challenges in recent years due to the rise of competitors in Asia and the global shortage of chips.

At the end of March 2023, Japan and the Netherlands imposed restrictions on chipmaking equipment exports, following US limitations to China.

China’s push for chip self-sufficiency

Economic self-sufficiency was echoing messages during China’s two-session events. In particular, China insists on being self-sufficient in the production of microchips.

It is part of new digital geopolitics with US export restrictions on chips and technologies for thier produciton.

Chinese vice-premier Liu He recently announced the ‘China Chip Act’plans to boost the local chip industry via both state and market power for growth.

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USA and India sign MoU on semiconductor supply chain

US Secretary of Commerce Gina Raimondo and Minister of Commerce and Industry for Government of India Piyush Goyal signed a Memorandum of Understanding on Semiconductor Supply Chain and Innovation Partnership.

The memorandum is intended to establish a collaborative mechanism between the two governments on semiconductor supply chain resiliency and diversification. It is further aimed at facilitating commercial opportunities and the development of semiconductor innovation ecosystems. Cooperation is also envisioned on matters related to research and development, and talent and skills development.

The Netherlands and US-China chip war

The Netherlands announced it would require licenses to export technologies, including Deep Ultra Violet (DUV) immersion lithography and deposition, produced by Dutch microchip equipment maker ASML.

ASML produces lithography machines that use lasers to print minuscule patterns on silicon as part of the manufacturing process of microchips.

According to Dutch Trade Minister Liesje Schreinemacher, this measure has been taken on national and international security grounds.

However, it is not a completely new development. Back in 2019, ASML stopped exporting to China the latest technology. US-China relations have already been impacted due to the restrictions imposed by the US on semiconductor exports from China, which the Netherlands’ decision will further exacerbate.

China promotes open-source chip design

T-Head, the chip unit of Alibaba Group Holding, is investing in RISC-V chips to become self-sufficient in the semiconductor space due to US sanctions.

Alipay, a payment service under affiliate Ant Group, and T-Head are jointly developing RISC-V chips to enable secure payment functions on wearable devices.

T-Head has launched an initiative to encourage 150,000 developers to learn about and gain credentials on the open-source chip design architecture.

China is pushing RISC-V as a means of reducing dependence on foreign technologies. T-Head has already launched eight RISC-V processors and is bringing commercial applications into both consumer and industrial fields.

Issues with high costs and algorithm compatibility remain challenges for adopters of the architecture.

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Further decline in value for global semiconductor industry

Figures from the Semiconductor Industry Association (SIA) show a further decline in the value of the global semiconductor industry, whose sales in January 2023 amounted to US$41.3 billion, down 5.2% from US$43.6 billion in December 2022 and down 18.5% from US$50.7 billion in January 2022. These figures are based on data collected by the World Semiconductor Trade Statistics (WSTS) organisation.

China’s sector shed 31.6% of its value in year-to-year sales (when comparing January 2022 to January 2023). Sales also decreased in the Americas by 12.4%, while in Asia Pacific (excluding China and Japan) they went down by 19.5%. Chip markets in Europe and Japan kept expanding by 0.7% and 0.9% respectively, in year-to-year sales.

‘Despite record-high sales in 2022, the global semiconductor market cooled considerably during the second half of the year, and that trend continued during the first month of 2023,’ said John Neuffer, SIA president and CEO. He further added: ‘The semiconductor market remains strong due to the ever-increasing role of chips in powering the critical technologies of today and tomorrow.’

Japan and Netherlands reportedly following US steps in China tech export ban

Japan and the Netherlands have reportedly joined the USA in the attempt to limit China’s access to minerals used to create advanced computer chips.

The deal represents a significant victory for Washington in its campaign to halt China’s emergence as a technological giant. It is predicted that Dutch ASML, one of the few companies worldwide capable of producing the printers needed to manufacture high-end semiconductors, will significantly reduce some of its advanced microchip printing equipment sales. The same limitations are presumably in place in Japan for companies like Nikon that make DUV equipment.

US government expands restrictions on exports of advance tech to China

The US Department of Commerce’s Bureau of Industry and Security (BIS) announced new restrictions on the export of advanced US technologies to Chinese entities. The Bureau added 36 new entities to the Entity List, meaning that they will be subject to strict licence requirements significantly restricting their access to commodities, software, and technologies subject to the US Export Administration regulations. Among these 36 entities, 35 are primarily located in China and 1 in Japan (but it is a subsidiary to a Chinese entity). The US government argues that these entities were found ‘to be acting contrary to the national security or foreign policy interests of the United States)’ for the following reasons:

  • Twenty-one entities are major artificial intelligence (AI) chip research and development (R&D), manufacturing, and sales entities thought to be or have close ties to government organisations that support the Chinese military and defence industry.
  • Two entities were added to the list for acquiring or attempting to acquire US-origin items in support of China’s military modernisation.
  • Seven of the entities engaged in supporting China’s military modernisation were found to have demonstrable direct ties to activities of concern.
  • Four entities are seen as posing a significant risk of becoming involved in activities that could have a negative impact on the national security or foreign policy of the USA.
  • One entity was found to engage in or enable activities contrary to US foreign policy interests.
  • One entity was found to facilitate the illegal export of US-origin electronics to Iran for use in the production of military unmanned aerial vehicles and missile systems.
  • For two entities, additional restrictions were imposed for having supported, or continued to support, Russia’s military (‘backfilling’) since the imposition of new export controls.

In a second rule issued on the same day, BIS:

  • Removes 25 Chinese entities from the Unverified List (UVL) due to satisfactory completion of End-Use Checks (EUCs) and verification of those entities’ bona fides, including in cooperation with the Chinese government. This means they are now removed from BIS’ restricted party lists.
  • Adds 9 Russian entities to the Entity List from the UVL due to the inability to complete EUCs.

Commenting on the two rules, the Chinese government expressed opposition to the addition of the 36 entities to the export controls list, noting that it ‘will take necessary measures to firmly safeguard the legitimate rights and interests of Chinese companies and institutions’. At the same time, it welcomed the removal of the 25 entities from the unverified list.

EU-US Trade and Technology Council holds third ministerial meeting

The third ministerial meeting of the EU-US Trade and Technology Council (TTC) was held on 5 December 2022 in Washington, DC, USA. During the meeting, the two parties:

  • Reiterated the importance of cooperating on trust and security in the ICT ecosystem and noted that the TTC Working Group on ICTS security and competitiveness plans to discuss transatlantic subsea cables’ connectivity and security, including alternative routes, such as the transatlantic route to connect Europe, North America and Asia.
  • Reiterated their commitment to developing and implementing trustworthy artificial intelligence (AI), building on the Joint Roadmap on Evaluation and Measurement Tools for Trustworthy AI and Risk Management.
  • Announced plans to launch a pilot project to assess the use of privacy-enhancing technologies and synthetic data in health and medicine.
  • Announced plans to establish an expert task force to strengthen research and development cooperation on quantum information science, develop common frameworks for assessing technology readiness, discuss intellectual property, and export control-related issues as appropriate, and work together to advance international standards.
  • Announced progress on increasing standards cooperation, for instance through the Strategic Standards Information mechanism meant to enable the EU and the USA to share information about international standardisation activities and react to common strategic issues.
  • Announced that the US Department of Commerce and the European Commission are entering into an administrative arrangement to implement an early warning mechanism to address and mitigate semiconductor supply chain disruptions in a cooperative way.
  • Stressed the importance of eliminating the use of arbitrary and unlawful surveillance to target human rights defenders, and expressed concerns over government-imposed internet shutdowns.
  • Announced plans to enhance transatlantic trade, for instance through developing joint best practices for the use of digital tools to simplify or reduce the cost of commercial actors’ interactions with the governments in relation to trade-related policy, legal requirements, or regulatory requirements.
  • Announced the launch of a Talent for Growth Task Force to facilitate exchanges of experiences on training and capacity building and serve as a catalyst for innovative skills policies.

These and other commitments and initiatives are outlined in the joint statement issued at the end of the meeting.