Wednesday, 27 October 2021 10:45

US demand for chip firm data aimed at benefitting Intel: claim Featured

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US demand for chip firm data aimed at benefitting Intel: claim Courtesy Taiwan Semiconductor Manufacturing Company

ANALYSIS An American demand that semiconductor manufacturers provide internal information about chip inventories, orders and sales data appears to be aimed at helping Intel which has fallen well behind.

The demand was made last month by US Secretary of Commerce Gina Raimondo, during a semiconductor summit hosted by the White House.

The rationale for seeking this information was to identify the bottlenecks causing the current semiconductor shortage and help ease kinks, if any, in the supply chain.

Chipmakers were given 45 days from 23 September to respond. Raimondo hinted at strong-arming the companies if they did not obey, telling Reuters the US had "other tools in our tool box that require them to give us data. I hope we don’t get there. But if we have to we will".

George Koo, a long-time adviser on China strategies and business operations for a global advisory services firm, said in an op-ed in Asia Times, that such data was a corporate secret.

He pointed out that Taiwan Semiconductor Manufacturing Company and Samsung, the leaders when it came to chip fabrication, were very likely to yield to US pressure.

TSMC has kept pace with development, investing the huge sums needed to bring in the latest manufacturing equipment and has served as a designer of proprietary chips for companies like Apple, Nvidia and Huawei.

"TSMC’s strategy was to serve as everybody’s foundry and offer semiconductor fabrication as a service for a fee," said Koo. "To be credible, it promised strict confidentiality, to protect the client’s trade secrets and never to make its own devices to compete with its customers."

He said this was an arrangement that suited everyone until the US imposed restrictions on Huawei, preventing it from getting its chips fabricated by TSMC.

"[Donald] Trump’s successor Joe Biden has gone a step further by becoming the Godfather of the worldwide semiconductor industry and made an offer the foundries cannot refuse: Turn over your confidential files to the US Department of Commerce or else we will stop you from operating," Koo wrote.

Complying with what he described as "strong-armed unethical outrage" would diminish TSMC's position in the industry, he claimed.

"If TSMC relocates some of its facilities to the US to please Washington, it will face the same set of comparative disadvantages of having to operate in America that caused Intel to fall generations behind," Koo explained.

He said cutting off China would force it to accelerate the development of indigenous semiconductor technology. "It will be stymied for an interim period but in the end, China will have its own semiconductor production and market," Koo added.

As TSMC's standing was diminished, staff would leave and go elsewhere: some to the US, but most would end up in China "where they will not be penalised for language or cultural disconnect".

Koo said there was no certainty that Intel could catch up with TSMC even with Washington’s assistance. "Besides policy and financial subsidy, doing so will also require people with motivation and skillsets. In that respect, China far outnumbers the US," he pointed out.

Morris Chang, the man behind TSMC, has said it may be impossible to replicate what has been done in Taiwan in other parts of the world, including the US.

"Washington seems to think it is playing a win-lose game. It doesn’t seem to appreciate that by cutting China off, American companies will be deprived of access to the largest market in the world," said Koo.

"When the world’s semiconductor market is split into two, the halves will be less than the whole. Thus a virtuous circle will become dysfunctional, and everybody will lose."

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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