A proposed US-led chip alliance is aimed not only at boosting production, but is also seen as a US move to counter China’s growing influence in the global chip market, Chung-Hua Institution for Economic Research economist Roy Lee (李淳) said on Sunday.
The Chip 4 alliance is a proposed alliance of semiconductor powerhouses in the US, Taiwan, Japan and South Korea, to enhance cooperation on the design and production of sophisticated semiconductors.
With a preliminary meeting of the alliance reportedly expected to take place at the end of this month or early next month, the Ministry of Economic Affairs has proposed continuing its collaboration with the US on supply chain resilience and industrial cooperation, as well as semiconductor supply security.
Photo: CNA
Lee, deputy executive director of the Taiwan WTO & RTA Center at the institute, said that the ministry’s proposal to cooperate on supply chain security was made with Taiwan’s needs in mind.
Although Taiwan is strong in semiconductor foundries, it relies on the US and Japan for the supply of equipment and materials, he said, adding that there are areas where the three nations are reliant on each other.
If the US aims only to bring semiconductor production back home, it only needs to negotiate with individual nations, Lee said.
As such, it is believed that the US might want to work with Taiwan, Japan and South Korea to impose controls on semiconductor exports and technology outflows, forming an anti-China group to exclude Beijing from global semiconductor supply chains, he said.
However, the US proposal might put a certain amount of pressure on South Korea due to its economic ties with China, its biggest trade partner, so Washington wants to talk to Seoul to see whether it plans to join Chip 4, Lee said.
China, including Hong Kong, accounts for almost 60 percent of the exports of South Korean chips, according to a report in the Korea Herald, South Korea’s largest English-language daily, which presents a dilemma for Seoul in having to choose between US technology and the Chinese market, he said.
On the pros and cons of Taiwan’s participation in the alliance, Lee said that Taiwan should participate, given the close semiconductor links between Taiwan and the US, especially regarding supply chains and intelligence gathering.
The US Congress last month passed the CHIPS Act of 2022 to strengthen domestic semiconductor manufacturing, design and research.
In addition, Washington has been promoting the Chip 4 alliance and announced a ban on exports of advanced electronic design automation software tools for 3-nanometer and other advanced chips to China in an effort to curb the development of China’s chip industry.
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