Geopolitical competition has turned the semiconductor industry into a key sector being contested globally. As a US-China technology dispute continues to heat up, Washington is implementing a “small yard and high wall” technology control strategy in an attempt to slow China’s development of semiconductors, and to prevent high-end artificial intelligence (AI) chips from being used for Chinese military purposes. On the other hand, Beijing is trying to break through that wall, using talent mobility and AI as shortcuts.
China’s semiconductor industry faces four major bottlenecks: semiconductor equipment for advanced manufacturing processes, electronic design automation (EDA) software for semiconductor design, high-end AI chips and semiconductor talent.
In particular, the US’ restriction on exports of extreme ultraviolet equipment has made it more difficult for China to obtain technology more advanced than the 7-nanometer manufacturing process, which has become a key factor in constraining its development.
By adopting the technology of optical proximity correction, China has attempted to improve the low yield rate of deep ultraviolet multiple exposure processes caused by the optical proximity effect. It has also utilized AI to enhance the accuracy and efficiency of optical proximity correction in an attempt to break through the technological bottleneck and the US blockade.
The US “small yard and high wall” blockade focuses on the extreme ultraviolet equipment and deep ultraviolet lithography equipment, as well as high-end AI chips and EDA software.
It also prohibits US citizens from assisting China in the development of high-end chips. China has responded to the US controls in a roundabout way, through pre-stocking, shell companies and even smuggling.
Chinese start-up SEIDA has made significant progress in optical proximity correction through the transfer of core EDA talent from Siemens, demonstrating that in the face of US bans, the outflow of talent would result in a spillover of technology to China.
Taiwan must be careful in its response to this situation to ensure that it can maintain a leading position in the complex US-China-Taiwan “silicon triangle.”
The government should not only develop a list of national core and critical technologies to bolster its mastery of semiconductor technology, but also cooperate with international allies in a multilateral export control system to prevent the outflow of advanced chip technology to China, as well as the illegal transfer or mobility of key semiconductor equipment, technology and talent, to protect core technologies and outstanding semiconductor talent.
Recently, the EU has pushed for “de-risking” its economy from China and strengthening export controls to prevent sensitive dual-use technologies from being leaked to China through overseas investments. Meanwhile, Taiwan should enhance the cultivation and retention of semiconductor talent, bolster independent innovation in IC design and continue to develop emerging semiconductor technologies such as silicon photonics, small chip packaging and AI applications, to ensure the competitiveness of Taiwan’s semiconductor industry, and to push the industry to new peaks.
Liao Ming-hui is an assistant researcher at the Chung-Hua Institution for Economic Research.
Translated by Eddy Chang
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