Taiwan Semiconductor Veteran Wary Of ‘Anti-China’ Chip Pact

Matthew Broersma,

Taiwan semiconductor industry veteran warns country could be ‘hurt’ if it joins four-nation pact that looks to block China’s chip progress

A Taiwanese semiconductor industry veteran has warned that the country’s involvement in a US-led chip pact meant to cripple the mainland’s role in the chip supply chain could result in problems for countries that participate.

Charles Kau told the Taiwan-based Economic Daily News last week that Taiwan and South Korea could be “significantly impacted” if they join the so-called Chip 4 Alliance, which he described as being designed to deny mainland China access to advanced chip technologies and equipment.

The two countries would be likely to lose access to the mainland China market, he said.

Samsung executives at the production line of Samsung Electronics Hwaseong Campus. Image: Samsung

Chip alliance

The Chip 4 group is reportedly planned to include Japan, South Korea, Taiwan and the US.

Kau’s remarks come as the US looks to institute a range of measures to block the advances of mainland China in the semiconductor industry, without worsening a two-year-old worldwide chip shortage.

Kau, 69, worked at Intel and Taiwan Semiconductor Manufacturing Co (TSMC) before helping to create Nanya Technology in 1995, which became Taiwan’s biggest manufacturer of DRAM memory chips.

Following his retirement from Nanya, in 2015 he joined mainland government-backed Tsinghua Unigroup, becoming the first Taiwanese memory chip industry executive to join a mainland firm, working there until 2020.

Backlash

Kau said memory companies such as South Korea’s Samsung Electronics and SK Hynix, which have already built memory chip plants in mainland China, could be barred from upgrading the sites, meaning they would quickly become outdated.

“Taiwan would unlikely be a winner and may get hurt as well [by the alliance],” Kau reportedly said.

Taiwanese business have many clients on the mainland and the alliance could force them to give them up, he said.

“Taiwan has to think about this, can it really work with the US to go against China? Does Taiwan really need to join Chip 4, and what Taiwan can contribute after it joins? Can it really stop China’s progress?” he said.

Chips Act

South Korean foreign minister Park Jin said last week the country expects to participate in a preliminary meeting of the four countries but did not elaborate on what would be discussed.

As tensions with China rise US president Joe Biden earlier this month signed into law the Chips and Science Act, which sets aside $53 billion (£45bn) to fund domestic semiconductor production.

Companies receiving the subsidies are banned from expanding production in mainand China beyond “legacy semiconductors”, defined as using 28-nanometre processes or older, for 10 years.