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Industry watch: What role can Taiwan play in semiconductor supply chain revamp?

Colley Hwang, DIGITIMES, Taipei 0

During a recent radio interview I was asked to comment on the US government's request for customer information from leading semiconductor companies. We are all aware that Americans are very good at asking questions, and Taiwanese and Koreans know well how to answer the questions. We can feedback properly on all product specifications defined by the Americans. But this time the Americans may be asking the wrong questions and Taiwanese and Koreans are likely to get them wrong or even give irrelevant answers.

Take wafer foundry as an example. Manufacturers develop their core capabilities through the three dimensions: the node process technology, construction of ecosystems, and customer engagement. Tasks behind the three dimensions are how to professionally fit orders from several hundred customers in the different processes of each fab to maximize their benefits. The job to develop an optimal queue for orders is as professional and intricate as the notebook EMS's bidding for businesses on the Internet. The professional specifics are esoteric and beyond understanding of a layman. Moreover, it may not be in line with the original intention of the US government.

In other words, the US may be asking the wrong questions. The global media community may be also getting them wrong. Many commentators sound like they hit the nail on the head. But they do not comprehend the significant details of the questions, let alone arrangement of order fulfillment by the wafer foundries.

The source of this incident should date back to February 2021, when the Biden administration asserted on the White House website: "The United States needs to meaningfully regain control over the four major sectors, semiconductors, car batteries, rare earth elements, and pharmaceuticals." The part about semiconductors targets Taiwan's wafer foundry industry and South Korea's memory industry.

The US-led supply chain restructuring is bound to have a profound impact on the world's supply and demand structure. When the Big Brother was asking, the Taiwanese and Koreans responded in no time. The national policy of the US is to define standards, vision statements and development routes for technology and knowledge by combining advanced technology and the overwhelming force of national defense.

If it is simply to construct a fab in the US, Taiwan would be presenting its expertise. If Taiwan is not yet ready, or there isn't a national consensus, enterprises would be ill at ease and be simply making sacrifices. Apart from that, is there any room for Taiwan to contribute ideas to US policymaking?

I believe both the government of Taiwan and private think tanks have a role to play. If Taiwan's position in the global technology industry becomes more and more crucial, can Taiwan and the US co-develop a platform to explore the common values of their science and technology policies through think tanks? As an international media with an English outlet, we believe that the US will also get the latest insights through DIGITIMES Asia's English-language website. With Taiwan's pivotal position in the semiconductor industry, this is the right moment for Taiwan to have a say. The government of Taiwan should think about how to transform "crises" at this moment into opportunities for international participation.

Moreover, what can Taiwan retain once wafer foundries are dispersed to several important regions worldwide? What sectors can or should be kept in Taiwan? Taiwan has the most efficient fabs. Multiple giga fabs contributing monthly output of more than 100,000 units will stay. To compete in the international race, talent, resources and equipment arrangements are difficult jobs. Is Taiwan ready? I agree with what Taiwanese always say: The semiconductor industry is the "guardian mountains" of the country. Is the government willing to let a third party provide its insights? Can we have the other options?

Credit: DIGITIMES

(Editor's note: This is part of a series of analysis of Taiwan's role in the global ICT industry.)

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.
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