The United States embarks on a semiconductor offensive with the Chip 4 project

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Bringing together the three key countries in the ultra-sensitive field of semiconductors. Here is the American ambition of Project Chip 4. The plan aims to forge a lasting alliance with Taiwan, South Korea and Japan while excluding China as much as possible. This desire is part of a tense economic context, while the consequences of the sudden increase in demand for semiconductors during the pandemic are still being felt.

52.7 billion dollars is the jackpot offered by Washington so that companies – American and foreign – invest in the production of semiconductors in the United States. The only condition is not to invest in China for the next ten years. A plan included in the Chip and Science Act, law signed on August 9 by Joe Biden, sunglasses on his nose, in the gardens of the White House.

The other part of the American offensive is the Chip 4 alliance project, planned to bring together four of the five key players in the production of these products that have become vital to the economic functioning of our planet. Computers, mobile phones, washing machines, all the distribution our electronic devices are conditioned to the proper functioning of the semiconductor market.

Meeting of key players

Taiwan and South Korea are specialized in the manufacture of memory chips and the construction of high quality semiconductors, for Japan it is the contribution of key materials. While the United States provides the equipment and infrastructure. recalls Park Sang-in, a specialist in chaebols (the name given to large South Korean conglomerates) and professor of economics at Seoul National University. “It is not surprising to see these countries which all have considerable advantages in the semiconductor market agreeing to secure supply chains, what is new is to want to exclude a player “.

Through the voice of Shu Jueting, spokesman for the Ministry of Commerce, Beijing, has already strongly expressed his disagreement: “ The stability of industry and supply chains is a global issue that concerns us all. China believes that whatever the nature of any agreement on the issue, it should be open and inclusive, rather than discriminatory and exclusive. But it is in Seoul, nearly 7,000 km from Washington and just under 1,000 from Beijing, that the tremors of the Biden administration’s project should be the strongest. Because if the prospects for development in the United States seem to please the two South Korean giants in the sector, Samsung Electronics and SK Hynix, it is difficult to completely abandon the Chinese neighbor..

The South Korean company SK Hynix is ​​one of the leaders in the semiconductor industry. © JUNG YEON-JE/AFP

From a technological point of view, there is a strong dependence on the United States and there is a very solid historical alliance between our countries. But China is our main economic partner and the world’s largest consumer of memory chips, the specialty of the two large South Korean companies. points out Oh Jeon-seok, professor of economics at Sookmyung University in Seoul. ” If we [la Corée du Sud] loses China, we lose a third of our semiconductor exports. Add to this that the two major South Korean companies in the sector concentrate 40% of their chip production in China and the equation seems almost insoluble for Seoul.

The question of Taiwan’s participation

But yet, Washington is continuing its initiative so that the balance tilts completely in its favor. It must be said that the massive investment of Samsung Electronics in a new factory in Texas ($17 billion) and the promise of the president of SK Hynix to Joe Biden to bet $22 billion in the United States, can encourage optimism. Especially since Beijing’s economic retaliation against South Korea in 2017 for the installation of the THAAD anti-missile defense system, Samsung has reduced its Chinese investments. Chaebol numbers in the Middle Kingdom have fallen by 70% in the past nine years. “It’s a complicated situation for Beijing, which has invested heavily in Taiwanese and South Korean companies for the construction of semiconductors,” recalls Park Sang-in. China needs South Korea, which accounted for 13% of its chip imports in 2021.

The possible participation of Taiwan obviously makes the question more inflammable. In addition to the territorial dispute between the island de facto independent and the continent, TSMC, the world leader for latest generation chips, is Taiwanese. The latter, one of Apple’s main suppliers, has factories in Shanghai and Nanjing. For Beijing, time is running out as its companies are significantly behind Taiwanese and South Korean competitors in the race to produce the latest generation 3 or 5 nanometer chips. For its part, SMIC, the Chinese giant in the sector, would just manage to reach seven nanometers. It is difficult in these conditions to imagine Beijing not responding severely to an attempt to exclude a supply chain vital to its economy.

The Taiwanese flag next to that of TSMC at the technology group's headquarters in Hsinchu, Taiwan, October 5, 2017.
The Taiwanese flag next to that of TSMC at the technology group’s headquarters in Hsinchu, Taiwan, October 5, 2017. © Eason Lam/REUTERS

►Also listen: Grand Reportage – Taiwan, coveted champion of electronic chips

Unrealistic ambition?

So how do you completely isolate the main chip consumer? How to decouple China from a supply chain essential to the global economy? Is this feasible even if the sector experiences a global shortage caused by the pandemic? So many questions that remain unanswered until the clear contours of an agreement between the four countries see the light of day.

Especially since for Park Sang-in, ” if the United States has its own interests in being very aggressive against China, this could lead to significant losses for South Korea, Japan and Taiwan. The economist imagines that the three countries will seek to influence the United States to find an acceptable solution. For his part, Oh Jeon-seok believes that it will be necessary to reassure Beijing. ” First, South Korea absolutely must participate in the Chip 4 coalition and then the challenge will be to persuade China that this is not a complete exclusion from supply chains. “A mission that seems far from won in advance in the current circumstances.

For now, Seoul is playing for time. This is evidenced by the declaration of the South Korean Foreign Minister, Park Jin, during a meeting with his Chinese counterpart between August 8 and 10, estimating that a possible South Korean participation ” would not seek to exclude or target any particular country. If a preliminary meeting should take place soon between the United States and its three potential partners, the Taiwanese Minister of Economy this Friday claimed not to have been informed of the holding of a meeting. A file far from having found its epilogue risks fluctuating according to economic and geopolitical tensions.

►Also read: Decryption – Semiconductors, the new oil of the economy


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