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Semiconductor Wars: A Busy Week For Taiwan, US, China, Netherlands, Japan And India

  • Taiwan’s TSMC, wishes to be the production company for everyone. But in the era of chip wars, that possibility is becoming unlikely, thus furthering the importance of Tsai’s trip. 

Tushar GuptaApr 04, 2023, 12:31 PM | Updated 12:31 PM IST
Semiconductor chip (Representative image).

Semiconductor chip (Representative image).


The last week kept six countries, across three continents, on their toes as the chip wars moved forward. It would not be an exaggeration to say that since the introduction of the CHIPS and Science Act last year by the White House, there has been no week as instrumental as the last one.

It began with the visit of the Taiwanese President to the United States of America. Before she departed, President Tsai Ing-wen was warned by the Communist Party of China, labeling her visit as a provocation. 

The focus, apart from the looming Chinese threat, was on semiconductor manufacturing.

Under the recent rules introduced in the Creating Helpful Incentives To Produce Semiconductors (CHIPS) and Science Act, companies availing the benefits under the US programme, cannot expand operations in other countries, particularly Russia and China.

Mark Liu, chairman of the Taiwan Semiconductor Manufacturing Company Limited (TSMC), a week later, remarked that the restrictions being added under the CHIPS act were unacceptable.

While TSMC is building a plant in Arizona, to leave China would be a difficult prospect given it hosts 10 per cent of its production capacity. 

For Taiwan, the problem is twofold. Working exclusively with the Americans, especially on advanced technologies, would invite the ire of the Chinese government in the Taiwan strait.

However, to play a balancing act, where the operations in China continue to remain focused on older technologies, would not necessarily cater their interests.

Put simply, Taiwan’s TSMC, wishes to be the production company for everyone. But in the era of chip wars, that possibility is becoming unlikely, thus furthering the importance of Tsai’s trip. 

Then the Dutch got involved. Quite in the early months of the pandemic, the wolf warriors representing the Chinese Communist Party, warned the European Union of peril if they followed the export restrictions introduced by the White House.

However, Netherlands, which is only the third country, apart from Japan and the US, to have an advanced lithography machine.

To put things in perspective, shipping this lithography machine requires three Boeing-747s, 40 shipping containers, and 20 trucks; and is made up of over 457,000 parts. 

Lithography machines are one of the most important components in the semiconductor manufacturing process.

Even if the Chinese were able to develop an indigenous EUV lithography machine, similar to the one by ASML with over 457,000 unique components, they’d have exhausted billions of dollars, lost years worth of production, and chances are, by that time, new advanced technologies would be in play.


Japan announced that it had fulfilled its part of a three-way agreement with the US and Netherlands, to limit China's access to equipment for advanced semiconductor production.

The export restrictions would restrict the imports of around two-dozen critical chip making equipment.

The announcement mattered because only three countries, US (Applied Materials), Netherlands (ASML) and Japan (Tokyo Electron) dominated the equipment supply chain for manufacturing of advanced chips. China was blocked by all. 

However, hoping against hope, China’s YMTC (Yangtze Memory Technologies Corp) announced that it was looking to make a comeback. In 2022, YMTC was to supply 3D Nand memory chips to Apple.

The latter, however, had to reassess the decision, given the pressure from the senators, and also because of YMTC’s closeness to the Chinese government.

To dodge the export controls, YMTC would be using old equipment from ASML that is not a part of the restrictions. So, what happens to the advanced chips manufacturers in China, one wonders?

The final throw of the spanner in the works came from India at the World Trade Organisation (WTO). Questioning US’ CHIPS Act, in rare diplomatic alignment with the Chinese, India asked about the level-playing field for manufacturers from the developing world.

India’s concerns, however, were not without merit. Given the curb on expansion by companies availing the tax benefits under the CHIPS Act, the White House, at any moment, can restrict the manufacturing ambitions of any nation.

Put simply, to isolate China, they risk punishing the entire world. 

As the chip wars intensify, the countries, especially in the developing world, will have to navigate a new bipolar global order.

While Indians may have objections against the CHIPS Act, the ideal way to go forward would be to integrate chip supply chains into the long-term goals of the QUAD.

Unlike most geopolitical equations, this one will be settled by the countries that can control the hardware and software for advanced chip making equipment, and can also pump in infinite monetary resources. The US can do both while China can do only one. 

The royal rumble is only getting started. 

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