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Nikkei Asian Review
", thank you.
According to Nikkei, because China is both a technological competitor to the United States and a market coveted by American companies, chip manufacturers like Western Digital must move forward in this controversial business environment.
Semiconductors are essential for the iPhones and Teslas that consumers crave, as well as the advanced radars and precision-guided weapons the military needs. Yet U.S. pressure to limit China’s access to U.S. supply chains shows no sign of abating under President Joe Biden.
In a recent interview with Nikkei, Western Digital CEO David Goeckeler said that governments around the world have gradually adapted to the importance of semiconductors, but it is not easy to decouple the US chip industry from China or any market.
In semiconductors, “you want to be in the global market” and “use that scale to reinvest in R&D,” Goeckeler said.
“That’s how you keep going,” he said. “So you want to be careful not to limit the market you serve.”
China is the world's second-largest economy and has such large technology groups, Alibaba Group Holding, Tencent Holdings and Huawei Technologies, as well as numerous smaller players, so the number doubles here. Goeckeler said Western Digital will take US technology export restrictions in stride.
China is "a very important market for us and one we will continue to pursue," said the former Cisco networking executive.
“Right now, we have some restrictions on where we can sell in China,” he said. “… The U.S. government has some rules about who we can and can’t sell to, and we’re going to follow those.”
Regarding the potential conflict between national security and the goals of running a multinational company, Western Digital's CEO said technology makes life better for everyone. He added: "So I think it's very important, but there are also extremely important national security issues."
Western Digital hopes it can address national security concerns “without bifurcating the technology roadmap that we’re driving, but it’s a complex environment,” he also said.
The Biden administration made it clear at a summit with Asian leaders that securing American chip technology is a top priority.
Biden and Japanese Prime Minister Yoshihide Suga
agreed
in
April that the United States and Japan would "form an alliance on sensitive supply chains (including semiconductors) to promote and protect key technologies that are essential to their security and prosperity."
This month, South Korean President Moon Jae-in announced Samsung Electronics' plan to build a new $17 billion U.S. chip factory during a visit to the United States.
TSMC, the world's largest contract chipmaker, and U.S. chipmaker Intel also have their own plans for new U.S. fabs. That would mean all three of the world's biggest chipmakers would have new capacity on U.S. soil, furthering Washington's goal of moving technology supply chains domestically.
China, hungry for semiconductors and equally committed to self-reliance, also established Yangtze Memory Technologies Co., Ltd. The company, which only emerged in 2016, is considered a major force in China's creation of a domestic semiconductor industry.
“Business is hard,” Goeckeler said when asked about the prospects of these Chinese rivals catching up. “Technology is hard. It takes a lot of energy and technology to be in the technology business.”
Goeckeler went on to say, “And we all have to invest a lot of money to stay on the leading edge of the technology.” He said, “I certainly respect all of my competitors, but they have a “big mountain to climb, and the new entrants have a long way to go.”
Japan’s semiconductor industry has fallen from the commanding heights it once held in the 1980s. One of the few remaining Japanese leaders in chip technology is Kioxia. NAND flash memory was also invented by a Japanese company in the 1980s. The Western Digital-Kioxia partnership is based on NAND, which is an integral part of today’s digital economy, used in data centers as well as personal computers and other devices.
While demand for DRAM, another type of memory, is also growing, Goeckeler said, “I think it’s fair to say that NAND flash is the fastest growing segment of the entire semiconductor industry.
Western Digital sees Kioxia as "a great example of U.S.-Japan collaboration in the very important field of semiconductors," the CEO said.
Kioxia’s spinoff from Toshiba Corp. gives foreign investors majority ownership of the industrial conglomerate that’s one of Japan’s corporate crown jewels. But Kioxia’s engineering talent arguably remains an asset to Japan — and could hold strong appeal in the U.S.
Asked whether Western Digital had received requests from the U.S. government, Goeckeler said: “I’m not going to get into all the details of dealing with governments, but I think governments around the world are seeking to understand the semiconductor space better.”
The Wall Street Journal reported that Western Digital and U.S. peer Micron Technology Inc were both considering a deal for Kioxia. Goeckeler declined to comment on “rumors” about the company’s M&A strategy.
Since the advent of the pandemic, automakers have been forced to cut production due to insufficient chip supplies, which has attracted greater attention in the industry.
Goeckeler also said: "We have seen the semiconductor shortage and realized that we need to invest more in this area." He noted that the Biden administration "has been very supportive" of the industry.
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