Bloomberg: Biden’s semiconductor goals are simple-EEWORLD

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President Joe Biden’s blueprint for the U.S. semiconductor industry marks an ambitious effort to develop industrial policy for key sectors of the economy, but the strategy also requires more funding and global support for the United States to regain chip hegemony and stay ahead in the competition with China, Bloomberg reported.

The White House on Tuesday outlined a sweeping plan to secure supply chains for critical products from pharmaceuticals to chips, in part a response to the growing economic and political influence of its Asian rivals. Semiconductors — essential but extremely complex components in most modern devices — took center stage in a 250-page White House report that highlighted Beijing’s “ultimate goal of cyber sovereignty and establishing a first-mover advantage.”

The U.S. Senate passed a bill on the same day that provides $52 billion to support domestic chip manufacturing, expressing bipartisan support. The move is intended to reassure industry leaders such as Intel, Samsung Electronics and TSMC as they consider expanding investments in U.S. production capacity. It's a big commitment, but in an era when the cost of operating a single advanced wafer fab can exceed $10 billion, the money will go quickly.

Bloomberg said that China has made technological progress a major part of its 14th Five-Year Plan and pledged to invest $1.4 trillion over six years to ensure its leading position in areas such as chips, artificial intelligence and autonomous driving. South Korean companies such as Samsung and SK Hynix will also invest $450 billion in chip research and expansion over the next decade, while TSMC alone has invested $100 billion over the next three years.

“$50 billion is a good start, but this is an expensive industry and multiple regions have proposed large subsidies,” said Anne Hoecker, a partner at Bain & Co. The investment “provides more assurance for semi-finished product manufacturers to make large, multi-year investments.”

Biden has shown a willingness to break with America’s laissez-faire tradition, and given the government’s deep involvement in other countries, the computing semiconductor industry deserves a different approach. In his corner, he has powerful allies in countries that have leadership in different areas of the giant global chipmaking apparatus.

One of the goals outlined in the report is to work to attract more private investment from abroad and leverage U.S. diplomatic muscle. TSMC and Samsung are currently negotiating to secure significant incentives to build advanced chip factories in the U.S., which would immediately boost U.S. semiconductor technology and production capacity.

The White House also called for effective multilateral export controls to "protect U.S. national security interests by limiting the advanced semiconductor capabilities of relevant countries."

The Netherlands is home to ASML Holding NV, which has a virtual monopoly on the market for advanced extreme ultraviolet lithography equipment — essential for making the most advanced chips at 5 nanometers and above. Because the Dutch government has not renewed export licenses for Chinese customers, it cannot ship any EUV systems to China. Meanwhile, Japan's Tokyo Electron Ltd. and Nikon Corp. supply advanced equipment to first-tier chipmakers such as Intel Corp. and Chinese companies.

Biden’s plan partly reflects growing global concerns. The world’s heavy reliance on a handful of key Asian chip suppliers, such as TSMC, was exposed this year after a global supply crisis idled factories at several U.S. automakers, threatening to cut $110 billion in sales. The European Commission laid out plans in May to diversify its supply chain and conducts regular industry reviews to address its lack of industrial independence in strategic sectors, including semiconductors.

Bloomberg also played up the West's usual rhetoric - China poses a threat. The report pointed out that China is at least several generations behind Taiwan and the United States in terms of chip design complexity. But China's record as the world's factory and its massive data may allow it to gain a foothold in certain key areas, such as the labor-intensive but vital work of assembling and packaging semiconductors, or the young field of artificial intelligence chips.

Bain's Hoecker said advanced chip packaging offers China an opportunity to improve performance by combining multiple chips in a single package, but it is ultimately not a substitute for basic semiconductor development.

"For the past decade, China has been chasing the rest of the world. But as chip performance gains today are significantly lower than in previous years, China will surely be able to narrow the gap with the leaders," said Wu Hanming, a member of the Chinese Academy of Engineering.

In the short term, Biden’s blueprint promises to be a shot in the arm. The Semiconductor Industry Association and Oxford Economics estimate that a $50 billion federal program to incentivize domestic semiconductor manufacturing would add $24.6 billion to the U.S. economy annually. It would generate 280,000 permanent jobs, 42,000 of which would be directly employed in the semiconductor industry.

“The U.S.’ semiconductor goals are simpler than China’s. It just needs to get back on track with chip manufacturing, and it’s already doing a good job of that,” said Dan Wang, a technology analyst at Gavekal Dragonomics. “The challenge for China is not only to master chip manufacturing, but also to invent the equipment — some of the most sophisticated in the world — to produce them.”

Keywords：semiconductor Reference address：Bloomberg: Biden’s semiconductor goals are simple

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