A little over a year ago, the U.S. government proposed forming the so-called Chip 4 alliance comprising the USA, Japan, South Korea, and Taiwan to secure the global semiconductor supply chain, coordinate policies, subsidies, and joint research and development (R&D) projects. But even a year after the initiative was announced, the countries could not agree on a preliminary meeting agenda. Financial Times (opens in new tab) reports that potential partners have way too many concerns on the matter.
Japan, South Korea, and Taiwan governments traditionally have good relationships with the U.S., and companies from these countries work closely with their partners from America. But South Korean companies like Samsung do not want to share their trade secrets with Taiwanese peers like Taiwan Semiconductor Manufacturing Co. (TSMC). In addition, South Korea has political tensions with Japan, nobody wants to support the R&D efforts of U.S.-based Intel and Micron, and everyone is concerned about China’s response to the new coalition.
Companies from Japan produce tonnes of 3D NAND that are used in China, as well as various high-purity raw materials sold to chip and LCD producers in South Korea and Taiwan. Japan is struggling to revive its semiconductor industry, so the government attracted TSMC to the country and is building up an R&D center to prep scientists and engineers. Yet it is doubtful that Kioxia would like to develop even fundamental technologies with Samsung or SK Hynix since it will have to share specific know-how with its rivals.
In South Korea, Samsung Foundry is concerned that its technologies like materials or transistor designs could be used by rivals TSMC or Intel, which would instead not share its knowledge with the competition. Meanwhile, Samsung Memory and SK Hynix are hardly interested in boosting Japanese or Taiwanese computer memory industries with their research capabilities. Furthermore, they also compete against each other fiercely.
Taiwanese logic and memory chip producers are significantly ahead of their rivals from mainland China (SMIC, Hua Hong, Yangtze Memory, etc.). Still, they procure loads of raw materials from China, and they will barely be happy if the Chip 4 alliance prohibits them from doing it on supply chain security grounds.
But the biggest concern for everyone seems to be China. On the one hand, Japanese companies like Tokyo Electron and Nikon sell boatloads of tools used for chip production to China. Teaming up with the U.S. to develop next-generation chip production technologies could be bad for their business (as the U.S. wants to limit exports of leading chipmaking equipment to Tianxia). On the other hand, Samsung and SK Hynix have fairly advanced memory fabs in China. They are concerned whether their potential next-generation process technologies that rely on jointly researched fundamental breakthroughs could be applied at these fabs.
“Our stance is that, for the Chip 4 alliance, [the South Korean government] should seek understanding from China first and then negotiate with the U.S.,” said Kye Hyun Kyung, the head of Samsung Electronics Device Solutions Division, overseeing global operations of the Memory, System LSI and Foundry business units, in a conversation with Financial Times. “We are not trying to exploit the US-China conflict, but to find a win-win solution.”
In general, while setting some ground rules for the supply chain, specific policies concerning investments, subsidies to manufacturers, and joint R&D projects may make sense on paper, actual chipmakers may not be as interested in this as the U.S. government. At least, it seems so for now.