Over the past few months, the Biden administration has been fully motivated by "supply chain security." In late September, the U.S. Department of Commerce, in the name of solving the chip shortage and curbing chip panic, required more than 20 global chip companies, including TSMC and Samsung, to provide chip supply chain data to them, with a deadline of November 8.
After a series of struggles, the companies finally gave in and submitted data before the deadline set by the United States, which touched all aspects of global chip manufacturing. What impact will the Blatant "extortion" of the United States have on chip manufacturing companies in the future? Is this really just about securing the chip supply chain?
The origin of the storm
All this goes back to the end of 2020, when the shortage of global chip supply chains began to ferment. On December 6, 2020, according to domestic media reports, Volkswagen China faced the risk of production interruption due to a shortage of chips for key components. On January 24, 2021, Taiwan media revealed that the governments of Germany, Japan, the United States and other countries requested the Taiwan authorities to provide assistance such as semiconductor production increase.
TSMC, the world's largest semiconductor foundry.
The economic sector in charge of manufacturing in Taiwan has demanded that companies with strong semiconductor production capacity take measures such as increasing production, urging TSMC, the world's largest semiconductor foundry, and UMC, which ranks fourth in the world, to accelerate measures to increase automotive semiconductor production. According to the Nikkei Commentary, "This confirms the tension between the supply and demand of semiconductors brought about by the combination of US sanctions on China and the rapid recovery of the auto market." ”
The causes of this round of global chip supply chain shortages are complex. Overall, the previous US administration sanctioned technology companies in China in the name of "national security", undermining the "tight balance" of the global chip supply chain under the competition of free market. As a result, the supply of chips can not keep up with demand, prices rise in response, and enterprises and speculative capital in various countries are moving to buy and hoard chips everywhere.
On the one hand, in order to obtain enough chips, apple and other downstream companies have to repeated orders to upstream suppliers, and the purchase of 1 chip often requires 3 times the order. On the other hand, the chip shortage also spreads from the upstream to the various tributaries in the middle and lower reaches, which in turn affects the production of all intermediate products that need such chips, and the resulting market panic further spreads to the procurement that was not in short supply.
In order to maintain production, downstream enterprises have followed the trend and procured chips needed for production in the next few months or even years at one time, and the run effect is quite serious. Chip shortage gradually affected LCD screens, remote controls, network cards, etc., and then affected almost all consumer electronic products such as mobile phones, computers, digital cameras, etc., and the shortage of products continued to burn to the production lines of its associated industries. According to statistics, as of April this year, 169 industries around the world have been hit by chip shortages to some extent, and even industries such as steel, beer, soap, and concrete that at first glance have nothing to do with chips have also been affected.
To make matters worse, in June 2021, the U.S. Department of Commerce issued new regulations on chip export controls, prohibiting all U.S. companies from selling chips with processes under 28 nanometers, making advanced process chips below 28 nanometers also beginning to be in short supply. Its impact on global supply chains is likely to take another 1-2 years to fully manifest itself.
[Note: The original shortage of chip processes is mostly above 28 nanometers, which is called mature process chips.] 】
"Data blackmail", limited to 45 days
In the face of the chaotic situation caused by the shortage of chip supply chains, the US government began to "rush to the hospital". In late September, U.S. Commerce Secretary Gina Raymondo said in a speech: "There are allegations that certain consumer companies have bought 2-3 times the products they need and hoarded them, according to US media reports. ”
However, the statement of the US Department of Commerce has not received a positive response from chip companies in various countries. On September 24, Raymondo said again that the Biden administration was considering invoking the Cold War-era Defense Production Act to force companies in the semiconductor supply chain to provide chip inventory and sales information to the Commerce Department within 45 days to "alleviate the bottlenecks that lead to idle U.S. auto production and shortages of consumer electronics, and identify possible hoarding."
As soon as this statement came out, it immediately caused a global uproar. TSMC's attitude began to waver.
On September 30 and October 6, TSMC twice stressed that it would not disclose sensitive information. However, on October 22, TSMC claimed that it would "hand over the data on time"; three days later, it changed its mouth again, saying that it would not 'fully hand over the data' according to the requirements of the United States, and would continue to protect customer confidentiality as always." At that time, there were also Korean companies such as Samsung and SK Hynix.
Samsung Electronics showcases wafers for making chips.
Samsung, like TSMC, has mastered the technology to produce chips under 10 nanometers, and it is said that the current market share is about 8%. According to South Korean media reports, Samsung had been "in a dilemma for more than a month" before the US Department of Commerce announced the relevant measures.
On the one hand, for Korean companies, the Chinese market accounts for a considerable part of the profits of Korean companies and is difficult to give up. As a result, they will inevitably protect customers' trade secret data, and once Samsung is deemed "unreliable," its business orders will shrink. On the other hand, South Korean companies cannot afford to be included in the Entity List by the U.S. Department of Commerce. The manufacturing equipment and software needed to produce chips come from U.S. companies, and if they are included in the entity list, they will face extinction.
On October 6, South Korea's Ministry of Trade issued a statement expressing concern about the United States requiring South Korean chipmakers operating in the United States to disclose confidential supply chain-related information and saying it was ready to help defend the interests of the two major local chipmakers. On October 13, South Korea's ambassador to the United States made it clear that South Korean companies would not easily provide highly classified information. But even so, due to the larger framework of the U.S.-South Korea alliance, it is difficult for South Korea to say "no" to the U.S. government (as evidenced by subsequent developments).
In addition, there are also many other national enterprises in the US Department of Commerce's limited-time action, including the German manufacturer Infineon and Israel's Tal Semiconductor, but the governments and enterprises of relevant countries and regions are silent about this. Some domestic media quoted industry insiders as saying that "the most important reason is the fear of retaliation by the United States." This fear of "shooting the head bird" is exactly the effect that the United States wants this action.
Finally, on the deadline (November 8), companies "stepped on the point" to submit relevant data. On Nov. 29, Raimondo said more than 150 companies from around the world had submitted data to the U.S. Department of Commerce, saying it exceeded her and Commerce Department expectations.
The "big politics" behind small chips
The chip "data blackmail" incident shows that the United States will never let its global chip industry chain be threatened by any threat, even if it is a potential or possible threat.
In the 1970s, the United States built a global semiconductor industry chain with international cooperation, outsourcing manufacturing equipment, basic materials and production to South Korea, Taiwan and Europe. It is true that today's United States is no longer manufacturing most of the world's chips, but its absolute control over the supply chain and industrial chain has not been weakened.
The data shows that in the global chip foundry market, TSMC's market share accounts for 54%, Samsung's share is as high as 18%, and the United States accounts for 0% of semiconductor manufacturing in technology nodes below 10 nanometers. But that doesn't mean the U.S. has lost control of the global chip industry. After all, the key sources of chip manufacturing industrial equipment are all in the hands of the United States.
Although the latest extreme ultraviolet lithography machine is manufactured by the Dutch company ASML, the light source used for its lithography comes from the United States.
Although the latest extreme ultraviolet lithography machine is manufactured by the Dutch company ASML, the light source used for its lithography comes from the United States; the lithography machine contains a huge lens set with a diameter of more than 1 meter, and its ultra-high precision polishing and polishing must also use equipment and software from the United States; the electronic design automation (EDA) software used to design tens of billions of transistor circuit connections on the chip cannot be operated without the annual authorization of the American company.
Seeing this, it is not difficult to understand why electronic giants such as TSMC and Samsung must also be soft in front of the United States - their technology edifice is built on the foundation laid by the United States.
Overtones
Chip manufacturing is divided into two parts: mature process and advanced process. At present, the global chip shortage is mainly concentrated in mature process chips above 28 nanometers. What causes Volkswagen and Ford to face the risk of production interruption is ESP chip, ECM chip and MLCC chip, and the general process is about 40 nanometers. However, in the list of major companies consulted by the US Department of Commerce, we can hardly find any low-end chip manufacturers, but mainly advanced process chip manufacturers such as TSMC, Samsung, and Intel.
Chip manufacturing is divided into two parts: mature process and advanced process.
The combination of the two shows that the SO-called measures of the US government to solve the global "core shortage" are actually "drunkards do not mean to drink."
This is also evident in the types of chip data requested on the U.S. Department of Commerce's website.
According to the information on the website of the US Department of Commerce, the data requested by the US government includes 26 aspects such as corporate order shipments, inventory, customer information, technical nodes, production plans, yield rates, and material and equipment procurement in the past 3 years. Three years ago, it was precisely when the United States hit Chinese technology companies with its entity list.
At this time, the US Department of Commerce is forcing relevant enterprises to provide chip production data, most likely in order to grasp the implementation of their entity lists and have a deeper grasp of "supply chain data information", so as to further strengthen the effectiveness of entity list sanctions and avoid other countries from secretly violating the entity list.
In addition, the US government is also likely to seek asymmetric information advantages for US-related technology companies through this move.
Chip type, technology node, yield rate, etc. are the core secrets of chip manufacturing companies, once disclosed, the same industry can use it to see its strategic layout for the next generation, two generations or even three generations of chips - this is like knowing the other side's combat plan in advance on the battlefield. If the U.S. government discloses this information to its own companies, it will win a huge advantage in its future chip competition.
The organs are exhausted
Although the united states' current round of "data blackmail" has achieved its goal in the short term, in the long run, the biggest victim will be the United States itself. First, further disrupt the global market.
Information such as chip inventory and yield rate is extremely sensitive to the global IT market, which not only directly affects the pricing of commodities such as chips, but also has a feedback impact on the innovation investment of IT giants. In order to stabilize market prices, corporate inventory information has always been a highly trade secret.
Among the series of data required by the United States is a large amount of such trade secret information that has never been disclosed. This may lead to greater volatility in the market, creating a vicious circle of more transparency and shortage.
Second, accelerate the "decoupling" of global countries from the United States.
In the 20th century, the reason why the United States was able to use a series of new technologies such as the Internet, home computers and smart phones to stand at the top of the industry was not the government's coercive measures, but the free and open research and development ecology. It is precisely because this R&D ecology does not exclude any country and any enterprise that it has won the trust of science and technology enterprises in various countries around the world, built a technological innovation chain, and achieved results with the joint efforts of a generation.
To this day, the United States remains the biggest beneficiary of this free and open ecosystem. However, at present, the us Department of Commerce's approach has completely run counter to this ecology, and governments and enterprises in various countries will re-examine the risks of cooperation with the US-centered global innovation chain.
Third, chip manufacturing cannot be brought back to the United States.
Although the global chip supply chain is made in the United States, it has long formed an intricate network in the long-term market economic cooperation between countries. At present, the trend of digital innovation gradually shifting to Asia is by no means intentional by any government, nor is it "due to government subsidies" as the US policy circles say.
The United States adopts measures that violate the principle of fair competition in the global market economy, even if it can benefit US chip companies in the short term, but in the long run, it is tantamount to a chronic poison for US companies, making them "path dependent" and gradually losing their core competitiveness.
Finally, the helplessness and panic of the United States in the face of possible "technological stagnation" will be exposed.
In global chip manufacturing, "Moore's Law" was once considered an indisputable truth, that is, "the number of semiconductors on the chip doubles every two years." But as the circuits on the chip continue to shrink, this "pseudo-law" based on production experience has become increasingly unsustainable.
This is because semiconductors cannot become smaller indefinitely, and when the silicon material that makes up semiconductors is as small as a few atoms, the electrons that originally flow in the circuit and constitute currents will no longer be honestly stopped, but will pass through the semiconductor gate like a ghost, which is called the "quantum tunneling effect".
At present, the most advanced chip process developed by leading chip manufacturers such as TSMC and Samsung has approached 2 nanometers, which is equivalent to the length of 6 oxygen molecules side by side, which is enough to cause the electron to have a "quantum tunneling effect". In response to this problem, although there have been possible solutions such as the full ring of the gate and 3D stacking, it is no less difficult than developing a new chip manufacturing technology from scratch, and even the old technology empire of the United States has not yet found a way to break the game.
There are physical limits in the front, and emerging countries are catching up. The United States is well aware that since the obstacles ahead are difficult to break through in the short term, only by preventing latecomers from catching up can they let their scientific and technological leading positions survive. Ironically, choosing this path will further slow down the pace of global technological progress and slow down the pace of innovation in the United States itself. The United States wants to push the limits of physics, and it is more and more elusive.
Source: Lookout Think Tank