Hi everyone! It’s Lauly from Taipei.
Last week I attended the most talked-about industry event in Taipei in recent memory, a panel discussion between Taiwan Semiconductor Manufacturing Co (TSMC) founder and former chair Morris Chang and Chip War author Chris Miller.
Their conversation about the global chip industry and Taiwan’s unique strengths was candid and often humorous. The first thing that Chang said to Miller on stage was: “I wish I had written the book.”
But the 91-year-old industry veteran, who founded TSMC in 1987, also suggested a “minor correction”. While Chip War emphasises the Taiwanese government’s role in the early years of TSMC, Chang says it was more like an “investor” than a “partner” — and not a particularly bullish one, either.
“When TSMC went public, the government started to sell the stock. The only thing the government thought was they couldn’t sell it fast enough,” Chang recalled.
Their talk attracted not only industry executives but also more than 15 diplomats from around the world. The event kicked off on a strong political note courtesy of an opening speech by Taiwan’s vice-president William Lai.
“China should clearly know that waging a war against Taiwan, not only Taiwan will get hurt. The world will also suffer from severe catastrophe, including China itself,” said Lai, who is running for president next year for the ruling Democratic Progressive party. “It is Taiwan’s obligation and the world’s obligation to keep supporting and protecting TSMC, as semiconductors play a crucial part to the world’s civilisation’s progress.”
It was a stark reminder that chips and geopolitics are inextricably linked.
Five years from now, the US and its allies will probably still have the lead over China in terms of chip technologies, but Beijing’s policies could still influence the global semiconductor industry, Chip War author Chris Miller told Nikkei Asia’s Lauly Li and Cheng Ting-Fang in an interview in Taipei.
The mounting export controls by the US and its allies, such as Netherlands and Japan, will pose difficulties for China to keep developing advanced chip production technologies, but the Asian superpower already possesses matured chip production technologies and capacity, Miller pointed out.
“One of the scenarios is this turns into a new version of the solar panels,” Miller said, referring to China’s policy of heavily subsidising domestic panel makers, which has disrupted global prices.
Miller, who spent years researching semiconductor history and geopolitics, also says the push by major economies to cut their reliance on Taiwan’s chip sector will not affect the US’s commitment to defend the democratically ruled island. After all, he argues, there were 50 years of US-Taiwan relations before the island became a player in the global chip industry.
“I think it is wrong and historically inaccurate to think that the reason the US is supporting Taiwan is semiconductors.”
China is giving a group of its leading chip companies easier access to subsidies and positions in state-backed research, as tightening US controls on access to advanced technology force a major rethink in Beijing’s approach to supporting the sector.
Chipmakers Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor and Huawei, as well as equipment suppliers Naura and Advanced Micro-Fabrication Equipment China, will be among those benefiting from the policy shift, according to people familiar with the matter, writes the Financial Times’ Qianer Liu.
China’s move to form a closer collaboration with a select group of companies comes after Beijing shook up its tech strategy this month with the creation of a new Communist party science commission and a reinvigorated Ministry of Science and Technology.
Under the new policy, companies will be granted additional government funding without requirements of achieving performance goals as well as more important positions in the state-backed research projects, which used to be taken by state-owned companies and academic institutes.
The shift is a hint of the failure of previous policies of massive and often ill-targeted subsidisation of the semiconductor industry to build up domestic capabilities. But industry experts are concerned about the new approach and its ability to incubate technology innovation due to a lack of transparent communication between the chip industry and the Chinese government.
By just about any measure, China’s digital presence is vast. The country has around 1bn internet users and is projected to generate nearly 28 per cent of the world’s digital data annually by 2025. Its digital economy is already worth Rmb45.5tn ($6.6tn).
And the Communist party under President Xi Jinping is tightening its grip on that data, write Nikkei Asia’s Cissy Zhou and Pak Yiu. Beijing unveiled its plans for stronger oversight of data, technology development, finance and society at its annual rubber-stamp parliament session that wrapped up last week.
But control was not the only item on the agenda. A new national data bureau has been tasked with harnessing China’s massive data trove to keep the digital economy humming at a time of slowing investment, consumption and exports. The question now is how exactly this bureau will work.
Beijing’s hard line on cryptocurrencies makes for a sharp contrast with Hong Kong’s increasing embrace of the digital assets. Now, entrepreneurs from the mainland are looking to the city for opportunities in this emerging field, write Nikkei Asia’s Pak Yiu and Echo Wong.
Yu Jianing, who arranges junkets for mainland start-ups travelling to Hong Kong, said he has signed up more than 500 investors and entrepreneurs to explore opportunities in crypto and other blockchain businesses.
“I have had many people reach out to me about establishing start-ups in Hong Kong, tax incentives [and] talent,” Yu said.
Hong Kong’s charm offensive contrasts with the tough approaches to crypto other financial capitals have taken since the collapse of FTX, once one of the world’s largest exchanges. It also raises questions about whether Beijing officials approved of the moves.
“Hong Kong is likely to take the lead and be a test bed,” according to lawyer Joshua Chu. “China will likely build on the Hong Kong experience and roll out one with Chinese characteristics for the mainland.”
TSMC founder Morris Chang backs US on China chip curbs (Nikkei Asia)
Indonesia’s GoTo 2022 loss widens to $2.6bn (Nikkei Asia)
Japan lifts chipmaking export controls on South Korea (Nikkei Asia)
#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.