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U.S.-Proposed Chip 4 Alliance Faces Opposition from Partners

Panasonic
(Image credit: Panasonic)

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.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • RedBear87
    As Henry Kissinger phrased it "it may be dangerous to be America's enemy, but to be America's friend is fatal"; using the excuse of the supply chain crisis this US administration basically tried to create an anti-Chinese coalition that first and foremost works to the benefit of American interests, it's not surprising that Japanese, Koreans and Taiwanese try to keep it at arm's lenght.
    Reply
  • motocros1
    only chance they have of this working is if a small portion from each company join a group to develop future technologies that each individual company may be having trouble with or haven't even started on yet.
    Reply
  • watzupken
    US: Let us be allies. It is good for us. Oh by the way, I am going to use this interesting technology you developed if you don't mind. I am not stealing it since we should be sharing right? Unlike China we don't steal/ exploit.
    Reply
  • Integr8d
    RedBear87 said:
    As Henry Kissinger phrased it "it may be dangerous to be America's enemy, but to be America's friend is fatal"; using the excuse of the supply chain crisis this US administration basically tried to create an anti-Chinese coalition that first and foremost works to the benefit of American interests, it's not surprising that Japanese, Koreans and Taiwanese try to keep it at arm's lenght.

    None of it is surprising. All of these countries are out for themselves. There’s nothing wrong with healthy, voluntary competition.
    Reply
  • Friesiansam
    Looking at this from the UK, it seems obvious that if the Chip 4 Alliance happens, it is bound to be biased in favour of the US.
    Reply
  • Mandark
    So what? USA needs to be independent and not rely on others. As was said before. Those countries are out for themselves and we’re out for ourselves too bad if you don’t like it.

    if I had my way, the USA would’ve never lost these industries in the first place.
    Reply
  • wskinny
    Admin said:
    Companies from Japan, South Korea, and Taiwan have concerns over the Chip 4 alliance.

    U.S.-Proposed Chip 4 Alliance Faces Opposition from Partners : Read more

    This can be fixed. The problem with this is the number 4 (not really, just that I like 5's and my solution adds a partner to fix all issues).
    The solution is to add a 5th Partner which would be mostly "neutral" from a Technological capability standpoint and based on a politically convenient country.

    It is my opinion that Ireland should be added to the mix as the country were a new business consortium is to be established with equitable equivalent participation of all companies as shareholders. No one has more or less shares or power over this new consortium.

    As a base guidance rule the consortium will research using all parties technological input but will not share any proprietary secrets with businesses that could then pose a unfair challenge to the developing company unless all the related parties reach an agreement.
    Such agreements would also be mediated by the consortium itself.

    I see a future where this consortium smoothly leads cooperative optimization across multiple fields enabling tech otherwise impossible while also ensuring all involved parties have their knowhow safeguarded and as time passes their specific specializations will diverge yet complete each other.
    Reply
  • JamesJones44
    Mandark said:
    So what? USA needs to be independent and not rely on others. As was said before. Those countries are out for themselves and we’re out for ourselves too bad if you don’t like it.

    if I had my way, the USA would’ve never lost these industries in the first place.

    And you would be paying quadruple for everything and complaining about it all the way. Americans speak with their wallet and long ago they said we don't care what happens to the country or the world so long as we have cheap goods and services.
    Reply
  • Friesiansam
    Mandark said:
    So what? USA needs to be independent and not rely on others. As was said before. Those countries are out for themselves and we’re out for ourselves too bad if you don’t like it.

    if I had my way, the USA would’ve never lost these industries in the first place.
    Are you saying that if you had your way, all chip design and manufacturing would be in the US and nowhere else?

    I don't think you would find that idea would be popular anywhere, except in the US.
    Reply
  • Matt_ogu812
    Admin said:
    Companies from Japan, South Korea, and Taiwan have concerns over the Chip 4 alliance.

    U.S.-Proposed Chip 4 Alliance Faces Opposition from Partners : Read more

    Maybe they know that Taiwan will be no more once China takes it over.
    That would mean that China would be part of the Chip4 alliance which is what this is all about......don't be beholding to China.
    Reply