A United States-led proposed chip alliance is aimed not only at boosting chip production but is also seen as a U.S. move to counter China's growing influence in the global chip market, a Taiwanese economic analyst said Sunday.

The Chip 4 alliance is a proposed alliance of semiconductor powerhouses in the U.S., Taiwan, Japan, and South Korea to enhance cooperation on the design and production of sophisticated semiconductors.

As a preliminary meeting of the alliance is reportedly expected to take place at the end of August or in early September, Taiwan's Ministry of Economic Affairs has proposed to continue collaborating with the U.S. on supply chain resilience and industrial cooperation as well as semiconductor supply security.

Roy Lee (??), deputy executive director of the Taiwan WTO & RTA Center at the Chung-Hua Institution for Economic Research, said that the ministry's proposal to cooperate on supply chain security was made with Taiwan's needs in mind.

Although Taiwan is strong in semiconductor foundries, it relies on the U. S. and Japan for the supply of equipment and materials, Lee said, adding that there are areas where the three countries are reliant on each other.

If the U.S. aims only to bring semiconductor production back home, it actually only needs to negotiate with individual countries, said Lee.

As such, it is believed that the U.S. may want to work with Taiwan, Japan, and South Korea to impose controls on semiconductor exports and technology outflows and thus form an anti-China group to exclude China from global semiconductor supply chains, Lee explained.

However, the U.S. proposal might put a certain amount of pressure on South Korea due to its economic ties with China, its biggest trade partner, so Washington wanted to first talk with Seoul to see whether it will join the Chip 4, said Lee.

China, including Hong Kong, accounts for almost 60 percent of the total exports of South Korean chips, according to a report in The Korea Herald, South Korea's largest English-language daily, which presents a dilemma for South Korea in having to choose between the technology of the U.S. and the market of China.

Regarding the pros and cons of Taiwan's participation in the Chip 4 alliance, Lee suggested that Taiwan should participate, given the close semiconductor links between Taiwan and the U.S., especially regarding supply chains and intelligence gathering.

Last month, the U.S. Congress passed the CHIPS Act of 2022 to strengthen domestic semiconductor manufacturing, design, and research. In addition, Washington has also been promoting the Chip 4 alliance and announced a ban on exports of advanced electronic design automation (EDA) software tools for 3-nm and other advanced chips to China in efforts to curb the development of China's chip industry.

By: DocMemory
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