Opinion | When TSMC is lured by Biden, Washington gets credit, how's Beijing taking it?

By Augustus K. Yeung

Competition is said to be a defining characteristic of the United States. The nation, by nature and tradition, the Americans are believed to be exclusively competitive.

But competition is an encompassing concept expanding far and wide as the beloved country known as the United States of America. Unfortunately, some of its leaders are too one-sidedly competitive. For example, the former U.S. president Donald Trump is one.

However, you don't have to be hatefully like Donald Trump, who branded himself as the one and only leader who is out to "Make America Great Again." But worldwide, who respects him, a narcissist?

When Joe Biden comes along, competition takes on a more balanced dimension. Despite his competitiveness, the two leaders from China and America are on good talking terms. Lately, they have even come up with principles and promises to help stabilize bilateral relations. For President Xi it is the "three principles". For President Biden, it is his personal commitment, known as the "five noses".

Below is a situation in which the U.S. department of commerce revealed that the Biden administration signed the Chips and Science Act into law in 2022, setting aside billions of U.S. dollars to lure semiconductor companies – to build manufacturing facilities in the U.S.

Is this "a level playing field"? How would China react to and cope with this unconventional American restriction?

Consider the case of TSMC, a Taiwanese semiconductor company that was "lured" to the U.S. And the Biden administration has astutely provided substantial loans and grants in the billions.

Amid its continuing tech war with China, the U.S. has announced a U.S.$6.6 billion grant to Taiwan's Semiconductor Manufacturing Co. (TSMC) for the chip-making giant to build a third plant in Arizona – making America "the world's most advanced semiconductors".

A U.S.$5 billion loan from Washington will also be made available to the Taiwanese firm which will invest more than US $65 billion to build three semiconductor fabrication plants, or fabs, in Arizona, according to the U.S. Department of Commerce.

The third plant would be built before the end of the decade and would produce 2-nanometre or more advanced chips, it added.

"TSMC's renewed commitment to the U.S. and its investment in Arizona represent a broader story for semiconductor manufacturing – that's made in America and with the strong support of America's leading technology firms to build the products we rely on every day,"  Biden said.

The development underscored the Biden administration's push for the Chips and Science Act, signed into law in 2022 and setting aside $39 billion in direct grants – plus loans to lure semiconductor companies to build manufacturing facilities in the U.S.

Note: The U.S. currently produces less than 10 per cent of the world's chips and none of the most advanced ones. Owing to new investments like those from TSMC Arizona, the U.S. was now on track to produce roughly 20 per cent of the world's leading-edge chips by 2030, the commerce department said.

At full capacity, TSMC's three fabs would manufacture tens of millions of leading-edge chips powering products such as 5G or 6G smartphones and autonomous vehicles and artificial intelligence data centre servers, it added. The company's major clients include Apple, Micro Devices, Nvidia and Qualcomm.

"This would help strengthen America's competitive edge – in science and technology innovation," the department said.

The first fab will make 4en chips and is now scheduled to begin production by the first half of next year. The second fab, whose operational debut was delayed from 2026 to 2028, will produce 2nm chips on top of its original plan to make only 3nm chips, according to TSMC.

"Our U.S. operations allow us to better support our U.S. customers, which include several of the world's leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology." TSMC chairman Mark Liu said.

Last month, the U.S. commerce department announced tech giant Intel would receive $19.5 billion, which consisted of $8.5 billion in direct funding and up to $11 billion in loans, to build and modernize its semiconductor factories in four American states. (Source: SCMP)

Beijing's municipal government has just unveiled a scheme to subsidize local enterprises' acquisition of Chinese-made semiconductors to bolster the city's computing resources, as the nation pushes forward its artificial intelligence (AI) initiative – in response to U.S. export controls on advanced chips.

In a draft policy document, the Beijing Municipal Bureau of Economy and Information Technology said the city would provide an undisclosed number of subsidies – to help local firms buy graphics processing units (GPUs) made by domestic manufacturers to "expedite the supply of controlling intelligent computing resources".

"By 2027, Beijing will achieve self-sufficiency over smart computing infrastructure…with overall performance on a par with leading domestic standards," the draft said.

The Biden administration on April 4 rolled out revisions in sweeping export controls it implemented last October, making it harder for China's mainland enterprises to gain access to advanced AI processors, semiconductor-manufacturing equipment, and even laptop computers built with those chips.

For example, U.S. trade sanctions prevent Nvidia from exporting to China its advanced GPTs, such as the A100 and H100, which have become sought after components for training AI systems. Its A800 and H800 GPUs, developed as workarounds for Chinese clients, were blocked by updated U.S. controls last October.

Mainland universities and research institutes have recently obtained high-end Nvidia AI chips through resellers despite Washington's widening ban on the sale of such technology to China, according to a Reuters report. (Source: SCMP)

Recently, Antony Blinken visited Beijing. In his unusually subdued tone of voice, he listened attentively to President Xi Jinping. This manner is a stark contrast to his high-powered "warning" to China –issued to the press – shortly before arriving in Beijing.

My point is that – with the Biden administration, the Chinese feel there is this mutual respect, although the other side may resort to unconventional terms.

 

The views do not necessarily reflect those of DotDotNews.

To contact the writer, please direct email: AugustusKYeung@ymail.com

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