Washington consolidates its friends in the semiconductor industry

Authors: Robyn Klingler-Vidra, KCL and Yu-Ching Kuo, Kaohsiung

The importance of semiconductors for economic security has been in the headlines in 2022. As part of its technological competition with China, the United States has implemented a policy of “friendshoring” its production of semiconductors. -drivers to secure their supply of high-end chips that enable everyday life and store inventory for major tech companies such as Apple.

The term “friendshoring” gained prominence after a speech by US Treasury Secretary Janet Yellen in April 2022. her partners.

In an effort to boost national competitiveness, the United States passed the “CHIPS and Science Act” in August 2022 to strengthen national chipmaking capacity through major investments in regional centers and support for talent development. . Washington’s efforts also include the Chip 4 alliance – an agreement by which the US government aims to diversify supply chains between Japan, South Korea and Taiwan.

The not-so-subtle goal is to thwart the ability of Chinese producers to improve their capacity. This will help US companies maintain an edge over Chinese companies such as Semiconductor Manufacturing International Corporation (SMIC), which recently announced the development of a 7nm chip, among other new capabilities. The Taiwan Semiconductor Manufacturing Company (TSMC) is gearing up to mass-produce 3nm chips, while South Korea’s Samsung has just started 3nm production.

Much of friendshoring’s coverage has focused on manufacturing and design capabilities, chip company market share and political posture. But friendhoring and American 4-chip politics are ultimately about the people, or “friends,” behind these technological innovations. Japan, South Korea and Taiwan have chipmaking “godfathers” – people acclaimed for their crucial role in developing semiconductor capability. Yet many of these “godfathers” have turned out to be “enemies” of their own companies after being poached by competitors, including entrants to the Chinese market.

Yukio Sakamoto, dubbed the “godfather of Japanese DRAM”, was the president of the former semiconductor company and foundry, Elpida Memory. Sakamoto was unhappy after his experience at US-based Micron and joined China’s Tsinghua Group in 2019 to build DRAM products. In June 2022, Sakamoto announced that he was joining SwaySure in China. Sakamoto worked for Texas Instruments in Japan earlier in his career before being recruited by Kobe Steel Electronic Information Group.

Kim Choong-Ki is often called the “godfather of South Korea’s chip industry”. Kim nurtured future semiconductor engineers – referred to as “Kim’s mafia” – who went on to run semiconductor production at Samsung, LG and Hyundai. Kim received his doctorate from Columbia University, after which he joined semiconductor industry giant Fairchild, where he worked in R&D in Palo Alto.

Morris Chang founded Taiwan’s semiconductor powerhouse, TSMC, in 1987 and led the company’s growth for decades. Chang received his doctorate in electrical engineering from Stanford University, working for Texas Instruments for over 25 years. Shortly thereafter, the Taiwanese government recruited him to lead the soon-to-be-established “dedicated silicon foundry”.

Chiang Shang-Yi led R&D at TSMC until 2006. After his military service, he completed his undergraduate studies at National Taiwan University and received a Ph.D. from Stanford University. He made headlines for joining SMIC as an independent non-executive director from December 2016 to June 2019, becoming vice-chairman from December 2020 to November 2021.

Liang Meng-song, another semiconductor dean, was in the spotlight in a legal case between TSMC and Samsung. He was accused of leaking classified information to Samsung after joining the same year he left his longtime employer, TSMC. Liang, like Chang and Chiang, studied in the United States. He spent 23 years working at TSMC before leaving in 2009.

These “friends” have gained crucial work experience in American companies and most have completed their higher education in the United States. Sakamoto learned while at Texas Instruments while Kim and Chang, Chiang and Liang graduated from elite American schools and worked for major American corporations such as AMD, Hewlett-Packard, Fairchild and Texas Instruments. Back home, they became leaders of semiconductor companies or holders of intellectual property rights.

The U.S.-led Chip 4 alliance emerged amid the interplay between long-standing personal relationships in the semiconductor industry and the risk of talent moving between companies and countries, as illustrated by the trajectory of these sponsors. The movement of semiconductor professionals is sparking wars on employee talent and leading to lawsuits related to patents and trade secrets, intensifying rivalry and competition in the industry.

As Washington’s friendship policy aims to deepen supply chains with key producers in Japan, South Korea and Taiwan, policymakers should remember that the people who make up the management of these companies may move . Friendships evolve over time and friends learn from each other. In Granovetter’s words, Washington’s “weak ties” could prove more beneficial than its close ties with South Korea, Japan and Taiwan in advancing its semiconductor capabilities.

Robyn Klingler-Vidra is a Lecturer in Entrepreneurship and Sustainability at King’s Business School. She is the author of The State of Venture Capital: The Silicon Valley Model in East Asia (Cornell University Press, 2018) and Inclusive Innovation (Routledge, with Alex Glennie and Courtney Savie Lawrence).

Yu-Ching Kuo is an independent researcher based in Kaohsiung. She is co-author of “Brexit, Supply Chains and the Contest for Supremacy: The Case of Taiwan and the Semiconductor Industry” in A fresh start or more of the same? The European Union and East Asia after Brexit (Palgrave Macmillan, 2021, with Robyn Klingler-Vidra).