As the situation across the Taiwan Strait continues to rise, the United States and Taiwan are showing closer ties. US President Joe Biden is promoting domestic investment in the chip act and sending foreign delegations to visit Taiwan. On his 100th day in office, Biden continued the Trump administration’s tough stance on China by pushing new barriers to block SMIC’s supply chain, while TSMC benefited from geopolitical disputes and continued to keep orders flowing.
Mr. Biden’s accomplishments in his first 100 days in office have centered on China’s push for the U.S. Foundry Foundry Act
Time has passed quickly, and Biden has now reached his 100th day in office. Looking back at Biden’s efforts to compete with China these days, he pushed through the bipartisan process of the U.S. Foundry Foundry Act, called for a $50 billion investment in semiconductor manufacturing and research, and stressed the need to upgrade U.S. leadership in critical technologies and research infrastructure.
When it comes to global semiconductors, there’s the ongoing tension over the Taiwan Strait dispute, with the U.S. pledging support for Taiwan’s defense capabilities and Biden actively working with Taiwan Semiconductor to use its chips in U.S. weapons, in addition to continuing Trump’s arms sales program to Taiwan. At the same time, the US has placed state-sponsored SMIC on its list of physical sanctions on the grounds that it threatens national security, demonstrating a strategy of fundamentally weaponising critical supply chains.
Mr Biden’s move, which deserves attention from semiconductor investors, also included a move in early April by a number of Democratic and Republican lawmakers to reintroduce the Endless Frontier Act into law and propose renaming the National Science Foundation (NSF), an independent US government agency designed to advance scientific research, as the National Science and Technology Foundation (NSTF). The agency funds research in 10 key areas, including artificial intelligence, semiconductors, robotics, materials science, advanced communications technology and more.
Paul Triolo, head of the Earth Technologies practice at Eurasia Group, noted that Biden’s intense focus on domestic semiconductor investment and export controls was driven by the need to protect the United States by ensuring that American companies continue to be global leaders in technology in key areas such as semiconductor manufacturing.
Triolo also explained that the new Biden administration is now erring on new barriers around the bill, designed to contain the rise of Chinese power, especially the weaponization of key supply chains, which has become an important part of Biden’s strategy.
After being sanctioned by the United States, SMIC was forced to actively seek a way out to survive. SMIC, a Chinese semiconductor manufacturer, was led to obtain funding from the Shenzhen government to build a US $2.4 billion semiconductor plant. This is the first major project in China’s overall plan comparable to that of the United States, which indicates that China’s semiconductor development is heading for a new milestone. SMIC also sold its entire equity interest in its subsidiary, SJ Semiconductor Corporation, to help it return to the US market.
ASML of the Netherlands announced strong demand
ASML of the Netherlands is a supplier of TSMC’s upstream raw materials, and its extreme ultraviolet (EUV) lithography machines are essential for the manufacture of mature chips. Chief Executive Peter Wennink said first-quarter net orders, including 2.3 billion euros for extreme ultraviolet microimaging systems, rose 11.8 percent to 47.40 euros in the first quarter.
Semiconductor capacity is in short supply and TSMC is already fully equipped until the end of the year, the Taiwan Business Times said. It expects second-quarter revenue to reach NT $12.9 billion to NT $13.2 billion, up about 1 percent quarter on quarter, continuing to set a record high. In order to avoid overbooking, TSMC even allocated capacity in the first half of next year according to customers’ previous order volume and terminal market demand estimation rather than winning first.
The COVID-19 epidemic has accelerated the digital transformation, with chips such as laptops and servers, 5G smartphones, netcom devices, and automotive electronics all in short supply. Wafer foundry connections are abundant, and TSMC’s full production capacity will reach the end of this year. TSMC aims to meet strong customer demand by squeezing out capacity by increasing capacity utilisation and improving production efficiency. But customer orders continue to pour in, and with some of the new capacity being prioritised for automotive chips, all capacity is booked by customers until the end of the year. TSMC has also informed customers that its production capacity is full and it can no longer accept the demand for additional production.