The West's Technological Edge in Geopolitical Competition

[Riaz Haq]

The US and its allies enjoy a significant technological advantage over China and Russia.  The Chinese are working hard to catch up but the West is not standing still. It is making huge investments in research and development to maintain this edge as it becomes increasingly clear that the outcome of the ongoing international geopolitical competition will largely be determined by technology. 

East-West Comparison of GDP, R&D. Source: IMF (GDP), OECD (R&am...

In 2019, the United States and its allies invested $1.5 trillion in research and development, far outpacing the combined Chinese and Russian R&D investment of half a trillion USD.  This gap will likely narrow if the East's GDP continues to grow faster than the West's, allowing for higher investment in technology. 

After the Russian invasion of Ukraine, the US, EU, Japan, South Korea and Taiwan have made it clear that the Western allies can and will use technology sanctions to control the behavior of China and Russia. 

Taiwan Semiconductor Manufacturing Company (TSMC) will no longer fabricate computer chips for Russia, according to media reports. The ban will particularly affect Russia's Elbrus and Baikal processors, unless China agrees to step in to manufacture these chips, and risk additional US sanctions itself. Both Russian processors use mature 28 nm technology. The world's most advanced TSMC fabrication technology today is 5 nanometers. The best US-based Intel can do today is 7nm technology. China's SMIC (Semiconductor Manufacturing International Corporation) has the capability to produce chips using 14 nm technology.  Semiconductor chips form the core of all modern systems from automobiles to airplanes to smartphones, computers, home appliances, toys, telecommunications and advanced weapons systems.  

While China is the  biggest volume producer of semiconductor components in the world,  the Chinese design centers and fabs rely on tools and equipment supplied by the West to deliver products. Western companies dominate all the key steps in this critical and highly complex industry, from chip design (led by U.S.-based Nvidia, Intel, Qualcomm and AMD and Britain’s ARM) to the fabrication of advanced chips (led by Intel, Taiwan’s TSMC and South Korea’s Samsung ) and the sophisticated machines that etch chip designs onto wafers (produced by Applied Materials and Lam Research in the U.S., the Netherlands’ ASML Holding and Japan’s Tokyo Electron ), according to the Wall Street Journal. 

There is no question that the current western technology sanctions can seriously squeeze Russia. However, overusing such sanctions could backfire in the long run if the US rivals, particularly China and Russia, decide to invest billions of dollars to build their own capacity. This would seriously erode western technology domination and result in major market share losses for the US tech companies, particularly those in Silicon Valley. 

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[Riaz Haq]

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

To supply its military, Russia has found high-tech suppliers in the U.S. and other Western countries. Between 2015 and 2018, Almaz-Antey, a state-owned manufacturer of Russia's sophisticated air-defense missile systems, managed to bypass German export restrictions and procure nearly $10 million worth of high-precision metalworking machines, according to a person familiar with the matter and an official case summary filed with a Hamburg court. Export-license papers claimed the machinery was destined to various Russian producers of civilian goods in the city of Yekaterinburg when, in fact, they were delivered to a nearby Almaz-Antey facility, according to the person familiar with the matter and the case summary. Almaz-Antey didn't respond to a message seeking comment.
Suzette Grillot, a professor of international studies at the University of Oklahoma, said Western trade restrictions on Russia worked during the Cold War because the West then dominated world trade. "When you went from the U.S. to Russia in the early 1990s, it was a different world technologically speaking, the place was definitely behind the times in communications and other technologies," she said.
But replicating Cold War sanctions to squeeze the Russian economy and military industry today seems like an elusive goal, Grillot said, because Russia has had almost unlimited access to Western technology for the past 30 years and can now also rely on alternative suppliers such as China and India. "You can't unring a bell," she said.

Trained as a physicist and chemist, Wesley Morris had developed solutions to harden semiconductors against heat and radiation. In 2004, he founded SST (now called Vorago Technologies) in a bid to monetize his patented inventions. Morris told Reuters that his techniques caught the attention of the U.S. military, and SST received millions of dollars in research grants from the U.S. Department of Defense, including from top-secret missile programs, to hone its technology.
But 10 years later, in the spring of 2014, SST was still chasing its first significant commercial order. That's when Morris, the company's chief executive, said he learned from a newly recruited salesman that a Russian businessman, Sabirov, was interested in buying rad-hard chips from SST. Sabirov, the salesman said, wanted to purchase them for Russia's space agency, making him an attractive customer prospect because Russia relies almost entirely on imports for its rad-hard requirements.
The Russian space agency, Roscosmos, said it had no information about Sabirov's involvement in procuring electronic components for Russia.
Sabirov arrived at a meeting at SST's office in Austin in May 2014, accompanied by a Bulgarian associate, Dimitar Dimitrov. The two men formed an odd pair, Morris and several other people who dealt with them said. The Russian spoke English fluently and projected the confidence of a man with solid connections in his country's state bureaucracy. The Bulgarian appeared to be a brilliant scientist whose scuffed shoes suggested that he didn't worry too much about his attire. Both men seemed to have solid technical backgrounds.
According to Morris, Sabirov told him that one of his Russian companies, Kosmos Komplekt, had been buying rad-hard chips from SST's bigger U.S. rival, Aeroflex, since 2011, and was interested in transitioning to SST's products.

[Riaz Haq]

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

"I wanted to get the business," Morris recalled thinking at the time.
A spokesman for Cobham Group, which acquired Aeroflex in September 2014, said Aeroflex had stopped shipping rad-hard chips to Sabirov in Russia prior to the acquisition.
A week after the May 2014 meeting in Austin with Sabirov, SST's outside lawyer dampened Morris's expectations of quickly clinching a lucrative contract. "Anything that requires a license to Russia is currently subject to a presumption of denial," the lawyer told Morris and other executives, according to Commerce Department documents.
Morris told Reuters he wasn't ready to abandon what could be the transformational contract SST had longed for. From his conversation with Sabirov, Morris said he had grown hopeful the Russian would order $10 million worth of goods. He said he believed that the chips would be used in satellites, not in missiles.
Morris said that in July 2014, he and Sabirov discussed their options upon meeting on the sidelines of a nuclear-technology conference in Paris. Morris said his ideas hinged on obtaining one of the few export licenses U.S. authorities were still granting as part of Washington's cooperation with Russia on joint space programs.
Days after the Paris meeting, however, Morris lost hope. Geopolitical tension with Moscow had escalated after a Malaysian airliner flying through Ukrainian airspace was downed by a Russian-made missile, killing 298 people. Even though Moscow denied involvement in the tragedy, obtaining an export license to Russia was now virtually impossible, Morris concluded after conferring with SST's lawyer.
"We can't send you anything," the American CEO said he told Sabirov.
But Morris said Sabirov proposed to him an alternative solution: how about using Bulgaria, a country for which an export license wasn't necessary, as a transit point? To avoid the need for a U.S. license, chips could be mounted on electronic boards in Sofia, effectively changing the product's designation in export documents before they were shipped to Moscow.
In early August 2014, Morris again conferred with SST's lawyer, who said the plan wouldn't fly. Unless Sabirov could prove he was "adding substantial value in Bulgaria," a license for export to Russia likely would be required, the lawyer advised in an email, according to Commerce Department documents. The documents don't name the lawyer.
That same month, Sabirov told SST that since sanctions had disrupted his business of procuring parts for Russia, he had set up a Bulgarian company that would target civilian markets in Europe, according to former SST employees and the Commerce Department documents. The plan was to assemble modules with chips and sell them to car makers for use in engines and exhaust systems. Rad-hard chips aren't commonly used in automobiles because of their cost.
Sabirov's Bulgarian business – Multi Technology Integration Group EOOD, or MTIG – was set up by a relative of a business partner in Sofia. The next month, September 2014, MTIG ordered a silicon wafer of rad-hard memory chips from SST for $125,000, according to interviews and federal court documents. Sabirov told SST that MTIG would test the chips and that more orders would follow, according to interviews and Commerce Department documents.

[Riaz Haq]

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

The wafer, which had been produced using SST's hardening process at a Texas Instruments Inc foundry, was shipped to MTIG at the end of January 2015, according to former SST employees. Four months later, after the eight-inch wafer had been cut into 115 memory chips, the semiconductors were shipped to one of Sabirov's companies in Moscow, Sovtest Comp, where a 4.6-pound parcel arrived on May 25, according to Russian customs records, interviews and Commerce Department documents.
Texas Instruments said it "complies with applicable laws and regulations in the countries where we operate. At this time, we are not selling into Russia or Belarus."
By the time SST shipped the wafer to MTIG, the U.S. company had undergone a change in management. In early January 2015, Morris had been stripped of his CEO title after losing a battle for control with the firm's main investor, New Scientific Ventures. NSV declined to comment. The new CEO, Bernd Lienhard, learned of the shipment to Bulgaria in March 2015, according to the Commerce Department documents. Vorago declined to comment about Lienhard being informed about the deal.
The company rebranded itself as Vorago Technologies that August, but its fortunes continued to rely on Sabirov. In the fall of 2015, Lienhard learned that the Russian was planning to order five more wafers. Lienhard sent Sabirov an email saying it was "the most important biz opportunity for us this year and we are very committed to do whatever necessary to help you," according to the Commerce Department documents.

In November 2015, the two men exchanged more emails. Lienhard offered a steep discount if Sabirov ordered more wafers before year end.
"How would you feel about the following scenario? Could you buy only 3 wafers this quarter and we would reduce the price per wafer from currently $125,000 to $100,000?" Lienhard emailed Sabirov. "You would help us a lot."
Five days later, Sabirov asked if there were "any obstacles for direct shipment to Moscow?" Lienhard responded that the wafers would have to be sent to Bulgaria to comply with export regulations, according to the Commerce Department documents, which contained excerpts from the communications.
In December 2015, a new Vorago sales executive, Anne Joubert, met with Sabirov and Dimitar Dimitrov in Munich to discuss additional wafer purchases, according to interviews and Commerce Department documents. Days later, MTIG sent Vorago a purchasing order for five more wafers. Federal documents show that Vorago shipped two of them to MTIG in December 2015.
In July 2016, Joubert flew to Bulgaria where she met with Sabirov and the two Dimitrovs. During the meeting, Joubert asked if MTIG was shipping Vorago's rad-hard chips to Russia, according to interviews and federal court records. "Maybe," Sabirov replied. When Joubert said this would violate U.S. export regulations, Dimitar Dimitrov assured her that all of the chips the Texas company previously had shipped to MTIG had remained in Bulgaria
According to the federal indictment, this claim was false because some chips had been sent to Russia. The indictment says that the "Ship to" address on an MTIG invoice was Sabirov's company, Sovtest, in Moscow. Joubert declined to comment.

[Riaz Haq]

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

According to the federal indictment, this claim was false because some chips had been sent to Russia. The indictment says that the "Ship to" address on an MTIG invoice was Sabirov's company, Sovtest, in Moscow. Joubert declined to comment.
Sabirov continued discussing ordering more wafers, including during a meeting with Lienhard in Sofia in August 2018, according to the Commerce Department documents.
That December, an export control officer from the Commerce Department went to Sofia to verify that Vorago chips had been used by MTIG in Bulgaria. The officer met with the younger Dimitrov, Milan, who denied the semiconductors had been sent to Russia and said they were still in Bulgaria, according to the federal indictment.
By then, Vorago, Sabirov and the Dimitrovs were under investigation by both the Federal Bureau of Investigation and the Commerce Department for alleged export violations, according to interviews.
In early 2016, the company's founder, Morris, informed the FBI about what he viewed as alleged irregularities at the firm, including the sales involving Sabirov, according to people familiar with the matter.
Weeks after the tip-off, in April 2016, FBI agents raided Vorago's head office in Austin, searching the premises while staffers were told to remain in one room, according to the people familiar with the matter. "It was a very disruptive day," one former employee recalled.
According to people familiar with the matter, the federal investigations made slow progress. In July 2019, the FBI raided the third floor of an office building, also in Austin, where Vorago had relocated. That same month, arrest warrants were issued for Sabirov and the Dimitrovs.
Seventeen months later, in December 2020, the U.S. Justice Department announced the indictment of the three men on charges of illegally procuring rad-hard chips and money laundering.
Then, last September – six years after the Texas company first began shipping the specialized chips to Bulgaria – the Commerce Department announced a settlement in which Vorago agreed to pay a penalty: $497,000, the proceeds of its sales. Neither Vorago nor its executives were charged in the criminal case.
((David Gauthier-Villars reported from Istanbul, Steve Stecklow from London and John Shiffman from Washington. Additional reporting by Karen Freifeld in New York and Tsvetelia Tsolova in Sofia. Editing by Janet McBride))

[Riaz Haq]

Chinese Views of the US and Russia After the Russian Invasion of Ukraine
A new survey taken after the Russian invasion of Ukraine finds that the Chinese are very negative about the U.S., very positive about Russia – and very confident about China.



By Richard Q. Turcsanyi
May 14, 2022
https://thediplomat.com/2022/05/chinese-views-of-the-us-and-russia-...



Among the 25 countries respondents were asked about (Figure 1), Russia was the most positively perceived country with 80 percent of respondents saying they viewed Russia in a positive light while only 12 percent held negative views. The United States, on the other hand, was the most negatively viewed country in China with slightly more than 60 percent of respondents perceiving it negatively and 31 percent holding positive attitudes.

The other very positively perceived countries among Chinese respondents were Pakistan (73 percent), Singapore (66 percent), North Korea (62 percent), and Germany (61 percent). In turn, other very negatively perceived countries included India (56 percent), Japan (54 percent), Vietnam (48 percent), South Korea (47 percent), and Ukraine (46 percent).

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To get a more nuanced picture of the perceptions of the United States and Russia, we asked two open-ended questions in which the respondents provided their first associations with the respective country, and also a reason for why their image of the U.S. or Russia got better or worse.

In terms of the U.S. (see Figure 2), the most common association was “hegemon,” while other frequent expressions were “advanced,” “developed,” and “powerful,” but also “bossy,” “war,” “bandit,” and “sowing discord.”

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In the Russian case, the most common association was “warrior nation,” followed by words such as “Putin,” “vodka,” “vast,” “bears,” “powerful,” “war with Ukraine,” and “Sino-Russian friendship.”

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The picture we are getting is that both the United States and Russia are seen as powerful, but American power is seen mostly in negative terms, while Russia’s is almost exclusively positive. It may be noteworthy, however, that perceptions of Russia among the Chinese seem to be somewhat stereotypical and linked to the current leader, and might be lacking deeper social roots. Hence, these perceptions may be easily open to change.

When asked about how positively or negatively the respondents assess the foreign policy of major powers (Figure 4), only Russia (besides China) was seen positively, while the U.S. topped the negative ranking, ahead of India, Japan, and the European Union.



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Another major finding of the survey is Chinese people’s confidence in China. When asked about how militarily and economically powerful they perceive relevant major powers, China was seen as the most powerful one, while China’s culture was also perceived as the most attractive and Chinese universities were the most recommended ones.

We also asked how willing the respondents would be to get a COVID-19 vaccine produced by various countries. Again, Chinese vaccines were far more trusted than any other. This seems to be a result of two-plus years of propaganda painting the Western response to the pandemic in negative colors, presenting Western vaccines as ineffective, and even suggesting theories about the virus originating as a U.S. bioweapon. This may be a problem now, however, as Chinese vaccines don’t seem to be working as efficiently against the newer variants of COVID-19 as some Western ones.

[Riaz Haq]

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Opinion The best China strategy? Defeat Russia.

By Fareed Zakaria


https://www.washingtonpost.com/opinions/2022/06/09/biden-administra...


“We are now living in a totally new era,” said the 99-year-old Henry Kissinger, commenting on Russia’s invasion of Ukraine. In an op-ed last week, President Biden vividly outlined the stakes. “If Russia does not pay a heavy price for its actions,” he wrote, “it will send a message to other would-be aggressors that they too can seize territory and subjugate other countries. It will put the survival of other peaceful democracies at risk. And it could mark the end of the rules-based international order and open the door to aggression elsewhere, with catastrophic consequences the world over.”

In times like these, it seemed appropriate that Secretary of State Antony Blinken would deliver a major policy address, which he did late last month. Except that he chose to give the speech … on China. The talk itself contained nothing new; it was slightly more nuanced than the usual chest-thumping that passes for a China strategy these days. The real surprise was that, in the middle of the first major land war in Europe since 1945, with monumental consequences, Blinken chose not to lay out the strategy for victory but instead changed the subject. Washington’s foreign policy establishment is so wrapped up in its pre-crisis thinking that it cannot really digest the fact that the ground has shifted seismically under its feet.

Blinken declared that despite its aggression in Ukraine, Russia does not pose the greatest threat to the rules-based international order, instead giving that place to China. As Zachary Karabell suggests, this requires a willful blindness to decades of Russian aggression. Russia has invaded Georgia and Ukraine and effectively annexed parts of those countries. It brutally unleashed its air power in Syria, killing thousands of civilians. In responding to Chechnya’s desire for independence, it flattened large parts of the Russian republic, including its capital, with total civilians killed in that conflict estimated to be in the tens of thousands. Vladimir Putin has sent assassination squads to Western countries to kill his enemies, has used money and cyberattacks to disrupt Western democracies, and, most recently, has threatened the use of nuclear weapons. Does any other country even come close?

[Riaz Haq]

Opinion The best China strategy? Defeat Russia.

By Fareed Zakaria


https://www.washingtonpost.com/opinions/2022/06/09/biden-administra...


Ironically, one of the people who attended Blinken’s speech was Sen. Mitt Romney (R-Utah), who during his presidential campaign in 2012 warned that Russia posed the single largest threat to the United States. Those, including myself, who dismissed his prognosis were wrong, because we looked only at Russia’s strength, which was not impressive. But Romney clearly understood that power in the international realm is measured by a mixture of capabilities and intentions. And though Russia is not a rising giant, it is determined to challenge and divide America and Europe and tear up the rules-based international system. Putin’s Russia is the world’s great spoiler.

This phenomenon of a declining power becoming the greatest danger to global peace is not unprecedented. In 1914, the country that triggered World War I was Austria-Hungary, an empire in broad decline, and yet one determined to use its military to show the world it still mattered and to teach a harsh lesson to Serbia, which it regarded as a minor, vassal state. Sound familiar?

America’s dominant priority must be to ensure that Russia does not prevail in its aggression against Ukraine. And right now, trends are moving in the wrong direction. Russian forces are consolidating their gains in eastern Ukraine. Sky-high oil prices have ensured that money continues to flow into Putin’s coffers. Europeans are beginning to talk about off-ramps. Moscow is offering developing nations a deal: Get the West to call off sanctions, it tells them, and it will help export all the grain from Ukraine and Russia and avert famine in many parts of the world. Ukraine’s leaders say it still does not have the weapons and training it needs to fight back effectively.

The best China strategy right now is to defeat Russia. Xi Jinping made a risky wager in backing Russia strongly on the eve of the invasion. If Russia comes out of this conflict a weak, marginalized country, that will be a serious blow to Xi, who is personally associated with the alliance with Putin. If, on the other hand, Putin survives and somehow manages to stage a comeback, Xi and China will learn an ominous lesson: that the West cannot uphold its rules-based system against a sustained assault.

Most of the people in top positions in the Biden administration were senior officials in the Obama administration in 2014, when Russia launched its first invasion of Ukraine, annexed Crimea and intervened in eastern Ukraine. They were not able to reverse Moscow’s aggression or even make Putin pay much of a price for it. Perhaps at the time, they saw the greatest threat to global order as the Islamic State, or they were focused on the “pivot” to Asia, or they didn’t prioritize Ukraine enough. Now they have a second chance, but it is likely to be the last.

[Riaz Haq]

SMIC's 7-nm chip process a wake-up call for US - Asia Times

https://asiatimes.com/2022/07/smics-7-nm-chip-process-a-wake-up-cal...

But SMIC has no choice. It must use DUV because the US Commerce Department put in on its Entity List in December 2020, stating at the time that “Items uniquely required to produce semiconductors at advanced technology nodes – 10 nanometers or below – will be subject to a presumption of denial to prevent such key enabling technology from supporting China’s military-civil fusion efforts.”


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Reports of a China chip-making breakthrough are behind the curve but US sanctions are increasingly too little, too late and out of date
By SCOTT FOSTER
JULY 25, 2022


A TechInsights report stating that a bitcoin mining integrated circuit (IC) sold by MinerVa “appears to be manufactured in SMIC 7-nm technology node” has triggered an outburst of commentary about the failure of American sanctions to stop the advance of Chinese semiconductor technology.

TechInsights is a Canadian provider of semiconductor-related analysis and intellectual property services to technology companies and other subscribers. It is known for its reverse engineering capability.

Referred to as “China-based” by Bloomberg, MinerVa Semiconductor is registered in Canada. But the three directors listed in its registration are Chinese and the address given for one of them is in China’s Henan province. The “About Us” section on the company’s website is blank.

MinerVA Semiconductor claims that its MinerVa7 is “one of the best-valued chips” for mining Bitcoin and that it “utilizes mature foundry technology to ensure chip yield, quality and reliability.”

Semiconductor Manufacturing International Corp, or SMIC, is China’s largest semiconductor foundry (contract manufacturer) and a prominent target of US technology sanctions aimed at curbing China’s access to advanced chips and the capacity to produce them.

The report describes SMIC’s efforts to put 7-nm process technology into production as a qualified success. After noting similarities with Taiwan Semiconductor Manufacturing Company’s (TSMC) 7-nm process, it goes on to say that SMIC’s System-on-Chip (SoC) device seems to be a low-volume “steppingstone” that has the logic but not the memory aspects of a standard TSMC or Samsung product.

This is possible because “bitcoin miners have limited RAM [random access memory] requirements,” the report said. For reference, an SoC is an IC that incorporates a processing unit (logic), memory and other components, creating a specialized computer or other type of electronic system in a single device.

TechInsights also points out that SMIC’s use of Deep Ultra-Violet (DUV) lithography has resulted in a more complex and costly process that probably has lower yields than the Extreme Ultra-Violet (EUV) lithography-based processes now used by TSMC and Samsung.

[Riaz Haq]

Samsung says it is manufacturing 3nm chips in global first
South Korean tech company seizes lead over TSMC in advanced semiconductor race

https://asia.nikkei.com/Business/Tech/Semiconductors/Samsung-says-i...

SEOUL -- Samsung Electronics said on Thursday that it has started mass producing 3-nm chips at its semiconductor plant in Hwaseong, south of Seoul, becoming the first to reach the milestone.

The latest advance in a relentless race to cut the size and increase the power of semiconductors gives Samsung an edge over its archrival Taiwan Semiconductor Manufacturing Co. for now, though competition is only set to intensify.

The South Korean tech giant said the new advanced chip allows a 16% decrease in surface area, 23% higher performance and 45% lower power consumption compared with current 5-nm chips. Samsung has been competing with TSMC to develop cutting-edge chips.

Smaller, more advanced chips are harder to make because they squeeze more transistors onto the same space. The ability to mass produce them is an indication of a manufacturer's technological prowess.

"Samsung has grown rapidly as we continue to demonstrate leadership in applying next-generation technologies to manufacturing," Choi Si-young, head of the company's chip foundry business, said in a news release. "We seek to continue this leadership with the world's first 3-nm process."

The company also said: "Samsung is starting the first application of the nanosheet transistor with semiconductor chips for high performance, low power computing application and plans to expand to mobile processors."

It declined to say which customers will be buying the new chips, citing confidentiality.

Analysts said that while the development is a technological advance, the initial impact will likely be limited.

"While 3nm will be the most available leading-edge technology, in our estimates, the total capacity would account for less than 10% of [the] global foundry industry in leading-edge nodes (16-nanometer and below) in 2023, not a significant factor yet for industrywide demand/supply outlook," Dale Gai, an analyst at Counterpoint Research, told Nikkei Asia in an email. He added that capacity constraints could limit output going forward.

Analysts also say that while the start of the 3-nm chip production is positive for Samsung in reaching the milestone ahead of TSMC, it will take time until the advanced technology creates new revenue for the company.

"It's meaningful that Samsung is mass producing 3-nm chips based on new architecture technology for the first time," said SK Kim, an analyst at Daiwa Captial Markets. "However, it will not automatically lead to attracting new customers and improving earnings because it is not yet ready to produce main stream chips such as mobile CPUs." CPU stands for central processing unit.

The announcement comes amid a global shortage of semiconductors due to bottlenecks caused by the coronavirus pandemic. Manufacturers are still struggling to raise production.

Despite its latest improvement, Samsung will not be able to rest on its laurels.

C.C. Wei, CEO of TSMC, said during an earnings call in April that his company's 3-nm technology will be entering mass production in the second half of this year, adding he believes it will be the world's most advanced in terms of performance, power, and size as well as transistor technology.

TSMC also said in June that it would begin production of ultra-advanced 2-nm chips by 2025. The Taiwanese chipmaking titan is gearing up to introduce 3-nm chip production technology in the second half of this year. Its key manufacturing site is in the city of Tainan in southern Taiwan.

[Riaz Haq]

Senate Approves $280 Billion Bill to Boost U.S. Science, Chip Production
Chips act goes to House, where speaker has promised quick action

https://www.wsj.com/articles/senate-approves-280-billion-bill-to-bo...

The Senate on Wednesday approved a $280 billion bill to boost scientific research and the U.S. semiconductor industry, sending the legislation on to the House, where Speaker Nancy Pelosi has promised quick action.

The CHIPS and Science Act of 2022 creates a $39 billion fund that would provide direct financial assistance for the construction and expansion of semiconductor manufacturing facilities, among other purposes, according to a summary from the Senate Commerce Committee.

The bill was approved 64-33, with 17 Republicans joining Democrats to vote in favor.

Companies that could tap the funding for U.S. expansions include Intel Corp., Taiwan Semiconductor Manufacturing Co., GlobalFoundries Inc., Micron Technology Inc., Applied Materials Inc. and more.

A separate $11 billion program seeks to join with industry to advance semiconductor manufacturing research and workforce training, while another $2 billion fund aims to more quickly translate laboratory advances into military and other applications. Lawmakers added $24 billion in tax credits for investments in semiconductor manufacturing.

The bill has been in the works for more than three years. Senate Majority Leader Chuck Schumer (D., N.Y.) first started discussing it in 2019 with Sen. Todd Young (R., Ind.) when the two were exercising in the Senate gym.

“In the 1970s and 80s our companies could do just fine on their own,” Mr. Schumer said in an interview this week. “But in the 21st century, with countries like China and Germany investing heavily, we could sit back on the sidelines and who would lose out? American workers, American economic dominance, and our national security.”

During debate on the Senate floor this week, the bill’s supporters said that while competition with China was a primary motivator, they were spurred on by the disruption in semiconductor supplies during the Covid-19 pandemic. Most semiconductors, ubiquitous in modern electronics, are made abroad, and companies in industries from medical products to missiles have urged lawmakers to shore up supplies for the long term. A pandemic-related boom in chip demand has helped cause bottlenecks, though it is showing signs of easing in some industries.

“That vulnerable supply chain, if disrupted, could cause not only a severe economic depression in America but also threaten our national security directly,” said Sen. John Cornyn (R., Texas).

Opponents of the bill pushed to attach more strings to the funding and questioned the wisdom of a large subsidy to a profitable industry. Sen. Rick Scott (R., Fla.) called the package “one of the grossest gifts to corporate America I’ve ever seen.”

Sen. Bernie Sanders (I., Vt.) accused Intel Chief Executive Patrick Gelsinger of extorting lawmakers, pointing to the executive’s assertion that his and other companies would likely invest in manufacturing facilities in Europe or Asia if the bill doesn’t pass this summer.

“I worry not only about this bill. I worry about the precedent,” Mr. Sanders said. “Any company who is prepared to go abroad, who has ignored the needs of the American people, will then say to the Congress, ‘Hey, if you want us to stay here, you better give us a handout.’”