LI Kotetsu / “養鶏金卵と殺鶏取卵（Feed a chicken to take eggs or kill a chicken to get meat and eggs）”

SGRA kawaraban 943 of November 3 reported my essay “Let’s learn about Taiwan more” which the author reported at the session of INAF (Institute for Northeast Asian Future) of the 6^th Asia Future Conference. 

 

I made a report under the theme “Re-organization of Global Supply Chain in Semiconductor Industry – Struggle for Hegemony between the United States and China, and Taiwan”. Amid such severe trade friction and struggle for hegemony between the US and China, it is said that a “Country which controls semiconductors can control the 21^st century”. I gathered and analyzed articles and tried to clarify the relations between the US, China and Taiwan for the development, production and sales of semiconductors.

 

In November, we got noteworthy news related to this theme. “(Central Bangkok) Summit Talks of APEC (Asia Pacific Economic Corporation) ended in Bangkok on November 19.

Morris Chang (91 years old), on behalf of Taiwan President Tsai Ing-wen, revealed at a press conference on the 19^th night that he had unofficial talks with Xi Jinping, General Secretary of the Chinese Communist Party, in the morning of 18^th, the first day of the conference. According to Mr. Chang, they exchanged greetings in the breakroom on the morning of the 18^th. When he told Xi that he got an operation on hip joint last year, Xi Jinping responded saying “I’m glad to see that you seem fine”. He said also about the meeting with US Vice President Kamala Devi Harris. According to him, Ms. Harris welcomes the factory construction of TSMC (Taiwan Semiconductor Manufacturing Company), which is a leading company in the semiconductor industry, in Arizona and showed American determination which supports Taiwan. Mr.　Chang is a founder of TSMC and it is the sixth time since he was elected as the representative of APEC in 2006. It is the fifth time since 2016 since President Tsai’s inauguration.

 

TSMC is a world-leading semiconductor company. According to the Ministry of Economic Affairs in Taiwan, Taiwan foundry (contract manufacturing of semiconductors) is enjoying a 70 percent market share in the world. It is said that TSMC, the top of the foundry, exceeds 50%. Especially, they are taking lead in the world in the logic device industry. According to SIA (Semiconductor Industrial Association in America), 92% of factories which can produce less than one nano-meter line width exist in Taiwan and 8% in South Korea. Especially foundries in Taiwan can produce the world’s latest computer chips which can be mounted in almost all high-tech machines such as from cell phones to fighter planes.

 

As to semiconductors, both USA and China rely on Taiwan. According to the Nikkei Shinbun, TSMC is supplying high-performance chips Xilinx which can be mounted on F-35 jet fighters and other military chips approved by the US Department of Defense. We do not know how the US army relies on Taiwan chips. But we can imagine its importance from the fact that US Government pressurize TSMC to move their military chip factory to the US mainland from Taiwan. US industry relies on Taiwan semiconductors. It is said that only TSMC can supply 5nm processor chips which are mounted on the products line of iPhone 12, MacBook Air and MacBook Pro. A15 Bionic chips which are built-in into the latest gadget of iPhone 13 or iPad mini of Apple are made by TSMC. Other big enterprises in America like Qualcomm, NVIDIA, AMD and Intel are TSMC’s clients.

 

China imported semiconductor chips amounting to USD 300billion from Taiwan in 2020.

Needless to say, Taiwan is the biggest import source of China. They are investing hundreds of billions of Dollars to minimize their dependability on foreign chips under the plan “China Made 2025”. But it will take time to cover their needs by domestic supply. SMIC, semiconductor manufacturer in China, have entered 7nm production recently. But they are a few generations behind TSMC which produce 3nm or 2nm already. It means Chinese companies cannot help but rely on Taiwan-made chips. Huawei, the Chinese high-tech company, is the second largest customer of TSMC and relies on TSMC for 5nm and 7nm processors. It is said that Huawei contributed to TSMC’s revenue by 12% in 2021.

  

What kind of relations are there between the above report and the title of this essay “養鶏金卵と殺鶏取卵“？ The two idioms which consist of four Chinese characters are Chinese proverbs. It means “Feed chickens for the purpose to keep taking eggs or kill chickens to get eggs and eat their meat”. The clever choose the former and the stupid choose the latter.

 

US Government applied a permission system for the export of semi-conductor production equipment for miniaturization 14 nm or more to SMIC, the biggest foundry in China. It is an embargo. US Government tightened regulations having applied a permission system for the export of high-efficient AI chips to China which are suspected to be used for military purposes. On August 9, CHIPS Bill was enacted in the US. It encourages production capacity, research and development, and supply chain of the US semiconductor industry by subsidy amounting＄52.7 billion and tax deduction. People say, “The one who controls semi-conductors can control the world”. If Taiwan would be swallowed by China, China could control the world. The US, the hegemony, cannot concede it. We want to avoid the US-China war over the Taiwan matter.  

 

How is the correspondence of China? When Nancy P. Pelosi, Speaker of the US House of Representatives, visited Taiwan on August 2, a few authorities in China reacted all at once saying “she violated Chinese ‘Red-line’”. The Chinese Foreign Ministry called up US Ambassador Mr. William J. Burns at night unusually. He condemned severely saying “Nancy P. Pelosi provoked intentionally and destroyed peace and stability of Taiwan strait. The result is very important. We cannot overlook it and you must compensate for your mistake.” In the afternoon of four days after the return of Pelosi to the US, China announced that they had “Important military exercise” at surrounding areas of Taiwan strait having launched eleven missiles at six airspaces and waters. We remember it vividly.

 

At the 20^th National Congress of the Chinese Communist Party, General Secretary Xi Jinping said that “We never promise we waive our use of force” and “We must accomplish our reunification”. The most important theme of “Great reconstruction of ‘Zhonghua minzu (Chinese race)’ in his saying is “Homeland unification”. The US and the West analyze that Xi Jinping aims at Taiwan unification during his term of office. If Xi Jinping understands peaceful reunification of Taiwan is difficult (the Democratic Progressive Party of Taiwan is opposing their unification), unification by use of armed might “cannot be denied”.

 

According to a net-media “観察者網”（Observer Network？）、economist Ms. Chen Weiling, China Center for International Exchange (she is said to be one of the influential economist for policy making of the Government) made a speech at a lecture meeting of People’s University of China on May 30. She said, “If the US and the West impose destructive sanctions on China like against Russia, we must get back Taiwan for the reconstruction of the supply network. TSMC was originally Chinese own”.  

 

If the Chinese Government would decide and take an action following her words, it may lead to a war for the “liberation of Taiwan”. It means that if China would expect to get Taiwan which lay eggs, it is the same that China killing Taiwan only for getting one egg. I hope the leaders of China would not be so stupid. China should select the way of the wise men “feed chickens to be kept supplying eggs”. It is a way for peace. In such meaning, flexible diplomatic meeting of Mr. Morris Chan with leaders of the US and China at APEC had an important meaning.

 

 

SGRA Kawaraban 725 in Japanese (Original)

 

 

LI Kotestu / Chairman of INAF (Institute for Northeast Asian Future)

   

Translated by Kazuo Kawamura

English checked by Sabina Koirala