Group calls for easing rules on U.S. tech sales to China
Mike Clendenin
EE Times
(07/22/2005 8:36 AM EDT)
TAIPEI, Taiwan — The U.S.-Taiwan Business Council said the U.S. government should ease rules that inhibit technology sales to Asian companies, especially those with fabs in Taiwan and China.
Acknowledging the twin trends of Asian growth and U.S. decline in fab building, the advocacy group nevertheless said this shouldn’t automatically lead Washington to conclude that its economy or security are at risk.
“What U.S. policymakers are failing to take into consideration is the nature of the global semiconductor industry, where contract chip making by foundries in Taiwan and China is on the rise due to the exorbitant costs associated with owning and operating wafer fabs,” said Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council.
“The US has greatly benefited from the fabless business model, and is now the world’s leader in both chip design and chip-making equipment. To remain competitive globally, U.S. businesses cannot disregard factors such as favorable investment incentives and the value and cost-savings of having chip making in close proximity to electronics goods manufacturing — much of which is done by Taiwan businesses in China,” he said.
Earlier this week, a survey by data tracker iSuppli Corp. found that the US continues to dominate electronic system design. Electronic system design in the U.S. is expected to drive 33.5 percent of global semiconductor purchasing in 2005, amounting to $58.7 billion worth of chip sales for the year, according to iSuppli. The China/Hong Kong region accounted for 5.4 percent of design, behind Japan, Taiwan and Germany and ahead of South Korea.
Despite this lead, what worries some, like the U.S. Semiconductor Industry Association (SIA), is that China is proving attractive for fab investment. SEMI recently projected that China will add 20 new wafer fabs between 2005 and 2008. In 2004, China and Taiwan were the world’s fastest growing markets for chip making equipment, with 132 percent and 166 percent growth respectively, while North America was the slowest at 23 percent.
Scope of China chip expansion debated
Yet China is coming from a relatively low base for fabs, so its growth usually looks larger in percentage terms. Still, 20 fabs in three years is a lot of activity — the SIA has already cast doubt on the SEMI number, saying it would be closer to 10 to 15 fabs. That would still be about half of those built worldwide during that time period.
The Greater China region is already digesting last year’s big gains, with capital spending in Taiwan expected to be down about 20 percent in 2005, while China will fall by 50 percent year-over-year due to overcapacity issues, according to analysts at Piper Jaffray. The U.S. will also outspend China by at least two times when it comes to new fab equipment through at least 2008, according to SEMI.
Hammond-Chambers alluded to recent Defense Department reports that linked the decline in U.S. fabs to concerns within the defense establishment that the U.S. wouldn’t be able to contract out advanced military ASICs.
Another concern is limiting China’s access to advanced technology that could be used for military purposes. However, Hammond-Chambers cautioned that “overly strict” technology controls on things such as semiconductor equipment wouldn’t lessen the U.S. reliance on Asia as a main source of chip manufacturing.
“The U.S. should instead focus on encouraging sufficient domestic chip production through investment incentives, while at the same time working with its allies to formulate flexible overseas investment policies that balance national security concerns with global economic necessities,” he said.
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