A “Black Ship” versus a “White Knight”

The opening of TSMC’s Kumamoto factory in Japan (Japan Advanced Semiconductor Manufacturing, JASM) has been characterized by some Japanese media as the arrival of a “Black Ship” versus a “White Knight.” The term “Black Ship” is historically significant in Japan, symbolizing the forceful opening of Japan to the world by the United States in the 19th century, leading to significant modernization.

In Japanese textbooks, the arrival of the Black Ship is seen not as aggression but as a catalyst for Japan’s modernization, marked by events such as the Meiji Restoration. The use of the term “Black Ship” by Japanese media in relation to TSMC’s Kumamoto factory reflects the significance they attribute to Taiwan’s semiconductor giant setting up operations in Japan.

However, if the term “Black Ship” is used by a Taiwanese speaker, it may come across as somewhat arrogant. Some Japanese media caution against viewing TSMC’s Kumamoto factory as a negative development, warning against references to a “semiconductor bubble” and portraying TSMC as Japan’s savior without acknowledging local efforts. They suggest that TSMC’s historical significance may not match that of the Black Ship, emphasizing the need for awareness in Japan’s semiconductor industry.

Despite Japan’s strong technological capabilities, TSMC’s chip production depends on Japanese semiconductor equipment and upstream materials. Conversely, Japan’s semiconductor equipment and materials are insufficient without TSMC’s foundry capabilities. TSMC’s establishment in Kumamoto is seen as Japan’s attempt to regain influence in the global semiconductor industry.

On the contrary, Japan’s semiconductor equipment and upstream materials cannot complete chip production without TSMC’s wafer fabrication process. Therefore, TSMC’s establishment of a factory in Kumamoto, Japan, seems more like Japan’s domestic initiative to regain influence in the global semiconductor industry.

Taiwanese media presents another observation. From the Japanese perspective, TSMC is merely an invited “White Knight” to counter South Korea or the emerging Chinese semiconductor industry. If Japan’s semiconductor industry truly needs saving from this knight TSMC, with Japan’s face-saving national character, it might be difficult to accept.

Deep down, Japan’s semiconductor technology industry still believes that Japanese technology ranks first in Asia. If they were to choose an ally, Taiwan, compared to China and South Korea, is more suitable as Japan’s ally.

Influenced by geopolitical factors, whenever there is tension between China and Taiwan, various military threats or verbal intimidation could jeopardize Taiwan’s current semiconductor industry. This might lead to a blockade of the global semiconductor industry supply chain or even a crisis of disruption.

The smooth commencement of TSMC’s Kumamoto factory instantly eliminates these uncertainties related to geopolitical risks. Simultaneously, the alliance between Taiwan and Japan in the semiconductor industry is officially declared to the global semiconductor industry. While TSMC continues to develop advanced process research and development in Taiwan, the TSMC Kumamoto factory in Japan will handle the production of advanced process semiconductor chips. This division of labor in semiconductor chip production is quietly changing the ecology of the global semiconductor industry supply chain.

Reflections of Intel and Samsung: Navigating the Semiconductor Battlefield

The intensified competition between TSMC and Intel marks a pivotal moment in the semiconductor landscape. Intel, a longstanding powerhouse, finds itself in the midst of a technological arms race as TSMC’s bold expansion and commitment to cutting-edge processes pose a formidable challenge to Intel’s market dominance.

The semiconductor alliance between Taiwan and Japan undoubtedly sends a stark warning signal to the United States’ INTEL and South Korea’s SAMSUNG. During Intel’s inaugural “IFS Direct Connect 2024” event on February 21, 2024, CEO Singh announced that their wafer fabrication service (IFS) had secured orders for the 18A (1.8-nanometer) process from Microsoft. They have also inked agreements with four major clients, with an anticipated order value reaching $15 billion. Intel aims to become the world’s second-largest foundry by 2030, with aspirations to reclaim process leadership through the Intel 18A process in 2025.

The recent revelation of Intel securing orders for its 1.8-nanometer process underscores the urgency felt within Intel to reclaim its technological edge. This rivalry transcends individual companies; it propels innovation and reshapes the broader contours of the semiconductor industry’s competitive landscape.

Facing TSMC’s expansive reach, Intel stands at a crossroads, compelled to adapt swiftly to the evolving technological terrain. The semiconductor industry is undergoing a transformative phase that urges established players to reevaluate strategies and embrace innovation with unprecedented vigor. Intel’s response becomes not just a strategic move for individual market share but a pivotal factor in determining the industry’s future equilibrium.

As TSMC extends its global reach, an intricate dance unfolds with Samsung, another heavyweight in the semiconductor arena. Samsung’s commanding presence in both memory and logic chips places it in direct competition with TSMC. However, beneath the surface rivalry lies a fundamental interdependence. TSMC relies on Samsung for specific materials, weaving a complex web of relationships within the industry. This delicate dance necessitates careful strategic maneuvering, as any disruptions could send shockwaves through the global semiconductor supply chain.

For Intel, the alliance between Taiwan and Japan signifies more than a competitive challenge; it’s a call to reflection and adaptation. The collaborative efforts between Taiwan and Japan set new standards for cooperation in an industry where guarded innovation has been the norm. Intel must navigate not only the technological rivalry with TSMC but also respond effectively to the changing landscape of partnerships and alliances. Adaptability becomes the cornerstone for Intel’s continued relevance and leadership in the semiconductor saga.

Similarly, Samsung faces a nuanced challenge. The intricate relationship with TSMC requires Samsung to strategically position itself amidst intense competition and interdependence. The quest for technological supremacy is not solely an individual pursuit; it involves delicate collaborations and alliances that shape the industry’s trajectory. Samsung’s response to these dynamics will determine its resilience and standing in the ever-evolving semiconductor battlefield.

On January 15, 2024, the South Korean government declared its support for Samsung Electronics and SK Hynix, envisioning a collaborative effort over the next 20 years to establish a “semiconductor super-large wafer fabrication complex.” The total investment is staggering, amounting to 622 trillion Korean won (approximately $472 billion). South Korea aspires to possess world-class production capacity focused on advanced products, including chips utilizing the 2-nanometer process and high-bandwidth memory. The Ministry of Trade, Industry, and Energy in South Korea forecasts substantial growth, projecting that by 2030, South Korea’s global market share in non-memory chips will surge to 10%, a significant increase from the current 3%.

In this multifaceted semiconductor saga, where the stakes are unprecedentedly high, Intel and Samsung find themselves at the epicenter of a transformative narrative. As TSMC’s foray into Japan acts as a catalyst for broader industry introspection, Intel and Samsung must not merely contend with each other but navigate the complex intersections of competition, collaboration, and global geopolitical shifts. The industry’s future hinges on their strategic reflections and nimble responses in this era of profound semiconductor transformation.

Implications for Industry Alliances

In navigating these implications, industry players, including Intel and Samsung, must not only monitor technological advancements but also anticipate and respond strategically to the changing landscape of alliances. The global semiconductor stage is set for a transformative journey, where adaptability, collaboration, and forward-thinking are imperative for sustained leadership in an industry that stands at the intersection of technology, geopolitics, and innovation. The implications for industry alliances extend far beyond the immediate players, shaping the future trajectory of semiconductor manufacturing on a global scale.

Global Geopolitical Tensions: The semiconductor industry has increasingly become a focal point in geopolitical tensions, with the global supply chain susceptible to disruptions due to political uncertainties. TSMC’s strategic move into Japan not only diversifies its manufacturing locations but also serves as a diplomatic maneuver amid the ongoing geopolitical uncertainties, especially between China and Taiwan. The industry now faces a shifting geopolitical landscape, prompting other nations to reassess their semiconductor strategies. The potential ripple effects may lead to the formation of new alliances, creating a complex web of geopolitical entanglements.

Technology Transfer and Innovation: Beyond geographical expansion, the collaboration between Taiwan and Japan represents a paradigm shift in the industry’s approach to technology transfer and innovation. Traditionally, semiconductor companies guarded their technological advancements closely. However, the partnership between TSMC and Japan challenges this norm, paving the way for a more collaborative model. The exchange of expertise between these nations sets a precedent for a new era of cooperative approaches. This shift may inspire other industry players to consider similar alliances, fostering a culture of shared innovation for the greater advancement of semiconductor technology globally.

Supply Chain Resilience: TSMC’s strategic dispersal of production facilities across Taiwan, Japan, and the United States goes beyond operational efficiency—it underscores the crucial importance of building resilient semiconductor supply chains. Recent geopolitical tensions and the ongoing global chip shortage have exposed vulnerabilities in the current centralized manufacturing model. The industry is now at the precipice of a paradigm shift, moving towards more geographically distributed and resilient supply chains. This evolution may lead to a collaborative reimagining of the semiconductor supply chain, with companies prioritizing flexibility and adaptability to withstand unforeseen disruptions.

Emergence of New Industry Players: The collaborative efforts between Taiwan and Japan serve as a catalyst for potential new entrants into the semiconductor arena. As alliances redefine industry dynamics, emerging players from different regions may seek to capitalize on the evolving landscape. Nations with burgeoning technological capabilities may leverage partnerships to establish themselves as significant contributors to the global semiconductor supply chain. This has the potential to challenge the existing dominance of established players, introducing a new wave of competition and innovation.

Regulatory and Policy Adjustments: The evolving semiconductor landscape may prompt governments and regulatory bodies to reassess their policies and regulations concerning the industry. As alliances reshape the competitive environment, there could be an increased focus on fostering innovation, protecting intellectual property, and ensuring fair competition. Policymakers may need to adapt to the changing dynamics, offering incentives for collaborative ventures while safeguarding national interests. This could lead to a new era of regulatory frameworks designed to nurture industry alliances and promote technological advancement.

Conclusion

The JASM, as TSMC’s strategic expansion into Japan signifies more than the establishment of a manufacturing facility; it is a pivotal moment reshaping the very foundations of the global semiconductor industry. The juxtaposition of a “Black Ship” and a “White Knight” captures the complex interplay of historical significance, technological competition, and geopolitical alliances.

The intensified competition between TSMC and Intel, exemplified by Intel’s pursuit of the 1.8-nanometer process, highlights a transformative phase in semiconductor manufacturing. As TSMC solidifies its global footprint, the industry witnesses a paradigm shift, challenging established players like Intel to adapt swiftly to the evolving technological landscape. Intel’s response becomes critical in determining the future equilibrium of the semiconductor power dynamics.

Similarly, the delicate balancing act between TSMC and Samsung underlines the intricate relationships within the industry. While competition is fierce, there exists an essential interdependence, with TSMC relying on Samsung for specific materials. Disruptions in this delicate balance could reverberate across the semiconductor supply chain, impacting not only these giants but also the broader technological ecosystem.

Implications for Intel and Samsung extend beyond technological rivalry. The alliance between Taiwan and Japan acts as a compelling force, setting new standards for collaboration in an industry where guarded innovation has long been the norm. Intel and Samsung must not only contend with each other but also navigate the evolving landscape of partnerships and alliances, ensuring they remain at the forefront of technological innovation.

As TSMC’s Kumamoto factory expands and the Arizona facility comes online, the semiconductor industry prepares for a future in which Taiwan and Japan emerge as dominant forces shaping the rules of the global supply chain. The collaborative efforts between these nations send a clear message to Intel and Samsung – adaptability and strategic partnerships will be key to maintaining leadership in an industry undergoing unprecedented transformation.

In this ever-evolving semiconductor saga, where the stakes are high, JASM, TSMC’s foray into Japan acts, as a catalyst for broader industry introspection. The “Black Ship” has not just docked; it has set in motion a series of events that will redefine the semiconductor landscape, with Intel and Samsung at the epicenter of this transformative narrative.