U.S. Chip Firms Push For Supply Chain Ties With Taiwan Firms In Government-Level Meet

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Officials from the Taiwanese Ministry of Economics, U.S. semiconductor firms and the Taiwan Semiconductor Manufacturing Company (TSMC) met virtually on Friday to discuss cooperation in the chip sector, reports Taipei Times. The meeting comes as a global chip shortage for automobiles hurts Western economic recovery from the ongoing pandemic, and among the matters discussed was the potential for Taiwan to enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Qualcomm, Corning, United Microelectronic and TSMC Representatives Join Government Officials Virtually To Discuss Supply Chain Cooperation

At the heart of the meeting's agenda lay discussions to deepen the cooperation between the United States and Taiwan for chip supply chains. Statements made by Taiwan's Minister for Economic Affairs Ms. Wang Mei-Hua indicate that it was dedicated towards representatives from U.S. chip firms and TSMC to discuss their interdependence.

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On the American side, representatives of Qualcomm, Corning, the Semiconductor Industry Foundation (SIF) and the Information Technology and Innovation Foundation (ITIF) were present. From the Taiwanese side, TSMC's vice president and general counsel Ms. Sylvia Fang, United Microelectronics' chief financial officer (CFO) Mr. Liu Chi-tung, representatives from Taiwanese chip industry firm SEMI and other companies also participated.

During the meeting, the U.S. side suggested that Taiwan, South Korea and the U.S. should join the CPTPP and that the U.S. and Taiwan should sign a free trade agreement to deepen their cooperation in the chip sector, in particular, revealed Ms. Wang. Additionally, the minister also stated that the idea of America pushing the World Trade Organization (WTO) for an IT agreement to further reduce chip tariffs was also brought up.

U.S. auto giant Ford Motors has cut down the production of its F-150 semi due to a global automobile chip shortage.

The CPTPP is a trade agreement between 12 countries that followed after the U.S. withdrew from the Trans-Pacific Partnership (TPP) in 2016. Following the American withdrawal, the new agreement was modified to remove policies that the U.S. had advocated for.

Also present in the meeting were officials from the freshly-elected American administration, but Ms. Wang did not reveal their identities owing to a “longstanding mutual understanding” reports Taipei Times. Additionally, while the ongoing automobile chip shortage was not the main agenda, the American side thanked the Taiwanese companies for their efforts to speed up supply. These efforts came after officials from Germany, Taiwan and TSMC met earlier following which TSMC was reported to have agreed to kick off a 'Super Hot Production Run' which reduces the lead time for the processors but comes at the cost of additional capital injection and potential yield decreases.

According to Taipei Times,

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“The word that came up over and over again is ‘interdependence,’” Wang said. “US and Taiwanese semiconductor supply chains rely on each other.”

“On the US side, it was suggested that Taiwan and the US should sign a free-trade agreement to deepen our cooperation,” Wang said.

“They would also like to see Taiwan and [South] Korea join the CPTPP, as well as the US,” she added.

She said that they want the US to push for an information-technology agreement within the WTO, which would “further reduce tariffs on semiconductors.”

The meeting was held in the Taipei Economic and Cultural Representative Office in Washington, D.C. and the American Institute in Taiwan, stated the minister, going on to add that it was the first of more supply chain cooperation meetings that will be held in the future.

It comes as the global chip supply chain becomes consolidated in Taiwan and the island's fabs struggle to meet the world's demand for silicon. This demand is only expected to increase as autonomous driving systems and devices under the ambit of the Internet of Things (IoT) make their way into the hands of more users.

The author has no position in any of the stocks mentioned. NewAgeAds LLC has a disclosure and ethics policy.
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