Previously, foreign media reported that the United States has further tightened related semiconductor equipment control measures, which means that it will include manufacturers in the United States and related countries to reduce the maintenance of semiconductor equipment of Chinese manufacturers. Today, there is news in the market that the U.S. Department of Commerce has officially started taking action, currently targeting Chinese companies or units that have been included in the U.S. export control entity list. How Taiwan responds to this has become the focus of everyone’s attention.
Bloomberg recently reported that Alan Estevez, deputy secretary of the U.S. Department of Commerce, pointed out that regulations are currently being implemented not to repair key parts of Chinese manufacturers’ semiconductor manufacturing equipment. Therefore, the relevant prosecution content is currently being discussed with allies. Because of the cooperation with allies, it is critical to determine which equipment is important for subsequent repair and which is not. Among them, the United States is not prepared to impose controls on non-critical components that Chinese companies can repair themselves. Therefore, its discussion results are important. In this regard, the market has reported that the Financial Times has confirmed that Washington has begun to require the governments of Japan, South Korea, the Netherlands and other countries to restrict their companies from providing operation and maintenance services to Huawei’s supply chain.
According to a statement on Facebook by the online name Jeremy Chih-Cheng Chang, since the export control rules (EAR) were upgraded in 2022, the federal government has directly restricted “US Persons” (US citizens, residents and US companies). After the EAR blocked exports and technology supply within China’s technology red lines, and a large number of “Americans” including green card holders withdrew from China’s semiconductor production sites, people from all walks of life are watching when and how the Ministry of Commerce will ask allied countries to follow up.
However, over the past year, various public information has pointed out that Huawei and SMIC still have a large number of experienced and senior engineers from Japan, South Korea, Germany, the Netherlands, and Taiwan in China’s semiconductor fabs. Provide services including machine maintenance, parameter adjustment and various debug consultations. Even if the United States further requires Japan and the Netherlands to restrict the export of semiconductor equipment below the red line to China in 2023, there are still a large number of “United Nations Army” engineering teams in China’s domestic semiconductor factories, using already purchased equipment and equipment acquired from the second-hand market. The equipment continues to help China’s national semiconductor team advance into the five-nanometer process while accelerating the expansion of mature processes.
Faced with this situation, the United States finally took what they thought was the most reasonable approach and began to require the export control departments of Japan, South Korea, and European countries through diplomatic channels to target companies and nationals of these countries to continue to use the technology provided by Chinese semiconductors. Guidance services will be strengthened. Of course, so far, the governments of Japan, the Netherlands and South Korea have still adopted a low-key, passive and silent resistance, complaining by the way that the United States itself wants to control the shipments of American Fabless and equipment companies to China first, and then ask others to do so later. For example, Peter Wennink, the recently retired former CEO of ASML, a major exposure machine manufacturer, once said that there is no reason to stop our follow-up services for customers who have purchased equipment.
However, some industry players previously stated that related semiconductor manufacturing equipment purchases generally include maintenance and software upgrade services. To stop providing services to customers who are still within the term, there may be a breach of contract. However, if this time it is an injunction issued by the government, there should be no special breach of contract issues in this regard. However, maintenance and upgrade services are also an important source of revenue for related equipment companies, and manufacturers may also have to worry about how to respond.
As for the impact of such things on Taiwan’s technology industry, Jeremy Chih-Cheng Chang emphasized that it may be necessary to pay attention to requirements from the federal government. Although there is no source of information that the United States will use diplomatic channels to find the Taiwan government to do the same thing, in fact, it is definitely impossible. After all, it is well known that Taiwanese engineers play the most important role in China’s semiconductor manufacturing site. of. Secondly, this time the United States requires countries such as Japan, South Korea, and the Netherlands to use their own export controls. The premise is that the United States understands that the export control regulations of these countries do have ways to control them. The next step is just a question of whether the government wants to control them. For example, Japan’s foreign affairs law has a complete regulatory framework for the provision of pure technology. If the Japanese government follows the requirements of the United States, it will indeed prevent Japanese companies from providing operation, maintenance and various after-sales consulting services.
However, Taiwan’s export control regulations “Trade Law” still control physical goods, and the technical services part is very limited to “technology incidental to the goods.” Therefore, if there are various “service” models that have nothing to do with the export of goods, it is probably difficult for the Taiwanese government to intervene if it wants to. Therefore, Jeremy Chih-Cheng Chang also proposed three methods for reference. First of all, Taiwan’s new government will first finalize the draft amendment to the export control law and put it on the table. If the government and the opposition have different opinions, everyone can discuss it and show sincerity to the United States.
Secondly, we must first strengthen our industrial intelligence capabilities so that we have something to exchange for when asked by AIT. This will let people know that our regulatory authorities are on the same page, and we will have the confidence to hold on to the boundaries of our own country’s control. Finally, let’s learn from Japan and launch an export control manager certificate to provide management and legal cadres in Taiwan’s industry with professional training on export control regulations (and also increase employment opportunities). There are too few talents with export control-related professional knowledge in Taiwan’s technology industry. , which is not conducive to assisting enterprises in making professional risk management and control decisions in business decisions. Therefore, I believe that the above three practices will not affect the company’s stock price, and will also contribute to the win-win situation of the Taiwan government, companies and the United States.
(First image source: shutterstock)
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