From the F-35 to electric vehicles, semiconductors play a critical and strategic role both in our nation’s economic ambitions and U.S. national security goals. This role will only grow in importance, but the chronic semiconductor shortage is hampering the United States’ post-COVID economic recovery—and highlighting U.S. semiconductor supply chain vulnerabilities.
Against this background, what can the United States and its allies do to strengthen these vital supply chains?
On October 26, SAFE hosted a distinguished group of speakers to discuss the economic and national security need for a more expansive and resilient U.S. semiconductor supply chain including the expansion of cooperation with strategic partners such as Taiwan, which manufactures the largest share of high-end semiconductors in the world.
A Solid Partnership: Strengthening U.S.—Taiwanese Semiconductor Cooperation
In an engaging fireside chat between Michael Splinter, Chairman, U.S. —Taiwan Business Council and Chairman, Nasdaq, Inc. and The Honorable Wang Mei-hua, Minister of Economic Affairs for the Government of Taiwan, Minister Wang affirmed the close relationship between the two countries, “Taiwan—US technology cooperation goes beyond the semiconductor industry…both sides have created a very solid and trusted partnership.”
Minister Wang also suggested areas where the U.S.—Taiwan relationship can be improved, primarily by finalizing the Taiwan—U.S. Bilateral Trade Agreement (BTA). “The Taiwan—US BTA can ensure a more stable investment environment and trade protection for our respective industries for the development of semiconductor, ICT and 5G industries,” she added.
Developing Domestic Capabilities
In addition to working with our allies, reshoring manufacturing and bolstering American innovation is also critical to solving the disruptions that have so profoundly impacted the U.S. economy. Although the U.S. leads in semiconductor design, its share of global chip manufacturing has shrunk from 37 percent of world production in 1990 to just 12 percent today.
James Rowland, Director of International Government Relations of Ford, highlighted the urgent nature of the issue, noting, “in the United States, we will not be able to build two million vehicles this year due to the shortage of chips”. Similarly, W. Patrick Wilson, Vice President of Government Affairs at MediaTek, explained the uphill competition American chip producers currently face, adding, “we are the only OECD country with an existing semiconductor capacity that doesn’t have a federal incentive program…the pressure is just continuing to mount on the U.S. to get in the game.”
Competing With China
SAFE was also joined by Senator John Cornyn of Texas, who pointed out that “there is a clear and urgent need to reorient the way this country views and responds to manufacturing challenges from China.” The CHIPs for America Act, which Senator Cornyn sponsored and was passed with overwhelming bipartisan support, is designed to address this issue by providing federal funding to support investment in developing U.S. manufacturing capacity.
Focusing on new approaches to innovation and policy will be vital to the future success of the United States and its allies. SAFE is launching a new Semiconductor Center to identify potential supply chain disruptions and recommend appropriate policy and allocation of funding so that the United States can build a more secure and resilient semiconductor ecosystem.
For the full discussion, please watch the event below.
Admiral Dennis C. Blair, Chairman, SAFE, Former Director of National Intelligence & Commander, U.S. Pacific Command
The Hon. Wang Mei-hua, Minister of Economic Affairs, Government of Taiwan
Michael Splinter, Chairman, U.S. – Taiwan Business Council and Chairman, Nasdaq, Inc.
Jon Hoganson, Corporate Vice President of Government Relations, AMD
W. Patrick Wilson, Vice President of Government Affairs, MediaTek
Senator Byron Dorgan (D-ND) (Ret.), former Chair of the Appropriations Committee
James Rowland, Director of International Government Relations, Ford Motor Company