Taiwan, despite enjoying a kingmaker position, also wants to bolster its own leading-node logic chips supply chains. Taiwan’s minister of economic affairs, Wang Mei-hua, has stated that Taipei “strive[s] to grow Taiwan’s supply chain and have suppliers in close proximity to our chipmakers.” Taiwan continues to incentivize semiconductor fabrication, and TSMC, whose growth was funded by the Taiwanese government, has 83 percent market share in 5 nm fabrication. Additionally, TSMC has reportedly received approval for a 2 nm fabrication plant and will invest $100 billion in growing chip capacity over the next three years.

As for South Korea, it too has incentivized leading-node logic fabrication. Seoul subsidizes approximately 33 percent of the upfront construction costs for fabrication plants. IC Insights, a research firm, found in a November 2020 report that South Korea “remains significantly more leading-edge focused than the other regions and countries.” At this time, Samsung has 17 percent market share in 5 nm fabrication.

U.S. Government Efforts

Realizing the state of things, both the U.S. Congress and the White House have sought to incentivize chip research and fabrication to address national security concerns over semiconductor supply chains. These efforts include bills like the CHIPS Act, the Endless Frontiers Act, the FABS Act, and the Investing in Domestic Semiconductor Manufacturing Act. However, none of these bills have yet appropriated funding for semiconductors, and even if they do, the bills broadly target semiconductor research and fabrication while neglecting supply chains for leading-node logic chips. For example, the CHIPS Act—which provides $52 billion for semiconductor supply chains, including $2.5 billion for advanced assembly, testing, and packaging, and $2 billion for mature nodes—does not include specific funding for leading-node logic chip supply chains. Instead, it provides general financial assistance for “semiconductor fabrication, assembly, testing, advanced packaging, or research and development.” Likewise, the FABS Act and American Foundries Act, also seek to grow semiconductor fabrication capacity in a broad manner—unintentionally neglecting the importance of leading nodes. So regardless of American dominance in research and fabrication, the United States will still be dependent on foreign supply chain links for leading-node logic chips.

Successive U.S. presidential administrations have sought to strengthen semiconductor supply chains. The Trump administration galvanized focus on semiconductor supply chains, and the Biden administration has continued this focus, highlighting the importance of semiconductors in Executive Order 14017. The administration has also designated semiconductors as central in its supply chain initiative. But, the White House has still not established criteria for allocating semiconductor funds appropriated by the Congress—they are, for example, expected to provide specific allocation criteria for the CHIPS Act. Given the administration’s own supply chain report noting the vulnerability of logic chips supply chains, the administration’s criteria may yet target leading-node logic chips.

Addressing an Important Need

Leading-node logic chips are critical for emerging technologies, including AI, quantum computing, advanced wireless networks, and the Internet of Things—all of which will seriously impact America’s economy and military capabilities. Given this, it is essential that the U.S. government develop resilient supply chains for these chips. Current efforts broadly targeting semiconductor research and fabrication are not enough; key supply links and leading-node logic chips cannot be neglected, lest national security be put at risk. As U.S.-China competition intensifies, Washington must address vulnerabilities across supply chains—not piecemeal links—and prioritize leading-node logic chips rather than all chips.

Shubham Dwivedi is a Fulbright Doctoral Fellow at Georgetown University’s Science, Technology, and International Affairs Program.

Gregory D. Wischer is a master’s candidate at Georgetown University’s Security Studies Program.

Image: Reuters.