Fab 4 aims to take super chips off China’s menu

Tension in the Indo-Pacific triggers a semiconductor battle for the future of high-tech across the globe

They are known as the Fab 4 in maybe a passing homage to the legendary 1960s band The Beatles. But that is as far as it goes for John, Paul, George and Ringo.

The latest quartet involves the semiconductor superpowers of South Korea, Taiwan, the United States and Japan or the “Fab 4 Chip Alliance.”

Between them, they could “strangle” China’s high-tech industry, the battleground of the New Cold War in the Indo-Pacific

“China has the market, but the US has the technology,” Yeo Han-koo, who served as South Korea’s trade minister until May, said. 

“Without technology, you have no product. Without a market, at least you can find a way to diversify and identify alternatives,” he told the Financial Times earlier this week.

Chips with everything:

  • Semiconductors are the new oil of the 21st century.
  • They power the high-tech revolution from smartphones to satellite arrays, driving the Internet of Things.
  • Taiwan Semiconductor Manufacturing Company, or TSMC, dominates the high-end chip sector.
  • South Korean group Samsung and American firm Nvidia are also major players.
  • But it is not just about the manufacturing process. 
  • The chip alliance will also include Western semiconductor designers and Japanese equipment makers.

Delve deeper: Tech leaders such as TSMC or Samsung still lean heavily on suppliers of equipment, software and materials. Most of them are in the US, Japan and Europe.

If the US is to decouple from China, it will have to rope in other allies to form a technological iron curtain.

Global Times

What was said: “Technology theft and export bans threaten stable supplies [and] endanger our economic security. Chip 4 may offer a precious chance to declare a joint front against the move,” Choi Byung-il, the president of the Korea Foundation for Advanced Studies, said in a commentary for JoongAng Daily on August 21.

Big Picture: China has reacted angrily to the US Chips Act, which is part of an overall package worth up to US$200 billion. It is a cornerstone of the “Fab 4 Alliance.”

Alternative view: “No one can ignore the strong intention the US is now showing to wage a ‘chip war’ against China, especially after Washington threw a set of punches designed to strangle China’s technological development,” state-run Global Times reported.

Iron curtain: “If the US is to decouple from China in a ‘chip war,’ it will have to rope in other allies to form a technological iron curtain,” the newspaper, owned by the media voice of the ruling Communist Party, the People’s Daily, said.

Divided world: “Yet, it is highly questionable whether the US has the ability to pull the whole world into its ‘chip war,’” Global Times pointed out in a commentary.

The split: American behemoth Apple is looking to manufacture the iPhone14 in India, as well as China. It has already reached out to Vietnam to produce MacBooks to diversify its supply chain, which is rooted in the world’s second-largest economy.

China Factor comment: Big tech in the US has boosted its bottom line through the sheer scale of China’s manufacturing machine. Now, Apple appears to be making tentative moves to wean itself off that addiction. Will Tesla follow suit to avoid a “chip war” car wreck?