Russia Sanctions: Taiwan's TSMC Joins Western Ban on Technology For Moscow

Taiwan Semiconductor Manufacturing Company (TSMC) will no longer fabricate computer chips for Russia, according to media reports. The ban will particularly affect Russia's Elbrus and Baikal processors, unless China agrees to step in to manufacture these chips, and risk additional US sanctions itself. Both Russian processors use mature 28 nm technology. The world's most advanced TSMC fabrication technology today is 5 nanometers. The best US-based Intel can do today is 7nm technology. China's SMIC (Semiconductor Manufacturing International Corporation) has the capability to produce chips using 14 nm technology.  Semiconductor chips form the core of all modern systems from automobiles to airplanes to smartphones, computers, home appliances, toys, telecommunications and advanced weapons systems.  

Top 10 Semiconductor Chip Producing Countries. Source: Comtrade Database

China is the world's biggest producer of semiconductor chips, according to data from the United Nations. The electronics value chain, which includes consumer electronics and ICT, has been regionalized over the years, and China has become a major global production center for microelectronics, according to a report in Opportimes. Other major producers include South Korea, Singapore, Malaysia, the United States, Japan, Germany, the Philippines, the Netherlands, and Thailand. In particular, the statistics for China add up the production of Hong Kong and Macao. 

Russia's Semiconductor Imports. Source: WSJ

While China is the  biggest volume producer of semiconductor components in the world,  the Chinese design centers and fabs rely on tools and equipment supplied by the West to deliver products. Western companies dominate all the key steps in this critical and highly complex industry, from chip design (led by U.S.-based Nvidia, Intel, Qualcomm and AMD and Britain’s ARM) to the fabrication of advanced chips (led by Intel, Taiwan’s TSMC and South Korea’s Samsung ) and the sophisticated machines that etch chip designs onto wafers (produced by Applied Materials and Lam Research in the U.S., the Netherlands’ ASML Holding and Japan’s Tokyo Electron ), according to the Wall Street Journal

East vs West Economic Output. Source: Wall Street Journal


There is no question that the current western technology sanctions can seriously squeeze Russia. However, overusing such sanctions could backfire in the long run if the US rivals, particularly China and Russia, decide to invest billions of dollars to build their own capacity. This would seriously erode western technology domination and result in major market share losses for the US tech companies, particularly those in Silicon Valley. 

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Comments

Riaz Haq said…
TSMC says Nanjing wafer fab expansion plans on track as second quarter revenue surges 28 per cent

https://www.scmp.com/tech/tech-trends/article/3141240/tsmc-says-nanjing-wafer-fab-expansion-plans-track-second-quarter

Volume production of 28-nm wafers in Nanjing will begin in the second half of 2022, reaching 40,000 wafers per month by mid-2023, said TSMC
Apart from Nanjing, the Taiwan foundry said its new plant in Arizona is proceeding and it is also in talks to build a new fab in Japan

Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract producer of advanced chips, said on Thursday it will press ahead with its 28-nanometre fab expansion in Nanjing, defying speculation that the project could be affected by US-China tech rivalry.
“We are further expanding our presence in Nanjing with 28-nm technology to support our customers’ urgent needs,” Mark Liu, chairman of TSMC, said during a conference call with analysts on Thursday. “The volume production will begin in the second half of 2022, reaching 40,000 wafers per month capacity by mid-2023.”
Liu said the 28-nm line will be “the sweet spot for our embedded memory applications” and he expects structural demand for 28-nm to be strong.
Riaz Haq said…
#Chinese Foreign Ministry: ‘#Pakistan, #China concerned over sanctions on Russia’. Both share concern about “spill-over effects of unilateral sanctions” on #Russia over its war against #Ukraine, called for a ceasefire & diplomatic resolution of the crisis. https://www.thenews.com.pk/print/943818-pakistan-china-concerned-over-sanctions-on-russia

Old allies China and Pakistan have refrained from condemning Russia over its Feb 24 attack on Ukraine, unlike Western countries that have imposed unprecedented financial and corporate sanctions in response to what Russian President Vladimir Putin calls a “special military operation”, a British wire service reported.

“Both expressed concerns about the spill-over effects of unilateral sanctions,” the Chinese foreign ministry said in a statement following a meeting on Monday in Pakistan between the neighbours’ foreign ministers. “Both called for a ceasefire through diplomatic dialogue and hope that based on the principle of indivisible security, a fundamental solution to the Ukraine problem can be found,” the Chinese ministry said.
Riaz Haq said…
Economic Weapons of Mass Destruction

https://www.project-syndicate.org/commentary/economic-wmds-and-the-risk-of-deglobalization-by-raghuram-rajan-2022-03

By RAGHURAM G. RAJAN


Because Russia's war against Ukraine could not go unpunished, the use of painful, sweeping economic sanctions is clearly justified. In the future, though, these powerful new tools will need to be subject to proper controls; otherwise, they could trigger a reversal of globalization – and of the prosperity that it has made possible.

CHICAGO – War is horrific, no matter how it is waged. Nevertheless, Russia’s unprovoked attack on Ukraine, with its scenes of Ukrainian civilians being murdered or driven from their homes, undoubtedly had to be opposed. In addition to supplying Ukraine with military weapons, governments around the world have deployed economic weapons against Russia. While Russia, an economic midget relative to its military power, may still lash out by expanding the range of military weapons it uses and the territories it targets, it is a risk the world had to take.

Compared to Russia’s indiscriminate bombing, economic weapons will not kill people as quickly, create as much visible destruction, or inspire as much fear. Nonetheless, the unprecedented economic weapons that have been deployed against Russia will be unquestionably painful.

The strictures on Russia’s central bank have already contributed to the ruble’s collapse, and new limitations on cross-border payments and financing have had an immediate impact, weakening confidence in Russian banks. Though trade sanctions (restricting exports of key inputs such as airplane parts to Russia, as well as purchases from Russia) and the exodus of multinational corporations from Russia will have a less immediate effect, they will reduce economic growth and increase unemployment significantly over time. If these measures are not reversed, they will eventually translate into lower living standards, poorer health, and more deaths in Russia.

That we have come to this point reflects a widespread political breakdown. Too many powerful countries are now being led by authoritarian rulers whose reliance on nationalism makes them less willing to compromise internationally and who face few domestic constraints on their behavior. If Russian President Vladimir Putin’s aggression were to go unpunished, more international provocations like his war in Ukraine would become inevitable.



https://youtu.be/yFCpMOCVdAw


Equally problematic is the breakdown of the international order. The United Nations Security Council cannot legitimately act against any of its permanent veto-wielding members (China, France, Russia, the United Kingdom, and the United States). The organization’s impotence translates into impunity for strongmen who flout international norms. Moreover, even if the UN could approve a military response, the will to confront a determined nuclear power militarily would probably be lacking.

Economic weapons, made possible by global integration, offer a way to bypass a paralyzed global governance system. They allow other powers an effective (that is, painful) but civilized way to respond to aggression and barbarity.



But the risks that these weapons can create must not be underplayed. When fully unleashed, sanctions, too, are weapons of mass destruction. They may not topple buildings or collapse bridges, but they destroy firms, financial institutions, livelihoods, and even lives. Like military WMDs, they inflict pain indiscriminately, striking both the culpable and the innocent. And if they are used too widely, they could reverse the process of globalization that has allowed the modern world to prosper.



Riaz Haq said…
In 2020, #Russia was the world's 11th-largest #economy, according to the World Bank. But by the end of this year (2022), it (#Russian #GDP) may rank no higher than No. 15, based on the end-February rouble exchange rate. #UkraineUnderAttack #Sanctions https://www.reuters.com/world/europe/four-weeks-war-scar-russias-economy-2022-03-24/

Russia's invasion of Ukraine on Feb. 24 sparked sweeping sanctions that ripped the country out of the global financial fabric and sent its economy reeling.

A month on, Russia's currency has lost a large part of its value and its bonds and stocks have been ejected from indexes. Its people are experiencing economic pain that is likely to last for years to come.

Below are five charts showing how the past month has changed Russia's economy and its global standing:


In 2020, Russia was the world's 11th-largest economy, according to the World Bank. But by the end of this year, it may rank no higher than No. 15, based on the end-February rouble exchange rate, according to Jim O'Neill, the former Goldman Sachs economist who coined the BRIC acronym to describe the four big emerging economies Brazil, Russia, India and China.

Recession looks inevitable. Economists polled by the central bank predicted an 8% contraction this year and for inflation to reach 20%.


Forecasts from economists outside Russia are even gloomier. The Institute of International Finance predicts a 15% contraction in 2022, followed by a 3% contraction in 2023.

"Altogether, our projections mean that current developments are set to wipe out the economic gains of roughly fifteen years," the IIF said in a note.



Riaz Haq said…
#India stands with #Russia as Lavrov visits. #Delhi plans to double its imports of Russian coking coal used in making steel. India recently contracted to buy 45,000 tonnes of Russian #sunflower #oil for April delivery after supplies from #Ukraine stopped.
https://www.msn.com/en-us/news/world/india-stands-by-trade-with-russia-as-lavrov-set-to-visit/ar-AAVCTnc?ocid=msedgdhp&pc=W117&cvid=df54c9438db649a0ac86592f35a65226


NEW DELHI - Russian Foreign Minister Sergei Lavrov is set to fly to India this week, sources said, finding time to visit to one of the biggest buyers of Russian commodities since the international community began isolating Moscow for its invasion of Ukraine.

There is little sign that buying will slow down any time soon, as more deals get signed. One source said the two countries could discuss smoothening trade payments disrupted by Western sanctions on Russian banks. Media have said he could hold talks in the Indian capital on Friday.

It will only be Lavrov's third visit overseas since Russia's Feb. 24 invasion of Ukraine, after a trip to Turkey for talks with his Ukrainian counterpart earlier this month and a scheduled meeting in China on Thursday.

Russia is India's main supplier of defence hardware but overall annual trade is small, averaging about $9 billion in the past few years, mainly fertiliser and some oil. By comparison, India's bilateral trade with China is more than $100 billion a year.

But given sharp discounts on Russian crude oil since the attack on Ukraine, India has bought at least 13 million barrels, compared with nearly 16 million barrels imported from the country for the whole of last year. Many European countries have also continued to buy Russian energy despite publicly criticising Moscow.

New Delhi has called for an immediate ceasefire in Ukraine but has refused to explicitly condemn Moscow's actions. It has abstained from voting on multiple U.N. resolutions on the war.

India is now considering doubling its imports of Russian coking coal used in making steel, the Indian steel minister said on Sunday. Reuters reported on Tuesday that India recently contracted to buy 45,000 tonnes of Russian sunflower oil for April delivery after supplies from Ukraine stopped. Last year, India bought about 20,000 tonnes from Russia a month.

"India will import more items from Russia, especially if it is at a discount," one senior Indian government official said.


Riaz Haq said…
Chip consortium ISMC (joint venture between #AbuDhabi-based Next Orbit Ventures and #Israel's Tower Semiconductor) to set up $3 billion plant in India's Karnataka. It will be #India's first #Semiconductor #fabrication plant. #technology https://finance.yahoo.com/news/chip-consortium-ismc-plans-3-080237787.html?soc_src=social-sh&soc_trk=tw&tsrc=twtr via @Yahoo

ISMC and Indian conglomerate Vedanta Ltd have applied for Prime Minister Narendra Modi's $10 billion incentive plan to push companies to set up semiconductor and display operations in India, the government's next big bet on electronics manufacturing.

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BENGALURU (Reuters) - International semiconductor consortium ISMC will invest $3 billion in India's southern Karnataka state to set up a chip-making plant, the state government said on Sunday.

ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel's Tower Semiconductor. U.S. chip giant Intel Corp has announced plans to acquire Tower.

India’s first semiconductor fabrication unit is expected to generate more than 1,500 direct jobs and 10,000 indirect jobs, the state's investment promotion division said in a tweet.

ISMC and Indian conglomerate Vedanta Ltd have applied for Prime Minister Narendra Modi's $10 billion incentive plan to push companies to set up semiconductor and display operations in India, the government's next big bet on electronics manufacturing.

Munsif Vengattil
Sun, May 1, 2022, 1:02 AM·1 min read

A silicone semiconductor is seen at the offices of Tower Semiconductor in northern Israel
By Munsif Vengattil

BENGALURU (Reuters) - International semiconductor consortium ISMC will invest $3 billion in India's southern Karnataka state to set up a chip-making plant, the state government said on Sunday.

ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel's Tower Semiconductor. U.S. chip giant Intel Corp has announced plans to acquire Tower.

India’s first semiconductor fabrication unit is expected to generate more than 1,500 direct jobs and 10,000 indirect jobs, the state's investment promotion division said in a tweet.

ISMC and Indian conglomerate Vedanta Ltd have applied for Prime Minister Narendra Modi's $10 billion incentive plan to push companies to set up semiconductor and display operations in India, the government's next big bet on electronics manufacturing.

- ADVERTISEMENT -

Vedanta told Reuters on Saturday it was in "advanced talks" with Gujarat and Maharashtra in west India and Telangana in the south to choose a site by mid-May. It has a planned investment outlay of $20 billion for its semiconductor and display push.

Modi and his IT ministers outlined plans on Friday for investment incentives in the sector, saying they want India to become a key player in a global chip market dominated by manufacturers in Taiwan and a few other countries.

India's semiconductor market is forecast to grow to $63 billion by 2026 from $15 billion in 2020, the government says.

(Reporting by Munsif Vengattil and Aditya Kalra in New Delhi; Editing by Clarence Fernandez and William Mallard)
Riaz Haq said…
Semiconductor Fabrication by country:

USA 44%

South Korea 24%

Japan 9%

EU 9%

Taiwan 6%

China 5%

In 2018, about 44 percent of U.S.-headquartered firms’ front-end semiconductor wafer capacity was located in the United States. Other
leading locations for U.S. headquartered front-end semiconductor wafer fab capacity were Singapore, Taiwan, Europe, and Japan.


In 2018, roughly 81 percent of all semiconductor wafer fabrication capacity in the United States was accounted for by U.S.-headquartered
firms. Semiconductor firms headquartered in the Asia Pacific region accounted for most of the balance of capacity in the United States at
around 10 percent.

https://www.semiconductors.org/wp-content/uploads/2019/05/2019-SIA-Factbook-FINAL.pdf
Riaz Haq said…
Opinion Biden’s sanctions against Russia are a double-edged sword
Image without a caption
By Fareed Zakaria

https://www.washingtonpost.com/opinions/2022/05/12/biden-sanctions-russia-could-erode-dollar-power-financial-economic/

...the unprecedented nature of these measures (US sanctions against Russia) is producing concerns around the world that the United States has “weaponized” its financial power and could lead, over time, to the decline of the dollar’s dominance, which is what gives America its financial superpowers in the first place.

I’ve been hearing about this firsthand from three sources I trust. The first, in New Delhi, recently told me about a conversation that took place at the highest levels of India’s government. The topic: how to make sure that the United States could never do to India what it has just done to Russia. The second, from Brussels, where staff at the European Commission has been tasked — even while working with Washington on the sanctions — with finding ways to reduce the role of the dollar in its energy imports. The third, an Asian observer of China, speculated that the overly severe lockdowns in Shanghai — which involved the rationing of food and basic supplies — might be part of an effort by Beijing to experiment with a scenario in which it faced economic sanctions from Washington (perhaps after an invasion of Taiwan).

A debate is raging around the world about whether the dollar’s total dominance of the international financial system is waning. Even Goldman Sachs and the IMF have warned that that might well happen. I tend toward the opposite view: Namely, that you can only beat the dollar if you have an effective alternative, which so far does not exist.

But it’s clear that many countries — from hostile powers such as China and Russia to friendly nations such as India and Brazil — are working hard on ways to reduce their vulnerability to Washington’s whims. None of these efforts has so far gained much traction, though it is worth noting that the share of global foreign exchange reserves held in dollars has declined from 72 percent to 59 percent over the past two decades.

Partly this is because the United States appears less stable and predictable in the use of its extraordinary privilege. In the two decades preceding Russia’s invasion, Washington massively ramped up sanctions for all kinds of reasons — by more than 900 percent. Many of these measures were overreactions and should be rolled back. After 9/11, Washington put in place highly intrusive measures aimed at tracking money going to terrorists. It has inflicted harsh punishments on banks that did not adhere to all U.S. sanctions. It has imposed sanctions on Iran, Venezuela, North Korea, Cuba and other countries often simply to satisfy domestic critics who wanted to “do something” without paying much of a price. This type of economic warfare has failed to change the regimes in these countries but has caused widespread misery for ordinary people in them. Sanctions against Russia are aimed at policy change, not regime change, and therefore could be more effective.

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The dollar maintains its crucial role in the international system because the United States has the world’s largest economy. It also has the most liquid debt markets, its currency floats freely, and, crucially, it is regarded as a country based on the rule of law and not one prone to arbitrary and unilateral actions. That last criterion is not one that Washington has lived up to in recent years. Biden should make sure that, in fighting this battle against Russia, he does not erode America’s unique financial superpower.

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