Saturday 13 Apr 2024
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KUALA LUMPUR (Feb 6): The US State Department has some US$500 million (RM2.38 billion) at its disposal under the International Technology Security and Innovation (ITSI) Fund to recruit partner nations mainly as upstream and downstream suppliers to US chipmakers.

Information Technology and Innovation Foundation (ITIF) vice president for global innovation policy Stephen Ezell told German-owned political newspaper Politico's publisher Digital Future Daily that other promising candidates the State Department is looking into besides the Dominican Republic include Mexico, Malaysia and India, which is up next for an ITIF readiness report.

The semiconductor supply chain is already somewhat distributed; no single country can, or likely ever will, manage its entirety.

But the Indo-Pacific region — countries like Taiwan, Japan, China and South Korea — is essential to nearly every step of the manufacturing process.

So as companies look to de-risk from China, the goal of the new policy is to give them US-approved places to go.

Politico, based in Arlington County, Virginia, on Monday reported that the State Department already has partnerships with five countries — Costa Rica, Panama, Vietnam, Indonesia, and the Philippines — to explore semiconductor industry growth opportunities, as a precursor for ITSI funding.

Politico said the State Department is expected to pick seven in total.

There are some baseline requirements for countries seeking to make the cut for ITSI or otherwise enter the global semiconductor race.

The US is looking for reliable infrastructure; the cost from a power outage can escalate into the billions.

A skilled workforce is another important factor, as is free trade policy — ideally mirroring Singapore’s zero tariffs on nearly all imports.

Countries also need regulations that offer investors certainty, especially on permitting and environmental reviews.

One potential deal breaker might be negotiations over export controls, the main tool that Washington has used with established allies in the semiconductor supply chain, like the Netherlands and Japan, to keep a lid on China’s chip industry.

The US is wary of investing in countries where advanced technology could leak to a foreign adversary’s military, Center for Strategic and International Studies (CSIS) director focused on transatlantic trade Emily Benson said, and export controls are thought of as a springboard for meeting Washington’s trade demands in the future.

Politico said the US$500 million ITSI fund is a drop in the bucket, compared to US$39 billion that the US is investing in American-made chips.

It added that how far the money goes largely depends on countries’ ability to attract private sector investment.

In this global competition, it’s also unclear how long newcomers will be satisfied with just supplying the chip industry rather than developing their own fabrication capacity.

India has already made US$10 billion in subsidies available to build out its domestic semiconductor ecosystem.

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