THE sensational news that is making the global business round but remains unreported up to now by the Philippine mainstream media is the meeting last September 23, 2021 organized by the United States Department of Commerce whereby it ask global chip manufacturers, particularly Samsung of South Korea and Taiwan Semiconductor Manufacturing Company (TSMC) to “voluntarily” turnover to the US government their “internal information on their chip inventory as well as the number of orders and sales data in a move to tackle the ongoing global chip shortage.”
Mysteriously too, the links to the articles saved by Pinoy Exposé for use as materials for this article have completely disappeared from this writer’s FB account.
The additional mystery here is that the links to the meeting from ‘Korea Times’ (https://www.koreatimes.co.kr/…/2021/09/133_316147.html) and ‘Taipei Times’ (https://www.taipeitimes.com/…/arc…/2021/10/11/2003765875) were also now both unavailable as of this writing in the Google search engine.
Despite this, effort by Facebook and Google at hiding this hideous move by the United States against foreign integrated chip makers in favor of one of its own, Intel, has not been a complete success.
Of the four links, Pinoy Exposé has managed to download the articles from ‘The Korea Economic Daily’ (KED) dated September 26, 2021 authored by ‘Shin-young Park’ (‘US pressures Samsung, chipmakers to disclose key internal data’/ https://www.kedglobal.com/newsView/ked202109260001) and the ‘Korea Herald’ dated September 24, 2021 authored by Song Su-hyun, who is also reporting for Reuters (‘Samsung asked to reveal information about supply chains in US/ http://www.koreaherald.com/view.php?ud=20210924000684).
According to KED, US commerce secretary, Gina Raimondo also gave the chipmakers “45 days” to comply, stressing, “We have other tools in our tool box that require them to give us data. I hope we don’t get there. But if we have to, we will.”
Raimondo made the quote to Reuters, according to KDE, in the event the chipmakers failed to comply with the US demand.
“Such a request has put the firms in a tight corner as the information on sales, inventory and clients has been widely regarded as corporate secrets,” the article noted.
According to the Herald, aside from Samsung and TSMC, also present were “Intel, Apple, Microsoft and some automakers, which tuned into the meeting held via teleconference.”
“The companies were asked to submit documents including information about their supply chains in the US in the next 45 days.
“The information requested by the US government includes chip stockpiles, orders and sales records, according to a report by Bloomberg.”
KED reported further that Samsung is hesitant to reveal details of its production data such as ‘yields’ as this would put them in an “unfavorable position against the buyers.”
A semiconductor yield is the fraction of chips on wafers that are not discarded during the manufacturing process. A higher yield means a more advanced level of technology and lower manufacturing costs.
“Disclosing yield information means disclosing a company’s specific level of semiconductor technology. Such information may put the foundry companies in an unfavorable position regarding price negotiations with global clients,” said an industry official.
Other experts note that the information requested by the US government may also impact the overall market price of semiconductor chips. If a company’s level of chip inventory is revealed to be high, the price it supplies to the clients are likely to be cut after price negotiations.
The non-US chipmakers are being threatened by the US government under the 1950 ‘Defense Production Act,’ KED further said.
“While the global companies are highly reluctant to provide their internal data, they are unlikely to succeed in avoiding the request, with the US government considering legal measures in case of noncompliance.
“Sources report that the American government is reviewing the potential use of the Defense Production Act (DPA) to enforce the data submission. The DPA is a US federal law enacted in 1950 during the Korean War as part of a broad civil defense and war mobilization effort.
The law authorizes the US president to require firms to accept and prioritize contracts for materials deemed necessary for national defense.
“It also allows the president to designate materials to be prohibited from hoarding or price gouging. The president can also force the industry to expand the production of basic resources and allocate raw materials towards national defense.
“The global semiconductor industry, especially the firms based outside the US, is concerned that such a request on information may benefit American firms to a large degree.
“It’s not impossible that the information submitted by Samsung and TSMC to the American government may be leaked to US-based companies such as Intel,” said a South Korean industry official, as quoted by KED.
“Intel and the US government have been explicit in strengthening their partnership recently,” KED reported further.
“The Wall Street Journal last month (August) reported that Intel’s CEO Pat Gelsinger met with Biden administration officials and held a rooftop reception to push for its chip investment plan.
“Intel has been making arguments that the American government must provide more financial support to US-based firms by highlighting the impact of the global chip shortage on the American economy and the role that Intel can play in tackling the issue,” said an industry official.
The Herald, for its part, also reported: “It is unprecedented that a government demands such sensitive information considered as trade secrets,” said an industry official.
“The demand would be a significant burden on those companies.”
“Some raised questions about the purpose of the meeting, claiming that the program does not need to be applied to tech companies that are less relevant with the auto industry.”
Lesson from Alstom, Toshiba, Huwaei
That the US government does not mind breaking its own-created ‘global rules-based order’ in favor of its own multinational companies is nothing new and has become an ‘SOP’ in its pursuit of global business hegemony.
Last March 2020, Frédéric Pierucci, a former top executive of Alstom, the ‘crown jewel’ of France’s energy industry, released a book, ‘The American Trap: My battle to expose America’s secret economic war against the rest of the world.’
In the book, he exposed the US government’s machination and use of the ‘FCAP’ (Foreign Corrupt Practices Act) against Alstom that ended when Alstom was gobbled up by General Electric in 2014.
Peirucci was arrested on landing at New York in 2013 by the Federal Bureau of Investigation (FBI) after being indicted by the US Department of Justice on a bogus corruption case along with other top Alstom officials. He was imprisoned for more than a year while the US government and GE are dismembering Alstom.
Much earlier, in 1985, the US also targeted Toshiba, then the pride of Japan’s tech industry over the “sin” of selling precision instruments to the Soviet Union.
Aside from publishing full-page “apologies” in major Japanese newspapers, Toshiba and other Japanese chipmakers were also compelled from thereon to “unconditionally share” their technologies to American companies.
Since then, Toshiba has never recovered.
The only “anomaly” in the US effort to blackmail global companies threatening American economic interests to bow down to its wishes is the case of Huwaei, now the world’s leading telecommunications company and leader in the field of ‘5-G technology.’
Fully-supported by the government of China, Huwaei has managed to beat back the US effort to also surrender its core technologies and other trade secrets.
Like Alstom and Toshiba before it, Huwaei is now being considered as a threat to the economic and business interests of the United States.
Similar to the case of Peirucci, Meng Wanzhou, Huwaei chief financial officer and daughter of Huwaei founder, Ren Zhengfei, was arrested in December 2018 in Canada on trump up charges of financial fraud and for having transactions with Iran.
China promptly responded by arresting two Canadians for spying, which carries the death penalty.
The Huwaei scandal highlighted by US and Canada’s utter disregard for the rule of law, only ended after Meng was released and allowed to return to China last September 24, 2021. The two Canadians, Michael Spavor and Michael Kovrig, were also released by China.