If the US reveals the top secret information about semiconductors… Samsung Super Emergency Park Shin-young’s Electroman

Gina Lermando, U.S. Secretary of Commerce. AP Communication

“There is a way in case the company doesn’t cooperate. I hope it doesn’t go there, but if it does, it will.”

U.S. Secretary of Commerce Gina Lemando said in an interview with a foreign press on the 23rd (local time). It was an interview conducted in time for a meeting where the White House and the U.S. Department of Commerce convened industry officials including Samsung Electronics to respond to the semiconductor shortage.

Minister Lehmando made such remarks because the US government requested semiconductor companies to voluntarily submit information related to inventory, orders, and sales within 45 days. The cause is said to be to find a solution to the semiconductor shortage (shortage of supply), but companies are expressing disapproval. This is because semiconductor companies are keeping their inventory, order quantity, and production volume under such a secret that it has never been officially disclosed.

Semiconductor foundry’s production capacity and pricing influence

Samsung Electronics Hwaseong Campus Foundry.  Provided by Samsung Electronics

Samsung Electronics Hwaseong Campus Foundry. Provided by Samsung Electronics

Foundries such as Samsung Electronics and TSMC in Taiwan have never publicly stated where their customers are. In the case of Samsung Electronics, it is known that it produces Tesla’s self-driving chips and LED headlamps, but has not officially acknowledged this. Because customers don’t want it.

For global companies such as Apple and Tesla, the types, performance, and competitiveness of products can be revealed depending on which semiconductor company they entrusted with production. The reason why a Korean company that supplies parts to Apple only mentions Apple as a ‘American-oriented company’ in an internal report is conscious of such a customer.

From the foundry’s point of view, the production capacity, that is, the extent of the production capacity, is kept secret. Yield, which can measure semiconductor production, is a representative example. Yield is a number expressed as a percentage of the number of actually produced normal chips compared to the maximum number of chips (ICs) designed on one wafer. A higher yield means higher productivity. When the yield is high, the amount of material used is reduced, thereby reducing manufacturing costs. An industry official said, “The moment the yield is revealed, the semiconductor company’s technology is revealed as it is, so you may be at a disadvantage in price negotiations with customers.”

If a semiconductor company’s inventory and production capacity are revealed, it can affect the overall price of semiconductors. For example, the semiconductor contract price is the supply price that a semiconductor company determines in the form of a long-term contract through negotiations with major fixed customers such as overseas PC companies. If it is known that a semiconductor company has a large amount of inventory to process, the fixed transaction price will inevitably fall.

U.S. mobilizes Defense Product Production Act (DPA)

Although semiconductor companies are reluctant to disclose inside information, it seems unlikely that they will avoid pressure from the US government. This is because the US government is known to be considering ways to force companies to submit information by mobilizing the Defense Materials Production Act (DPA).

The DPA was established in 1950 to support the Korean War. Under the law, the president can require companies to contract to supply essential supplies. You can designate items that are prohibited from hoarding or price fixing. It can also instruct the establishment of a system for distributing goods, services and facilities, and control the private economy so that essential goods can be used for national defense purposes.

Fear of information leakage to US semiconductor companies

Above all, the semiconductor industry is concerned that such a request to submit information from the United States may work in favor of American semiconductor companies. An official from a semiconductor company said, “As Intel announced that it would re-enter the foundry with the US government on its back, the possibility that key information from Samsung Electronics or Taiwan’s TSMC could flow into Intel cannot be ruled out.”

Intel CEO Pat Gelsinger.  Hankyung DB

Intel CEO Pat Gelsinger. Hankyung DB

In fact, Intel and the U.S. government are explicitly strengthening their cooperative relationship. The Wall Street Journal (WSJ) recently reported that Intel was lobbying for a subsidy for semiconductor investment. According to the WSJ, Intel CEO Pat Gelsinger held a rooftop banquet near the White House in July with an administration official, Joe Biden. Earlier, it was reported that he had briefed the European Union (EU) Commission on a proposal to build a fab.

The industry believes that the US government’s creation of a semiconductor ecosystem in the US and Gelsinger’s aggressive investment strategy for foundries match. Since Intel will take the lead in resolving semiconductor shortages and manufacturing imbalances, some are arguing that the US government should provide more subsidies to domestic companies.

Reporter Park Shin-young [email protected]

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