The myth of chip resilience and a homesick Alibaba

Hello, everyone! This is Cheng Ting-Fang from Taipei.

As the US moves closer to realizing the $52 billion chip law, Lauly Li and I have just completed a months-long project that challenges the bill’s premise: Is it really possible to bring chip production to shore?

The project grew out of conversations with friends in the chip industry who said to me, “You know what? We have big problems with bottlenecks in valves, hoses and pumps made of special plastics. Without these components, the chip manufacturing facility could not be delivered.”

Such bottlenecks could delay the expansion plans of large chip manufacturers such as TSMC and Micron.

I was stunned to learn how shortages of such small and little-known components could disrupt the entire chip supply chain. No wonder Bertrand Loy, CEO of Entegris, called the current situation “the unprecedented supply chain crisis” in the semiconductor industry.

Small parts, big problems

How can the lack of something as mundane as a valve disrupt the global chip industry? And what does that mean for the big rush for onshore chip production? Nike Asia Cheng Tingfang and Lauly Li Answer those questions in this widely reported look at the long, complex — and surprisingly fragile — chip supply chain.

Chip production relies on a vast network of suppliers who supply hundreds of specialty chemicals, gases and equipment, as well as thousands of precision components. And some of these components – or the basic materials from which they are made – are only available from a tiny handful of suppliers.

This complexity is bad news for politicians and decision makers trying to get chip production on its banks. The US, for example, is courting companies like TSMC and Samsung to build chip factories on its soil, but the long and complex utility networks required to support their operations cannot be built in a day.

Most chip industry executives say they sympathize with governments trying to land chip supply chains and increase their resilience in this vital technology. But at the end of the day, some strategies are easier to advocate than to achieve.

Home Sweet Home?

Alibaba was once the darling of Wall Street with big ambitions to conquer the US market. But this week, China’s e-commerce giant showed signs that it’s longing for home, writes the Financial Times. Hudson Lockett.

The Hangzhou-based group says it will seek a dual primary listing in Hong Kong alongside its current primary listing in New York. The move would give mainland Chinese investors broader access to its shares — and help minimize disruption if U.S. regulators force Chinese groups to delist over a dispute over access to audit records.

The announcement comes as Alibaba’s global expansion plans have also stalled. It has failed to meet its goals of bringing US companies onto its e-commerce platform, largely due to intense competition from domestic players, and there have been mass departures from its New York offices.

The two developments show how far Alibaba’s global ambitions have changed since the heady days of its $25 billion IPO in New York in 2014, which was then the largest in history. Now, the e-commerce giant is likely reckoning that moving to Hong Kong and closer to the Chinese authorities’ purview will actually result in scrutiny of its operations by domestic regulators being eased. Investors, meanwhile, will wonder how many more Chinese tech companies will follow in his footsteps.

A policy with a different name

Launched in 2015, Made in China 2025 was once loudly touted as the Chinese government’s strategy to modernize its industries within a decade. Today, however, the name has all but disappeared from public discourse since the 2019 Washington-Beijing tech war and Washington’s subsequent crackdown on Beijing-backed tech champions like Huawei.

But that doesn’t mean Made in China 2025 is dead, writes Nikkei Asia Kenji Kawase. Chinese government subsidies for domestic listed companies remain high, approaching or exceeding 200 billion yuan ($29.6 billion) in each of the three years since 2019.

The recipients of these subsidies are national leaders in areas that China sees as crucial to securing technological supremacy, including automobiles and semiconductors. Whatever Beijing may or may not call the policy, it is clear that the government’s industrial ambitions are alive and well.

Apple moves

Foxconn founder Terry Gou once described electric vehicles as “an iPhone with four wheels”.

Whether Apple would agree with that assessment, the US tech titan appears to be heavily into cars and has been developing automotive technologies for two decades, Nikkei’s Kotaro Fukuoka and Naoshige Shimzu write.

The company has filed nearly 250 patents related to automotive technology since 2000, according to a joint study by Nikkei and Tokyo-based analytics firm Intellectual Property Landscape.

Apple’s initial efforts focused on navigation, paving the way for the 2014 launch of Apple CarPlay, which allows some vehicle functions to be controlled with an iPhone. His filings picked up steam from around 2016, with patents in areas such as next-generation autonomous driving technologies.

A large chunk of recent patent filings concern so-called Vehicle-to-Everything (V2X) technology, which allows cars to communicate with each other and connect to the Internet of Things. Some see this as a sign that the company that “reinvented the phone” wants to do the same with cars.

reading recommendations

  1. Beijing fines Didi over $1 billion for ‘heinous’ breaches of privacy (FT) laws

  2. Asia’s New Food Frontier: The Rise of Edible Technology (Nikkei Asia)

  3. Beijing Arrests Ex-Tsinghua Semiconductor Chief, Says Report (FT)

  4. Intel makes chips for MediaTek to win its foundry strategy (Nikkei Asia)

  5. China’s Alibaba and Ant Group end staff transfers as duo sever ties (Nikkei Asia)

  6. Singapore sues local tech giants over ‘national duty’ to relist (FT)

  7. Big Tech Signs Indonesia’s Tough Content Law (FT)

  8. NFT Black Market Sprouts Under China’s Crypto Crackdown (Nikkei Asia)

  9. Vietnamese Vingroup Strikes Tech Deals to Expand EV Business Globally (Nikkei Asia)

  10. Robotaxis/Baidu: Self-driving cars are the future in China (FT)

#techAsia is coordinated by Katherine Creel of Nikkei Asia in Tokyo, with support from the FT Tech Desk in London.

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