A semiconductor alliance comprising the US, Taiwan, Japan, and South Korea convened earlier this month to discuss global chip supply chain resilience, according to published reports.

Senior officials of the U.S.-East Asia Semiconductor Supply Chain Resilience Working Group -colloquially referred to as "Fab 4" or "Chip 4" - conducted a videoconference on February 16 to discuss the creation of an "early warning and mutual reminder" system to ensure a stable supply chain for chip manufacturers, according to a report from Taiwan's government-controlled Central News Agency (CNA).

The formation of an early warning system is significant as it would look to prevent the recurrence of the chip shortages and disruptions in the supply chain during the COVID-19 pandemic, CNA reported, quoting unidentified officials from Taiwan's Ministry of Economic Affairs. In the future, the Fab 4 countries will inform each other through official channels about problems that may be encountered in the global supply chain, it added.

The officials in the meeting "held off on discussions" related to export controls and no companies were part of the meeting, according to a Bloomberg report that cited an unidentified Taiwanese official.

Taiwan urges fast action on chip info exchange

Taiwan suggested that the four countries should exchange information on various aspects of the supply chain as soon as they can, according to the Bloomberg report. Taiwan and South Korea would concentrate on manufacturing, Japan on materials, and the US on market issues, the report added.

In September last year, the US held the first meeting of the Fab 4 countries to discuss ways to bolster the semiconductor supply chain, after two years of global chip shortage, according to a separate report by Reuters.

The meeting earlier this month, though, was the first formal meeting among the Fab 4 and comes as the Biden administration is reaching out to its global allies to enforce sweeping curbs on exports of advanced chip-making technology to China, designed to curb the country's progress in various advanced technologies. The US is increasingly worried about China's growing geopolitical power, which rests in part on its manufacturing capabilities.

China, as the world's second-largest economy, is a huge market for global semiconductor enterprises and the curbs on exports will impact their revenue and growth plans. The export controls will impact not only computer equipment, but many consumer products built on the restricted semiconductor technology.

US President Joe Biden's administration in early October issued new export controls that restrict US firms from selling advanced semiconductors as well as equipment required to make them to some Chinese manufacturers unless they receive a special license.

In mid-December, the administration expanded those restrictions to include 36 more Chinese chipmakers from accessing US chip technology, including Yangtze Memory Technologies Corporation (YMTC), the largest contract chipmaker in the world.

Countries seek to bolster chip production

The export controls came in the wake of the CHIPS and Science Act of 2022 signed into law by President Joe Biden in August. The legislation provides tax breaks and funds to attract manufacturers to build fabs in the US and boost the country's semiconductor manufacturing.

Now, several other countries, including India, France, UK, Japan, and Australia, are also extending incentives to attract semiconductor investment. Taiwan has long maintained a lead in manufacturing semiconductor chips that go into PCs, servers, and equipment used for advanced research.

Over recent months, Taiwanese chip-making giant TSMC has announced several investments for either constructing new foundries or injecting funds in existing ones. Earlier in February, the TSMC board approved a capital injection of up to$3.5 billion in TSMC Arizona.

In December, the foundry behemoth announced plans to open a second chip factory in Arizona, boosting its investment in the US threefold to$40 billion. This represented "the largest foreign direct investment in Arizona history and one of the largest foreign direct investments in the history of the United States," the company said.

TSMC also plans to set up a second semiconductor manufacturing plant in Japan with an investment of about$7.4 billion.