From everyday items such as cars and smartphones to the aerospace industry...

semiconductors are an essential part of modern society.

Every digitally controlled device requires them.

Since the 1980s, semiconductors have been developed in tandem with digital devices.

And they get smaller every year.

Semiconductors with circuit widths of 16 nanometers or less are called advanced semiconductors.

Since they are also used in military equipment, there is fierce competition around the world to develop them.

Apple had to buy all the advanced chips from overseas,

now they're going to bring more of their supply chain here home.

China will accelerate its scientific and technological independence,

and we will win the battle for innovative technology.

As political and economic divisions grow around the world,

the conflict between the United States and China is also deepening in the realm of semiconductors.

Today on GLOBAL AGENDA, experts from the United States, China, Taiwan, and Japan

will discuss the state of the industry now and where it's going.

Great to have you on GLOBAL AGENDA.

I'm Yuko Fukushima.

Semiconductors or chips operate all the machines that enable modern life to function.

This technology is therefore of vital importance to every economy on the planet.

Now let me introduce our panelists.

First from China, Victor Gao, vice president of the Beijing-based Center for China and Globalization.

Great to have you, Victor.

- So first of all, tell me...
- Hi, Yuko.

Hi, tell me what semiconductor means to your country.

First of all, semiconductor is like oxygen and the blood for every life, in every company,

in every family, in our daily life, for the government activities, corporate activities, you name it.

It is suffice to say that without semiconductor, modern life as we understand it will grind to a halt.

It is a major element of production for everything that we use in our daily life.

However, protectionism in semiconductor sector will not work.

I think open and free trade of semiconductor is a must going forward.

Okay, thank you, Victor.

Now from the United States, Rana Foroohar, editor of The Financial Times.

So, Rana, what does chips mean for the United States?

Well, you know, semiconductors are very much integral to the past, present, and future of the U.S. economy.

Silicon Valley, which is, of course, where semiconductors were really driven,

you know, set decades ago and the innovation really occurred there.

That's the growth engine of America.

And the future is about creating more resiliency, creating more hubs not only in Asia,

but in the US and Europe where we can make these crucial items.

Thank you, Rana.

And from Taiwan, Ling Hung-Wen.

He has spent more than 30 years writing about TSMC.

So great to have you.

Taiwan's already the world's semiconductor manufacturing center,

accounting for more than 60 percent of the world's wafer manufacturing,

and TSMC's high-end processes account for more than 90 percent.

ROC refers to the Republic of China.

But after chips became more and more important for Taiwan, my friends from TSMC,

they said that ROC stands for Republic of Chip.

Thank you, Hung-Wen.

And from Japan in the studio. Akira Minamikawa.

He's the senior consultant director of research company Omdia.

About 30 years ago, the Japanese companies, semiconductor companies,

global market share was 50 percent, but now going down to 10 percent.

So, go back to the, yeah, high market share, the Japanese company,

the Japanese people believes the semiconductor technology is a key, yeah,

fundamental technology of every equipment and also the digital transformation and green transformation.

Now we can see that chips are critical to economies and governments around the world.

So let's start by looking at the current situation in the U.S. and China,

which are the forefront of the battle over semiconductors.

The semiconductor industry has seen a global division of labor in recent decades...

Manufacturers specializing in each stage of the process,

such as design, manufacturing, assembly, and development of manufacturing machinery, are scattered across the globe.

The supply chain that connects them,

led by the US and China, has enabled high-quality semiconductors

to be produced at the rapid pace that the market demands.

However, with the deepening conflict between the US and China, there has been a significant shift.

The US has restricted exports to China of advanced semiconductors, which are also used for military purposes.

It has also asked Japan and the Netherlands,

which possesses key technology for semiconductor production, to do the same.

Today I'm signing a law - the CHIPS and Science Act - a once in a generation investment in America itself.

Now I promise you, we're leading the world again for next decades.

In 2022, the US government decided to invest $50 billion to boost domestic semiconductor production,

which had been declining for many years.

It passed the CHIPS and Science Act to attract manufacturing plants from overseas.

Meanwhile, China has launched a program called "Made in China 2025,"

which aims to create a semiconductor industry with every phase of production within its borders.

China will accelerate its scientific and technological independence,

and we will win the battle for innovative technology.

Although China boasts an overwhelming share of the non-advanced semiconductor market,

it has lacked the equipment necessary to produce advanced semiconductors.

In recent years, China has imported and analyzed large quantities of used,

non-advanced manufacturing equipment and claims to have succeeded in manufacturing cutting-edge semiconductors.

To the surprise of many, experts have confirmed that the Mate 60 Pro,

a new smartphone from Huawei made with all Chinese components, contains an advanced 7-nanometer semiconductor.

Competition between the US and China over semiconductor manufacturing is intensifying.

So the United States seems to be changing the global supply chain for semiconductors.

So, Rana, through the Chips and Science Act, the U.S. is seeking to increase domestic production

and preventing China from acquiring advanced semiconductor technology.

So can you elaborate on the intention behind this legislation?

Mm. Well, I would disagree, actually, with a few of the starting premises there that you lay out.

I see the economy as a sort of a pendulum that swings back and forth.

And from about the '80s onward, the U.S. made various policy decisions,

both Democratically and on the Republican side to outsource manufacturing jobs.

The idea was that Americans should all sort of be software engineers and bankers

and that we were going to go up the service food chain and get rid of the making of things.

Economists thought that was a great idea.

The U.S. and I think China have become too extreme in their own models.

This idea that the U.S. can simply be the consumer of last resort and just buy things and not make anything,

or that China can continue its practice of being the factory of the world but suppressing wages domestically

and so not having a more balanced consumption system, that's not working.

It's not working for the whole world.

So the idea behind the Chips Act is to create more nodes of production,

- not just in the U.S. but regionally, to support that idea.
- Hm.

So you're saying that the United States wants to diversify the production with the consumption as well?

Yeah. I think that - interestingly, I think both the U.S. and China in some ways have the same problem.

We have imbalanced economies.

The U.S. is consuming too much. China is producing too much.

And, you know, my reading and I'd be curious what others on the panel think,

my reading of Made in China 2025 was that in some ways, it was an appropriate strategy.

You're saying, okay, we want to balance our economy,

we want to have more regionalized supply chains, we want to consume and produce.

That makes sense.

But it also makes sense for the U.S.,

because frankly, you can't have a 70 percent consumer spending economy, which is what we have in the U.S.,

with wages having been flat or falling in real terms until very, very recently for complicated reasons.

That math just doesn't add up.

You've got to have a more diversified, resilient economy.

And I disagree with the notion that there is some zero sum between no holds barred,

laissez-faire globalization and protectionism.

I think there is something in the middle, and I think it makes sense to have more regional nodes of manufacturing.

Okay, thank you.

So, Victor, from the Chinese point of view,

this United States intention of diversifying production, what do you say to that?

First of all, before this latest round of chips war initiated by the United States

and forced by the United States onto its allies,

China was very happy to import more than 300 billion dollars' worth of chips

from countries like the United States, Japan, ROK, and China's Taiwan island and elsewhere,

China was very much a free trader as far as semiconductor chips were concerned.

China produced a lot of chips on the lower end and was very happy

to simply import more advanced chips manufacturing equipment from other countries and regions.

Now, as a result of the maximum pressure created by the United States on China,

try to deny China's access to advanced semiconductor chips,

well, it leaves China with nothing but only one road forward.

That is to invest in the semiconductor industry as much as possible

to eventually achieve complete self-independence and self-reliance to such an extent.

So, Rana, you have something to say?

Just a very quick thing.

I think we do need to go into history and remember that Made in China 2025 was actually launched in 2015.

That was before the Trump administration's tariffs.

That was before Biden's tariffs.

China was the first to say - and again, I think appropriately -

We want to take more production and consumption regionally.

We want to shift, we want to move up the ladder.

But let's not pretend that a country that strategically protects industries

as part of a planned economy and industrial policy is somehow a victim.

Made in China 2025 was actually the first thing globally to say,

"Yeah, we're going our own way and we want to be independent of Western technology."

China is not only producing seven-nanometer chips for the Huawei Mate smartphone that mentioned.

China is already making five-nanometer and is on the way

to making three-nanometer chips with completely Chinese proprietary technologies.

This is a game changer because we will see that the semiconductor industry

will bifurcate into the model dominated by the United States on the one hand and a self-placed pathway by China.

And I think, as we see in many other sectors, once China achieves self-reliance and independence,

it will not only satisfy the demand in China, but sell to every corner in the world.

I would say, China in a matter of years will no longer need to import any chips of any kind -

advanced, super-advanced or ordinary grade semiconductor chips from any country or any region in the world,

meaning the United States is going to forfeit this large market of more than 300 billion U.S. dollars'

worth of chips import from all the other countries and regions in the world.

Okay, thank you, Victor.

So let me ask Hung-Wen, what do you think?

Who started this protectionism race and what do you think of this rivalry between the U.S. and China?

Yes, I can hear, and smell out the fire between the two - the lady and the gentlemen's discussions.

Taiwan is very small. But Taiwan matters.

I think in the chip war, Taiwan is very critical.

Because Taiwan manufactures the majority of chips in the world.

But you know, Taiwan always plays as a good friend to the world.

If the customer succeed, Taiwan will succeed.

So they will work very hard to make their customers succeed.

Like Apple, like NVIDIA, right now TSMC invests in Kumamoto, a friend.

He also helped Toyota and Sony to succeed.

So I think Taiwan matters, but Taiwan just wants to be a friend to the world.

Okay, thank you, Hung-Wen.

So, Akira, what do you think of the race between the U.S. and China?

You know, who started it?

What do you think of the situation going on in the semiconductor industry?

First of all, I would like to say before the U.S./China chip competition,

one third of the semiconductor engineers in U.S. was the China people, China engineers.

So the huge, talented engineer go back to China now and then support to the semiconductor development in China.

So there is a very high possibility that China catch up the technology.

However, the Japanese companies and people are very concerned about the China copy issues.

So many semiconductor equipment company is afraid to ship their leading-edge equipment and technology to China.

It means the Japanese companies will, lose their market share in the future.

So, Victor, Akira was saying that Japanese companies

are afraid of Chinese companies stealing technologies and copying things from Japan.

What do you say to that?

Well, first of all, I would say, without this chips war launched by the United States of America,

China would be very happy to be the largest importer of chips of all kinds, including from Japan.

And there was no need to break off from this free trade tradition.

However, when this war launched by Washington to try to deny China's access to the advanced semiconductor chips,

China is not going to be a second Japan.

And by the end of 2023, China was not only the largest producer of semiconductor chips,

mostly on the lower end and medium end, of course,

but China is already the largest exporter of semiconductor chips to the rest of the world.

It is a strange subsidy which is being accused of by the United States government in many ways against China,

against so many other countries.

But the United States is really violating its own sacred policy of free trade and free market economy,

for example, and adopting more and more policies like a planned economy.

This is the irony in the world today.

Rana, what do you say to that?

Yeah, I mean, like, the United States is violating free trade policy?

Maybe the Chinese should be flattered that the U.S.

is actually taking a page out of their book of the last 40 or 50 years.

I mean, listen, the truth is, if you go back in history, most countries at most times,

particularly during growth periods, have had industrial strategy.

The U.S. has actually been kind of unique, particularly,

amongst developed countries in not having an industrial strategy in the last 30, 40 years or so,

and that was part of this turn towards neoliberal economics,

this idea that it doesn't really matter where you make things, place doesn't matter.

But as we know, place does matter for all kinds of reasons.

And it's really not just about whatever trade tensions there might be between the U.S. and China,

it's about the idea of what if there's a tsunami that disrupts the entire Japanese auto industry?

What if something happens in Taiwan, either a geopolitical event or a natural event,

and suddenly the lifeblood of the world, in the form of semiconductors, is cut off?

That's not a scenario that anybody wants.

And I reject the idea either that this is a chip war or that it's a zero sum game, frankly.

I think it's about rebalancing the global economy in a sensible way for everyone.

Now, because of various reasons, the U.S. is restricting extending semiconductor technology to China.

So what are the effects?

Victor, what is the impact on China currently?

Thank you for mentioning this.

First of all, these sanctions and export controls are in violation of free trade.

That's number one, which is a very important point.

And I think the American guest may be surprised

that this statement comes from the mouth of a Chinese lawyer, but it is true with Chinese characteristics.

Secondly, these sanctions make life difficult in China for the short term

because if China has no way of standing up and developing

its own semiconductor technologies and promoting its own tech manufacturing,

then China will just lie flat on the ground like a victim to be bullied, to be stampede upon.

But China is unique. China stands up.

China mobilizes all the resources and put them to good use.

And I would say this will completely change the dynamics in the semiconductor industry for the whole world.

China will reach a point of no need to import any ASML machine at all,

because China is figuring out a new way of making chips.

Designing chips, for example, completely different from the traditional technological pathway.

China will be the most important semiconductor R&D and manufacturing and exporting center in the world before 2030.

You mentioned the 2025 - 2025 is only seven months away from now.

No one in China is talking about 2025.

We are talking about 2030, 2035, and 2050.

- Okay, thank you.
- The horizon keeps changing.

So Rana, how do you see the impact on Chinese semiconductor industry from the export controls of the U.S. and the rest of the world?

So one of the things that's tricky about technologies like semiconductors is they're what's called dual-use technologies, right?

They have both commercial uses and they have military uses.

And that's something that is of a lot of concern in Washington.

The U.S. military believes that China poses the biggest strategic threat from a military standpoint.

I'm sure Taiwan has thoughts about that that we might want to hear.

And so giving away certain technologies that could be used for military operations,

for military development and strategy is foolish.

- Hung-Wen?
- Yes.

About the topic I can give you some viewpoints about this.

I think semiconductors are very high-tech and complicated right now.

So no country can do everything.

The best model is to focus more on development, developing the parts that you are very specialized in.

And as for the parts that you are not strong enough, try to collaborate with others.

This is also the lesson that Taiwan has learned in the past 50 years.

Yes, because Taiwan just focus on manufacturing.

Some design and some assembly, but Taiwan don't do their own product.

Yeah, so I think this should be an experience that TSMC and Taiwan can refer to the world.

Okay. Thank you.

Now as the U.S. and China become more polarized,

what impacts are being felt in East Asia where semiconductor production is concentrated?

Here's a brief look at the current semiconductor industry in the region.

Once one of the world's leading semiconductor powers,

Japan is now trying to regain its footing by joining forces with the United States.

The country is working to attract a manufacturing plant of Taiwan's TSMC,

and in Hokkaido, it's aiming to develop an ultra-advanced semiconductor of 2 nanometers with Rapidus.

In May, Japan's Minister of Economy, Trade and Industry visited the new plant,

which is under construction, for the first time and received a detailed report.

This year will be a very important year for Rapidus, with the installation of equipment starting

and the need to expand our efforts to raise private funding and win customers.

As the Japanese government, we will do our utmost to ensure the success of the project.

Taiwan is the global leader in semiconductor manufacturing.

In the cutting-edge devices under 16 nanometers, Taiwan Semiconductor Manufacturing Company or TSMC,

boasts an astonishing global market share of over 90%.

Taiwan is trying to use its overwhelming advantage along with free and open trade,

as protection against various forms of intimidation from China.

Everyone needs more advanced the semiconductor.

Taiwan will be a key player in the world and to make global more prosperity and I think make Taiwan more safer.

So, Hun-Weng, what is Taiwan's strategy for semiconductors from an economic security perspective?

If a war breaks out between the Taiwan Strait, the impact on the whole world will be unimaginable.

So not only will digital products be unable to be shipped by the entire world, we also stop functioning.

Therefore, the whole world should work together to avoid that disaster happen.

However, many media have said that Taiwan is currently the most dangerous place in the world.

Actually, Taiwanese people have never wanted to provoke any cross-strait conflict.

They want to choose their own way of life, including freedom, democracy, and the rule of law.

This is a system recognized by most countries, but China is not waiting to let the Taiwanese people make such a choice.

So is TSMC a deterrent for Taiwan?

I mean, motivation for the United States, Japan to protect Taiwan?

Yeah. TSMC is, I think, is a very good, stable power in the whole world.

Yeah, because - especially for Taiwan.

Yeah, because right now, we always say Silicon Shield for Taiwan.

So right now, TSMC also invests in United States, Japan, and Germany in the future.

Therefore, as long as the United States, Japan, and Taiwan cooperate well,

there should be enough deterrent force to prevent military actions from happening.

Rana, from the United States' point of view,

TSMC's expansion overseas, does it reduce the effectiveness of the Silicon Shield for Taiwan?

You know, honestly, I'm not sure how effective the Silicon Shield would be long-term anyway.

I think Taiwan's future, as the gentleman just said, is largely dependent on how China decides to approach Taiwan.

But I think the idea of expanding and creating more manufacturing nodes, creating more economic diversity,

rather than focusing on concentration of particular products in particular geopolitical places,

is the best strategy, not just for Taiwan, but for the world.

I mean, one of the big-picture background issues here, which goes way beyond semiconductors,

is that the global trading system over the last 20 years has essentially created a lot of concentration.

There's been a sort of a cheap capital for cheap labor bargain between the US and Asia.

Companies basically try and silo their supply chains, do things as cheaply as possible,

and that's part of this neoliberal philosophy that as long as share prices are going up and consumer prices are going down,

doesn't matter what else happens.

Mm-hm. And, Akira, what is your view on this?

Global supply chain is the best.

However, the current situation is going to the different direction already.

So Japan need to protect our technology or increase, improve the technology more.

Otherwise our country also facing the problem, currently equipment company,

materials company, only key engineer go to U.S. or Europe,

iMac and Samsung TSMC to develop the new machine and the new materials.

It means the local Japanese engineer cannot get the experience to develop the leading-edge technology.

What is the best strategy for Japan going forward in this changing semiconductor industry for Japan?

Only semiconductor technology is not the key technology but passive components,

motor, PCB and connector, battery, and many other devices.

Fortunately, Japan, we have very good, passive component company like Murata, TDK,

and good motor company, Nidec and other many companies.

So we need to think about the module, to make the module,

to combine those small devices to make more high-performance modules to compete with the other country.

Victor, what do you think of Akira's strategy for Japan in Japan, Inc.?

I listened very carefully to the remarks by the distinguished panelists from Japan and from Taiwan.

I think I actually agree with many of the points they made.

I think the decisions made by many of the semiconductor companies in Japan, in Taiwan, in Netherlands,

elsewhere, et cetera, these were not business decisions.

These were political decisions being forced upon these companies by another country.

Now, this country happens not to be China for very obvious reasons,

I think it will be very messy, but one thing is certain in this great scene of chaos,

that is China rises up and China picks up all the pieces

and China will push forward for complete independence in semiconductor industry.

Okay, Rana, do you have anything to say to that?

And I also want to ask about Japan's strategy of semiconductors mentioned by Akira.

Yeah. No, I was actually interested to come in on the point about Japan because Akira,

I think, was starting to move towards a topic that we haven't mentioned yet, which is friendshoring.

And the idea - this is a word that Janet Yellen, the U.S. Treasury secretary, came up with, actually,

in a conversation I had with her a couple of years ago at the Atlantic Council.

And the idea is that countries with shared values and synergistic needs

should actually work together to create new and more resilient supply chains,

and I see a tremendous amount of possibility for the U.S. and Japan

to work together in that arena and not just in chips.

And Hung-Wen, do you have any opinion about Japan's strategy?

And I also want to ask you about Taiwan's strategy.

Yeah, because right now, semiconductor is a very current, very burning-money industry.

You should invest a lot of money in the high, very advanced technology and also a very high tech space.

You have to invest - right now, a plant is about more than 10 billion U.S. dollars.

That's a huge money.

So I don't think every country can subsidize forever.

You can subsidize one year, two year, but you cannot subsidize for 10 years.

So we need globalization.

Akira, yeah?

- I have a little different opinion.
- Okay.

As I mentioned before, Lapidus's key mission is educate the Japanese engineers

and support semiconductor equipment company and materials companies' engineers to develop the future technology.

This is a key issue, I think.

- So, engineers. Okay.
- Yeah.

Now, as the United States and China moves to bolster their positions,

traditional supply chains are becoming increasingly fragmented, and a new ecosystem is about to emerge.

Western countries are opening semiconductor manufacturing bases in emerging Asian countries one after another.

The US has signed comprehensive partnership agreements and memorandums of understanding

with Malaysia, Vietnam, India, Indonesia and other countries.

When India and U.S. work together on semiconductors and critical minerals it helped the world in making supply chains.

In Asia, China has deep geographic and economic ties with others in the region.

It remains to be seen whether the US will succeed in building a new supply chain that excludes China.

So, Rana, you mentioned friendshoring.

So does the United States want to have two supply chains for semiconductors, one centered on the U.S., another led by China?

The U.S. is definitely interested in developing supply chains that are robust and resilient

with partners that share its values, democratic values, liberal values.

It's interesting, because Katherine Tai, who's the USTR, has spoken of a post-colonial trade paradigm,

and I really quite like that phrase because, again,

if you think about how trade has worked for so many decades and indeed many hundreds of years,

it's often been controlled by a handful of powerful forces, be it countries or companies.

And so the idea now, not just, you know, thinking about the U.S. or China,

but thinking about the global North and the global South, you know,

how can we make sure that all countries have an equal stake and equal share in the system?

How can we make sure that things are not extractive?

So I think the flaw - I'll be honest -

the flaw in the first Trump administration was that they simply used tariffs as the sole tool in the arsenal.

And tariffs are not that - you know,

you have to have a competitive strategy at home if you want to succeed, right?

I mean, every country knows that.

I think the Biden administration has said,

Look, we are going to use tariffs where appropriate when we feel that

there are non-WTO-compliant, non-fundamentally fair market practices in play, and that's okay.

But we also have this incredibly elaborate industrial strategy that we're developing in the U.S.,

which is creating certain manufacturing hubs, often in areas that have been less economically advantaged,

so it's about balancing wealth and dealing with inequality as well.

It's about working into issues like 21st-century labor training.

It's about, as we just discussed, trying to find new ways to interact with partners abroad.

So there's a lot of difference, I think, between the two approaches that Biden and Trump have taken.

Mm. So, Akira, how do you see the semiconductor industry changing, from your point of view?

Semiconductor market, last 30 years, 40 years,

was driven by the personal computer, smartphone, and flat TV, that type of the consumer goods.

From now, every country already announced to succeed the GX, carbon-neutral policy.

That will be driven by the government.

New market will start from now.

Semiconductor industry growth rate will be increased, of course, the supply and demand balance is important.

Every country's support subsidy to develop the semiconductor industry now,

that, maybe is overinvestment and oversupply.

So you're saying that in the future, semiconductor industry will not be, you know,

motivated by consumption but more of government policy.

Right, so, Hung-Wen, what do you say to that?

My opinion is that global industry supply chain will change a lot in the future,

now because of the U.S. and China Chip war,

some - I have to say many foreign investments have withdrawn from China,

including many Taiwanese design and packaging manufacturers.

China has to independently develop various advanced processes and technologies.

I think, all countries will face challenge, but in China, the challenge is even greater.

Every country do what they do best.

Yeah, but right now, China has to do all those things.

Now that will be very difficult and challenging. Yeah.

So, Victor, what do you say to that?

The panelists just now say the U.S./China semiconductor war.

No, it's U.S. war of semiconductors against China.

It's one-directional, it's not bi-way or two-directional.

And allow me to add a very quick point.

I listened very carefully to what the distinguished panelist from the United States said,

and with due respect to her, allow me to make one point.

If she is really serious about values, et cetera, she should go to the White House and try her best

to convince President Biden to approve Nippon Steel's acquisition of U.S. Steel.

No one says that Japan and United States do not have a lot of values very similar,

if not identical, to each other.

So why should the United States deny Nippon Steel's bid to buy U.S. Steel, which is on sale?

And I truly believe no one in Japan would ever forget that it was the United States

which bludgeoned the Japanese semiconductor industry from the pinnacle of the industry

to the low end and never recovered from the highs in the 1980s.

I think every country need to do what is best for itself,

considering its own independence and using its own brainpower to make that decision

rather than being dictated by any other country in the world,

and globalization is still the best path going forward.

All of us need international cooperation.

No one should indulge in the fantasy that by dictates

it can change the supply chain in the world which has been built up for decades.

Rana, you had something to say?

Yeah, I just want to respond to the gentleman from China's point about Nippon Steel,

which I actually think is a good point.

And in fact, I wrote a column arguing that the US and the Biden administration

should have let that deal go through.

Now, let me explain, though, why it didn't happen.

That deal didn't go through only because this is an election year.

And it's a huge election year, an election that matters enormously not just for the US but for the world.

The Biden administration needs steelworkers and it needs Pennsylvania. It's a swing state.

Why does he need labor right now?

Why does he need those swing status in the hollowed-out Rust Belt?

Because of the bad decisions that the U.S. made

to let the entire industrial commons go overseas and largely in big chunks of it to China.

That was not a good decision for national interests.

Jake Sullivan, who's the National Security Advisor in the U.S., gave a speech last April.

And he said, "Look, we've reached a turning point.

It's very clear that the world is not - and China in particular -

is not going to come seamlessly into the Washington Consensus and into the Bretton Woods system."

Perhaps that's appropriate.

You know, these, institutions were largely developed by Western powers in the post-World War II period.

We need growth now that's not just growth at all costs.

Not always cheaper is better, not always thinking about cheap clothing made with slave labor or, you know,

environmental standards that don't take into account the fact

that coal-produced electricity has a carbon cost for the world.

We need growth that is sustainable,

meaning we probably need to put some kind of a price on carbon at some stage

or come up with a mechanism for dealing with carbon, and is equitable,

meaning you're putting a floor under labor standards.

You simply can't compete in markets where you have subsidized labor, substandard labor,

and environmental standards that don't take into account the entire cost of a product,

and that's the direction we're going, and it's a good direction.

So, Victor, what do you say to that?

So the U.S. does not want to repeat what it experienced with the steel industry against China.

I was full-attention listening to the distinguished panelist from the United States.

Allow me to raise one objection.

She said substandard labor in China.

The Chinese labor is up to any standard in the world.

- The Chinese workers work really very hard and they make huge sacrifices.
- That's not the point.

They're underpaid and they're not treated well.

They are treated well.

And you can come over to visit us

and I hope I will help you to escort you on many of these visits.

- Using your own eyes will help.
- I hope they'll take me to Xinjiang.

I hear it's pretty difficult for journalists to get in there, though.

Xinjiang borders with Afghanistan and has suffered 20 years of a spillover of radicalization

from Afghanistan in the war of 20 years led by the United States against Afghanistan.

- The repercussion is still there, we hope it will recover.
- This is about slave labor and it's about China exporting its own problematic,

negative externalities of its own model to the rest of the world and it's unacceptable.

I hope you will do your real homework and visit Xinjiang before you make such representations.

Okay, let's get back to semiconductor industry for now, okay?

So do you think there would be two separate supply chains for the semiconductor industry?

Akira?

Yeah, I think so. That is the current situation, yes.

Hung-Wen?

Yeah, just Akira-san mentioned.

Because I covered LED display industry for many years.

In China, government subsidized many, many companies to compete with other vendors in other country.

You know, China is a very big country, so they have a lot of resources and people.

So if they focus on some industry, even the United States or other companies cannot compete with them.

China subsidized, China spend a lot of money on the industry.

Yeah, so a lot of other Asian company cannot compete with them.

Hm. Victor, what do you say to that?

Well, when we talk about subsidies,

look at how the United States government is subsidizing the semiconductor industry.

Don't be fooled by what you want to believe.

Look at what's happening just in front of our eyes. Subsidies.

Subsidies for Boeing, subsidies for Apple, Airbus, subsidies for the agricultural products.

When you talk about subsidy, open your eyes.

There are many ways, many forms of subsidies by different countries,

including by the biggest economy in the world.

Okay, so, I think we should wrap up now.

So in view of all the discussions we've had,

what is your biggest concern about the semiconductor industry

and do you see any positive signs in the future? Victor.

I believe after the chips war is over,

the world will still be one world and globalization being pushed to 2.0 will continue

and the Cold War mentality eventually will not generate any benefit for any country.

The world is big enough to accommodate both a very successful United States and a successful China at the same time.

China and the United States are not opposite against each other.

And I believe China and the United States will eventually get along with each other

and become two major engines for the growth of the world economy in the future.

Mm. Rana.

I think that one of the big challenges to re-industrialization

and creating more resiliency and more nodes of production is that it takes time, right?

You know, building a chips industry is a years-long,

decades-long project and there's a lot that can happen in the world

between now and the next 10 or 20 years.

And so we have to just stay focused on the future, stay focused on the big goal,

keep our eyes on the prize.

That can be difficult sometimes in the U.S. because we have a liberal democracy,

and like it or not, elections are part of that.

Mm, and Hung-Wen?

You know, Taiwan is very small island, so we just do what we can do.

We do a good job to manufacturing for all the customers.

I think that is a good strategy for Taiwan.

And Akira.

Yeah. The globalization is the most important for the worldwide.

So I agree, the political issue will not support the industry growth.

Thank you for your comments and your lively discussions.

That wraps it up for this edition of Global Agenda.

I'm Yuko Fukushima, thanks for watching.