Month: August 2022

Ukraine’s top cyber official addressed a room full of security experts at a hackers convention following a two-day trip from Kyiv to a casino in Las Vegas.

During his unannounced visit, Victor Zhora, deputy head of Ukraine’s State Special Communications Service, told the so-called Black Hat convention Wednesday that the number of cyber incidents that have hit Ukraine tripled in the months following Russia’s invasion of his country in late February.

“This is perhaps the biggest challenge since World War II for the world, and it continues to be completely new in cyberspace,” Zhora told an audience at the annual conference.

Ukraine faced a number of “huge incidents” in cyberspace from the end of March to the beginning of April, Zhora said, including the discovery of the “Industroyer2” malware that could manipulate equipment in electrical utilities to control the flow of power.

Russian hackers also hit Ukraine at the onset of the war though a cyberattack that took down regional satellite internet service.

Since the beginning of the year, Ukraine had detected over 1,600 “major cyber incidents,” Zhora said.

Zhora told Reuters in an interview that Microsoft, Amazon and Google had offered pro bono cloud computing services to the Ukrainian government as it moves its data out of the country, away from the destruction wreaked by Russian bombs and missiles.

Some of Ukraine’s data archives are being held within data centers across “multiple [European] countries,” he added, without elaborating.

Zhora said his trip to Las Vegas took two days. He traveled to neighboring Poland to stay a night before flying to the United States.

Zhora said he would not waste time on the slot machines at the sprawling Mandalay Bay casino, where the Black Hat conference is being held: “It would be inappropriate for me to gamble here while Ukrainian soldiers are defending our land.” 
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U.S. teens have left Facebook in droves over the past seven years, preferring to spend time at video-sharing venues YouTube and TikTok, according to a Pew Research Center survey data out Wednesday.

TikTok has “emerged as a top social media platform for U.S. teens” while Google-run YouTube “stands out as the most common platform used by teens,” the report’s authors wrote.

Pew’s data comes as Facebook-owner Meta is in a battle with TikTok for social media primacy, trying to keep the maximum number of users as part of its multibillion-dollar, ad-driven business.

The report said some 95% of the teens surveyed said they use YouTube, compared with 67% saying they are TikTok users.

Just 32% of teens surveyed said they log on to Facebook — a big drop from the 71% who reported being users during a similar survey some seven years ago.

Once the place to be online, Facebook has become seen as a venue for older folks with young drawn to social networks where people express themselves with pictures and video snippets.

About 62% of the teens said they use Instagram, owned by Facebook-parent Meta, while 59% said they used Snapchat, researchers stated.

“A quarter of teens who use Snapchat or TikTok say they use these apps almost constantly, and a fifth of teen YouTube users say the same,” the report said.

In a bit of good news for Meta’s business, its photo and video sharing service Instagram was more popular with U.S. teens than it was in the 2014-2015 survey.

Meanwhile, less than a quarter of the teens surveyed said they ever use Twitter, the report said.

The study also confirmed what casual observers may have suspected: 95% of U.S. teens say they have smartphones, while nearly as many of them have desktop or laptop computers.

And the share of teens who say they are online almost constantly has nearly doubled to 46 percent when compared with survey results from seven years ago, researchers noted.

The report was based on a survey of 1,316 U.S. teens, ranging in age from 13 years old to 17 years old, conducted from mid-April to early May of this year, according to Pew.
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China has blocked many of Taiwan’s exports in retaliation for U.S. House Speaker Nancy Pelosi’s visit to Taiwan on August 2, but certain goods including semiconductors and high-tech products have been spared because of China’s reliance on those products from Taiwan, experts say.

“It is unlikely that Beijing will take serious trade actions against electronic exports from Taiwan. Doing so would be China shooting itself in its own foot,” Dexter Roberts, a senior fellow at the Atlantic Council, told VOA.

Taiwan makes 65% of the world’s semiconductors and almost 90% of the advanced chips.

By comparison, China produces a little over 5% while the U.S. produces approximately 10%, according to market analysts. South Korea, Japan, and the Netherlands are the other sources of the product, which is at the heart of many electronic devices and machinery.

Though China produces some semiconductors, it depends heavily on supplies from Taiwan for advanced chips. Taiwan’s TSMC makes most of the advanced chips in the world and counts Advanced Micro Devices, Apple and Nvidia among its customers.

Semiconductor Manufacturing International Corp. (SMIC) in China, which has 5% of the global fabrication market, produces 14-nanometer chips. There is also evidence that SMIC has 7-nm technology, according to a TechInsights blog. These are considered less advanced than the 3-nm chips produced by TSMC.

Beijing may not block the flow of semiconductors even if the military confrontation escalates, analysts say.

“Taiwan-based TSMC is the biggest world producer of chips, and China and the rest of the world need TSMC semiconductors. Hence, I don’t expect China to target electronic exports,” said Lourdes Casanova, Gail and Rob Canizares director of the Emerging Markets Institute at Cornell University.

Though China’s People’s Liberation Army says it is rehearsing to impose a military blockade around Taiwan, it will be careful not to hurt semiconductor companies like TSMC, Casanova said.

“The stoppage of supply of TSMC semiconductors would be the worst scenario for China and for many other countries. TSMC’s semiconductors are used by Foxconn, another Taiwanese firm, which is the main manufacturer of the iPhone in plants based in China and elsewhere,” she said.

Fear of invasion

A military invasion of Taiwan could disrupt supplies of semiconductors and seriously hamper dozens of high-tech companies that depend on them. TSMC Chairman Mark Liu voiced that fear when he said a military invasion would make TSMC factories inoperable.

“Our interruption would create great economic turmoil in China — suddenly their most advanced component supply disappears. It is an interruption, I must say, so people will think twice on this,” Liu said.

“Nobody can control TSMC by force … because it is a sophisticated manufacturing facility that depends on the real-time connection with the outside world,” such as Europe, the U.S. and Japan, for materials, chemicals and engineering software, he said.

Even with China’s ban on certain imports from Taiwan, analysts said, Taiwan is unlikely to retaliate because it is heavily dependent on Beijing in terms of trade and investment.

“Companies like TSMC are deeply reliant simultaneously on both the U.S. and China markets. Unless the situation in the Taiwan Strait badly deteriorates and turns to outright open hostilities, Taiwan will try to avoid taking any drastic action which would be cutting off chips to China,” said Roberts, author of The Myth of Chinese Capitalism.

China’s domestic manufacturing

China has been pushing to boost its domestic semiconductor manufacturing capacity. Beijing has pledged $150 billion to expand the industry and be more self-reliant. Plans are in place for new semiconductor factories.

Just last year, China’s chip manufacturing grew by 33.3%, according to China’s National Bureau of Statistics.

“China’s rapid growth in semiconductor chip sales is likely to continue due in large part to the unwavering commitment from the central government and robust policy support in the face of deteriorating U.S-China relations,” the Semiconductor Industry Association said in a blog.

Much of what will be produced in China is expected to be chips containing more mature technologies, analysts say.

US action

Under President Joe Biden, the U.S. has intensified efforts to strengthen its chip-making capabilities and reduce the reliance on external sources.

On Tuesday, Biden signed the much-awaited CHIPS and Science Act, which allocates around $52 billion to promote the production of microchips, the powerful driver for high-end electronics used in a wide range of products, including smartphones, electric vehicles, aircraft and military hardware.

Biden said the legislation would help “win the economic competition in the 21st century.”

U.S. Commerce Secretary Gina Raimondo said last month that it was necessary to reduce the dependence on supplies from Taiwan.

“Our dependence on Taiwan for chips is untenable and unsafe,” she said on July 22. “This is a Sputnik moment for America,” Raimondo said, referring to the CHIPS Act. “I mean that very sincerely. And this is a project we’re working on.”

Taiwan’s TSMC website states it is building a fabrication plant in the U.S. state of Arizona with the aim of starting production in 2024. It will produce semiconductor wafers using 5-nm technology.  During her recent controversial visit to Taiwan, Pelosi met TSMC’s Liu. TSMC is expected to be one of the beneficiaries of the $52 billion CHIPS and Science Act.

The U.S. is also countering China’s semiconductor industry in different ways. It recently broadened its ban on sales of chip-making equipment to China, according to Tim Archer, the chief executive officer of Lam Research Corp., a California supplier of silicon wafer fabrication gear.

The restriction would affect the shipment of machinery to produce 14 nm chips in China. This is an extension of the earlier ban, which prevented the supply of machinery for making advanced technology nodes of 10 nanometers. The idea is to cover a wider range of semiconductor equipment going to China.

South Korea, a U.S. ally, has indicated it would also cut off the chip supply to China in case Washington imposed global sanctions on it. Cutting off supplies would put China and Russia at a major technological disadvantage and hamper their manufacture of advanced military hardware. 
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U.S. President Joe Biden has signed the CHIPS and Science Act, which aims to boost U.S. competitiveness against China by allocating billions of dollars toward domestic semiconductor manufacturing and scientific research.

“The United States must lead the world in the production of these advanced chips. This law will do exactly that,” Biden said in remarks during the signing ceremony Tuesday. The president is recovering from COVID-19 and coughed repeatedly during his remarks.

He called the bipartisan legislation a “once in a generation investment” in the country and said it will create good jobs, grow the economy and protect U.S. national security.

Biden noted stiff competition with China in the chips industry. “It’s no wonder the Chinese Communist Party actively lobbied U.S. business against this bill,” he remarked.

Biden was joined on stage for the event by House Speaker Nancy Pelosi, Senate Majority Leader Charles Schumer, Commerce Secretary Gina Raimondo, and Joshua Aviv, CEO of Spark Charge, an electric vehicle charging network.

Schumer called the legislation the “largest investment in manufacturing science and innovation in decades” and thanked Republican Senator Todd Young for his partnership for over three years working on semiconductor-related legislation, beginning with what was then called the Endless Frontier Act.

The proposed act went through various iterations before it was passed as the $280 billion CHIPS and Science Act on a 243-187 vote in the House of Representatives and a 64-33 vote in the Senate in July.

Last year, a semiconductor shortage affected the supply of automobiles, electronic appliances and other goods, causing higher inflation globally and pummeling Biden’s public approval rating among American voters.

Catching up in the chips race

The CHIPS Act includes $52 billion in incentives for domestic semiconductor production and research, as well as an investment tax credit for semiconductor manufacturing. Advocates say it will allow the U.S. to catch up in the global semiconductor manufacturing race currently dominated by China, Taiwan and South Korea.

Following the passage of the bill, the White House noted that Micron, a leading U.S. chip manufacturer, will announce a $40 billion plan to boost domestic chip production while Qualcomm and GlobalFoundries will unveil a $4.2 billion expansion of a chip plant in New York.

The U.S. share of global semiconductor manufacturing capacity has decreased from 37% in 1990 to 12% today, largely because other governments have offered manufacturing incentives and invested in research to strengthen domestic chipmaking capabilities, according to a state of the industry report by the Semiconductor Industry Association.

Now China accounts for 24% of the world’s semiconductor production, followed by Taiwan at 21%, South Korea at 19% and Japan at 13%, the report said.

The CHIPS Act also includes $4.2 billion to fund defense initiatives and the U.S. mobile broadband market, particularly efforts to promote non-Chinese 5G equipment manufacturing.

Broadly, the legislation lays out a strategy for Washington as it aims for global technological and economic dominance – gaining production autonomy by leveraging allies, including South Korea and Japan and eliminating political dependencies on the global semiconductor supply chain.

That strategy puts the U.S. on a collision course with China, which also aims to be the global leader in semiconductors. In 2015, Beijing launched the Made in China 2025 project, which aimed to increase chip production from less than 10% of global demand at the time to 40% in 2020 and 70% in 2025.

The Taiwan factor

Taiwan — a self-governed island that Beijing claims to be its breakaway province — is the main producer of the world’s most high-tech chips. It lies at the heart of the semiconductor showdown, the latest battlefront in the increasingly tense U.S.-China strategic rivalry.

Taiwan accounts for 92% of the global production of 10 nm or smaller semiconductors, essentially creating what some observers have characterized as a “silicon shield” that ensures American support in the event of a Chinese attack, as well as a deterrence against such a move.

In a visit to Taipei that angered Beijing earlier this month, U.S. House Speaker Nancy Pelosi met with Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co., the world’s biggest chipmaker.

Pelosi delivered all but one Democratic vote in the House of Representatives for the CHIPS Act. “Mr. President with the stroke of your pen, America declares our economic independence,” she said in her remarks Tuesday. “We strengthen our national security, and we enhance our family’s financial future.”

Following Pelosi’s Taiwan visit, Beijing halted key communication channels with Washington and conducted live-fire military drills, raining Dongfeng ballistic missiles into the waters near Taiwan’s eastern, southern, and northern coasts.

While most experts don’t believe a war over Taiwan is imminent, many fear a conflict there would disrupt semiconductor production and have disastrous effects on global manufacturing.
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