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State Department Official Discusses Chip Shortage, Taiwan Talks, 5G 'Trusted Network'

FILE - Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) headquarters in Hsinchu, Taiwan, Oct. 20, 2021.
FILE - Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) headquarters in Hsinchu, Taiwan, Oct. 20, 2021.

A senior U.S. State Department official said the United States is not asking the world's top chipmakers to provide "trade secrets" in response to a request for supply chain information to help address the global chip shortage.

"We're not asking for information that will be public. It's confidential information that will be kept confidential," said Undersecretary for Economic Growth, Energy, and the Environment Jose Fernandez in an interview with VOA on Tuesday.

"It's intended to do what we need to do, which is to find ways to ease the bottleneck in supply chains."

Fernandez led U.S. participation in the second U.S.-Taiwan Economic Prosperity Partnership Dialogue (EPPD), an initiative launched last November, as the United States seeks closer economic ties with Taiwan.

Taiwan is home to the world's largest contract chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC). Any disruption in Taiwan affecting TSMC production could strain the global supply chain to the snapping point. Many link the survival of this self-ruled democracy to U.S. supply chain security.

Fernandez said TSMC's decision to build a new plant in Japan, which is slated to open in 2024, is a good move that "diversifies" the supply chain locations.

He also confirmed the State Department has changed the name of the Clean Network, an initiative launched during the Trump administration to promote a trusted 5G network supplier while discouraging other nations from using equipment from Chinese telecom Huawei to build theirs. It is now called the Trusted Network.

"I like 'Trusted Network.' It's not a question of cleanliness. It's a question of who do you trust," Fernandez said.

The following are excerpts from the interview. It has been edited for brevity and clarity.

VOA: On Monday, you led U.S. officials' participation in the second U.S.-Taiwan EPPD. What was discussed? What was agreed on? And what can we look forward to?

FERNANDEZ: We discussed a number of items that are important to both the U.S. and to Taiwan: supply chain issues, economic coercion, science and technology changes, things that we can do to try and deepen our people-to-people relations as well as to deepen our economic partnership. And I think you will see a number of suggestions implemented from that dialogue. For example, we are going to start creating private-sector engagement between the two private sectors to make sure that both Taiwan and the United States are able to benefit from our deep economic ties.

VOA: Countering economic coercion was among the topics discussed. What specific measures is the United States considering?

FERNANDEZ: One of the things that the U.S. can do is to try and, first of all, provide moral support and statements of support to countries such as Lithuania, Australia and others who are being pressured. But also, we can do things such as replacing export credits that China takes away when it doesn't like the actions that are being taken. …One of the points that we discussed with Taiwan is what can the U.S. do going forward to anticipate and to try and counter economic coercion on the part of China.

VOA: There is a very strong pushback in Taiwan about the U.S. asking Taiwan to share semiconductor chip data such as inventory, orders and sales records, which are considered trade secrets. What exactly is the U.S. asking for? If the situation were reversed, the U.S. would probably not comply with such a request.

FERNANDEZ: I'm so glad that you asked that question, because there's a lot of misinformation as to what we're asking. What we're trying to do is to figure out why there are supply chain bottlenecks in countries. Why, for example, … are car companies unable to receive those kinds of semiconductors that they need in order to build their cars? What we're asking for is information from consumers, also from producers, from intermediaries, we want to find out why is there a bottleneck so that we can actually work to get rid of those bottlenecks. We're not asking for information on trade secrets. We're not asking for information that will be public. It's confidential information that will be kept confidential. … We are not going to use it in order to benefit our companies.

VOA: TSMC announced plans to build a new plant in Japan and start operations there in 2024. Do you think this will diversify the supply chain?

FERNANDEZ: I think, you know, it's a commercial decision. But what we try to promote on any supply chains, not just semiconductors, is diversity of suppliers, diversity of locations, diversity of products. Anything that diversifies the supply chains is good both for our industry and for the world economy.

VOA: Concerning 5G network security, is it fair to say the U.S. is still discouraging countries from using Huawei equipment to build their 5G networks? If so, why not continue using the name "Clean Network." Why call it "Trusted Network"? What is the difference?

FERNANDEZ: We are going to continue to talk to countries about the danger of unsecure networks. The bottom line is, telecommunications equipment has to be secure. It is in many ways the backbone of our economy. It is a national security asset. And so we talked to countries about why they need to make sure that their telecom networks are secure.

We in the United States … believe very strongly that Huawei is not secure. Why is it not secure? Because it depends on the PRC government. It is an entity that has to follow the dictates of the PRC. And so we talked to countries about what are the risks, and we talked a little bit about alternatives. There are alternatives, not just the traditional 5G telecom network providers but also new technologies such as O-RAN and many others. And, you know, these are not just U.S. companies — they're companies from around the world.

I think our main concern is to make sure that these are trusted networks that will not impair and will not jeopardize the security of a national telecommunication system. I like "Trusted Network." It's not a question of cleanliness. It's a question of who do you trust.

VOA: You came to the U.S. as an immigrant from Cuba. Can you share your personal journey with our audience?

FERNANDEZ: Oh, you don't have time for that! We came to this country when I was 11 from Cuba. We settled in New Jersey. Cubans, for most part, either go to Miami or they go to northern New Jersey. You know, my mother worked in a factory as a seamstress. My father worked at a bank. It was hard. But we also got a lot of help from many people in this country — from teachers, from churches. And I think back on those days, of the courage of my parents for basically leaving it all behind. But also with a lot of gratitude. I had a lot of luck, but I also had a lot of people who were willing to help.

VOA: What went through your mind when you were coordinating the charter flights to bring Afghans out of the country?

FERNANDEZ: So this happened a day or two after I got into this job. I was confirmed on a Tuesday and on Thursday we had to start dealing with this here. So I didn't have a lot of time to get prepared. I saw a lot of faces that reminded me of the faces that I had seen as I was leaving [Cuba]. … I didn't go home for three weeks. You know we were able to, after August 31, we were able to get out hundreds and hundreds of Americans, and not just Americans but also locally employed staff, humanitarian workers. I'm very proud of the work we've done. And I'm also very proud of my colleagues because they showed the devotion that makes the State Department such a special place.