I recently read a piece on Protocol about a new book just released called “Chip War-The Fight for the World’s Most Critical Technology.”
The column, written by Hirsh Chitkara, introduces his interview with the author of the book, Chris Miller, and puts forth the main point of the book:
“World War II was decided by steel and aluminum, and followed shortly thereafter by the Cold War, which was defined by atomic weapons,” Chris Miller, a professor at Tufts University’s Fletcher School of Law and Diplomacy, writes in the introduction to his latest book. So what’s next? According to Miller, the next era, including the rivalry between the U.S. and China, is all about computing power.
That tech rivalry and the story of how the chip industry got from four to 11.8 billion transistors are all part of Miller’s book, “Chip War: The Fight for the World’s Most Critical Technology,” which comes out on October 4. “Chip War” outlines the nature of the coming battle over semiconductors, showing how the power to produce leading-edge chips fell into the hands of just five companies: three from the U.S., one from Japan, and one from the Netherlands.
I highly recommend you read the interview with Mr. Miller, which is informative and enlightening.
If you are a history buff, you know that technology such as radar, advanced communications, and early forms of computing machines, including the Enigma Machine that broke the code of German communications, were major technologies that helped win WWII.
While we are in another period of war threats due to the conflict between Russia and Ukraine, and a potential conflict brewing between China and Taiwan, another battle is taking place that has significant ramifications for our future.
That war is the control of our digital world in which semiconductors are at the center of this battle.
Almost every digital device has some form of semiconductor that powers its functions and capabilities. This was highlighted last year when automakers were unable to get the kind of smarter specialty chips needed to drive many new safety features as well as entertainment and communication functions.
PC makers also had to deal with a shortage of chips, which impacted their ability to build and ship some of their higher-end models. While the supply chain for creating more processors is improving, the bigger problem is the ongoing conflict between the U.S. and China via the trade wars.
China itself wants to be self-sufficient and wants to be able to make the most advanced processors in China and rely less on the U.S. and others who provide the advanced machinery needed for China to achieve this goal.
The U.S. complicates this problem by restricting all advanced semiconductor manufacturing equipment shipments to China.
The U.S. goal is two-fold. First, the broader reason is that the U.S. does not want China to become a semiconductor powerhouse. Secondly, they fear that China’s “for China only” policy would keep China from ever selling chips made in China outside of China in the future.
Most tech manufacturers are very cautious of China’s potential controlling policies and are starting to move much of their manufacturing out of China to Viet Nam, Malaysia, India, and Mexico.
In the meantime, the U.S. has created the Chip Act to help the U.S. bring more semiconductor manufacturing to the U.S. Companies like Intel, TSMC, Samsung, Micron, and others are building new fabs in Arizona, Texas, Ohio, and upstate New York. Within the next 2-4 years, these new semiconductor manufacturers could make sure the U.S. and other countries who are boycotting China can meet the chip needs of their customers around the world.
While China cannot get its hands on advanced chip-making equipment due to U.S. restrictions, they do see a way to circumvent these U.S. policies.
China has a policy called “One China,” which aims to bring all of the islands in and around China under their rule and to bring Taiwan back to being a part of China.
Taiwan broke away from China early in the last century and has been an independent country since then. However, China sees Taiwan as its property and wants to bring it back under China’s rule.
The U.S. and other countries in the region, such as Australia, Japan, and other surrounding countries, do not want a democratic nation like Taiwan to come under communist rule. As a result, these regions are taking military positions to try and thwart any attempt for China to do anything drastic to bring Taiwan under China’s rulership.
However, while bringing Taiwan back into China’s fold is the top reason for China’s position in this nation, there is another underlying reason they want to get Taiwan under China’s rule sooner than later.
That reason is if China successfully takes over Taiwan, it would come with a big prize. They would conceptually bring TSMC, the highly advanced semiconductor manufacturer, under Chinese rule. TSMC makes the chips for Apple, Qualcomm, AMD, and many others. So China would not only own one of the most advanced semiconductor fabs in the world but could use it as a bargaining chip to get more of its way in reaching a bigger China goal. That goal is to become chip independent and economic power to rival the U.S. and E.U.
This all boils down to the fact that China’s desire to be independent of the need for western technology and its goal to be a technology rival makes this chip war a significant area of conflict that is going on now.
It’s too early to tell how this battle plays out and if there is even a single winner in the future. However, the U.S. is moving fast to bring semiconductor manufacturing back to the U.S. to help mitigate any fallout should China eventually get Taiwan back under their rule and claim TSMC as part of China’s advanced semiconductor future.