The Semi-conductor “Chip” War

The world is ever increasingly dependent on tech and with this reliance comes a growing need for “chips.” These chips, more formally called semiconductors, are what revolutionized the electronics industry and paved the way for devices such as mobile phones, computers, CD players, televisions, and many appliances found around the home. Today these chips are needed in everything from coffee makers to vehicles and are a huge $349.76 billion dollar industry.

These semiconductors are difficult to make, so difficult in fact that there are only three companies worldwide that are capable of making competitive products in the field (TSMC, Samsung, and Intel). Unfortunately, due to the COVID-19 pandemic restrictions, an enormous chip dependency was exposed when all production was paused for several months. This resulted in a shortage that affected products across many industries and left governments to consider ways to relieve this issue.

China recently stated its plans to become a world leader in the semiconductor market. However, this decision has been received with much scrutiny from the US, given the conflict between the two countries and the ongoing trade war. The United States government would like to prevent China from taking part in the market advantages of this pseudo-monopolistic industry given that currently intel, a company run from the United States is one of the current leaders. This is why they have decided to tighten China’s access to the chip-making equipment required to grow their production. This does, however, still leave the risk that China could invade Taiwan to take its semiconductor market by force; a big problem for the United States as they are currently in a trade agreement with TSMC (the semiconductor leader of Taiwan). This agreement involves US government subsidies and training of United States citizens in Taiwan to gain the leading edge knowledge required to upgrade the technology in the united states.

It is possible that this quarrel between countries could result in a type of “cold war” for semiconductor dominance which would result in a much faster and more powerful technology for everyone. However, this de-Globalization of trade is not something to be celebrated and could just as easily put the whole world back years economically.