China vs US Battle Over Valuable Technology ( microchips) After Oil.

 The Battle for Semiconductors: Why the World's Two Largest Economies are Fighting Over Microchips

In recent years, the world's attention has shifted from oil and energy sources to a new, equally valuable and important technology: semiconductors. These tiny microchips are the heart of a $500 billion industry and are expected to double in size by 2030. According to experts, the country that controls the supply chain of these microchips will become the superpower of the world.

China and the US are currently locked in a battle over semiconductors, with China seeking to acquire the technology to make these microchips and the US trying to isolate China. Chris Miller, an associate professor at Tufts University and author of Chip Wars, explains that the two countries are in a traditional arms race in the Asia-Pacific region. It's not just about production of ships and missiles, but also about the quality of artificial intelligence algorithms that can be used in military systems.

The Semiconductor Manufacturing Process

The process of semiconductor manufacturing is complex and requires specific and integrated steps. For example, the microchip in an iPhone is designed in the US and manufactured in Taiwan, Japan, and South Korea before being assembled in China. India, which is investing heavily in the semiconductor industry, has the potential to play an important role in the future.

The competition in the semiconductor industry is to make the best and most efficient microchips on a large scale, with the goal of making chips as small as possible. This requires overcoming the challenges of manufacturing chips with as many current-passing and blocking transistors as possible on a tiny piece of silicon. The semiconductor industry operates under what is known as Moore's Law, which states that the number of transistors on a microchip should double over time.

The Battle for Nanometers

In mid-2022, Samsung became the first company to begin mass-producing three-nanometer microchips, followed by Taiwan Semiconductor Manufacturing Co., the world's largest microchip maker and supplier of chips to Apple, by the end of the year. These microchips are incredibly small, with wires finer than a human hair and a number ranging from 50 to 100,000. These tiny, yet powerful, microchips can be used in devices such as supercomputers and AI systems.

Taiwan, where most of the world's microchips are manufactured, has been dubbed the Silicon Shield by its president. This title reflects the country's protection from China, which claims the region as its own, and its heavy investment in the semiconductor and AI industries. However, China is still far behind in the race to become the world leader in the semiconductor industry.

Stopping China's Access to Microchips

The US, under President Biden's administration, is taking steps to block China's access to microchip technology. In October 2022, Washington announced tougher controls on the export of microchips, machines for making them, and programs involving American technology to China, regardless of their location. The US has also prohibited its citizens or residents from supporting the production of microchips in certain factories in China.

These measures have had a significant impact on China's chip industry, which relies heavily on imported hardware and human capital. Many of the executives of Chinese semiconductor companies have American passports or have studied in the US, which is a major issue for China.

The US is also seeking to increase microchip production within its own borders through the Chips and Science Act. The act provides grants and subsidies to chip manufacturing companies in the US, with big companies like TMSC taking advantage of the opportunity.