Issued on: 13.10.2022 – 08:31
The Chinese Communist Party Congress will open in Beijing on October 16, a week after Washington imposed tough restrictions on exports of invaluable semiconductor technology to China to prevent it from outperforming the US economically and militarily. As semiconductors emerge as a key battlefield, FRANCE 24 spoke to the author of a new bestseller about these all-important pieces of silicon.
For years, semiconductors have been critical to everything from refrigerators to ballistic missiles. But only recently have they attracted public attention.
Washington demonstrated the almighty might of the US semiconductor industry in 2018 when Donald Trump’s Commerce Department banned Chinese telecom company ZTE from buying US-designed chips. These actions almost drove the company to collapse before the unpredictable then President reversed the action.
But semiconductors didn’t dominate the headlines until early 2021. A constellation of factors – most notably the Covid lockdowns that distorted consumer demand – triggered a chip shortage crisis that pushed up inflation and caused shortages of goods from cars to cellphones.
Now, semiconductors are back in the spotlight ahead of the Chinese Communist Party Congress after President Joe Biden’s Commerce Department unveiled sweeping new measures to curb US exports of semiconductor technology to China on Oct. 7. This was part of Biden’s response to President Xi Jinping’s plans to wean China off US-designed chips and turn it into a global leader in the sector.
To take a closer look at how semiconductors rose to the forefront of international business and politics, FRANCE 24 spoke to Chris Miller, author of the recent best-selling book Chip War and Associate Professor of International History at Tufts University, Visiting Fellow at American Enterprise Institutes – and Eurasia Director at the Foreign Policy Research Institute.
What are semiconductor chips and how did they become so central to the world economy and everyday life?
Semiconductors are small pieces of silicon engraved with millions and billions of tiny circuits. These circuits provide the computing power in almost every device with an on/off switch: smartphones, computers, data centers, cars and dishwashers.
The typical person interacts with dozens if not hundreds of semiconductors every day, although we almost never see them.
How important was the US advantage in semiconductors to their victory in the Cold War?
The US advantage in computing was crucial. From the earliest days of the rocket race, the Pentagon has been fixated on using computing power for defense systems. The first major application of chips was in missile guidance systems, but today they are used in everything from communications to sensors to electronic warfare.
Just as the typical person interacts with dozens of chips every day, military personnel rely critically on the chips’ processing power and signal handling capabilities. Also, as militaries begin to experiment with increasingly autonomous systems, they will depend even more on advanced chips.
How did Taiwan—especially Taiwan Semiconductor Manufacturing Company (TSMC)—come to near dominance in chip manufacturing? And what would happen to the world economy if TSMC’s facilities in Taiwan were damaged in the war?
TSMC is the world’s most advanced manufacturer of processor chips thanks to its enormous size and exceptional manufacturing precision. Today, TSMC produces 90 percent of the most advanced processor chips that go into everything from smartphones to PCs to data centers.
If a war were to shut down their production, the cost to the world economy would run into the hundreds of billions of dollars.
There’s a perception in Europe that we’re lagging behind in high-tech industries, but Dutch company ASML is the big exception. How did it come to play an invaluable role in chip manufacture?
ASML makes the machines without which advanced chips cannot be made.
ASML specializes in lithography and has a 100 percent market share in manufacturing the most advanced lithography machines. It has honed these skills over many years and is now a key supplier to companies such as Samsung, TSMC and Intel.
Washington has been concerned for a number of years about the national security implications of China catching up in the semiconductor business, particularly in light of Xi Jinping’s Made in China 2025 initiative, which makes chips a top priority.
Do you think China has what it takes to rival or oust the US when it comes to semiconductors?
China has invested tens of billions of dollars in government chip development programs. These programs have resulted in significant advances in some areas, most notably chip design.
Overall, however, China lags far behind the capabilities of the United States, South Korea or Taiwan when it comes to chip production. In addition, all chip manufacturing in China today relies on machine tools imported from abroad, mainly from the United States, the Netherlands, and Japan.
Given the security implications that the overwhelming majority of advanced processor chip manufacturing is based in Taiwan, do you think President Joe Biden’s plans to bring more chip manufacturing back to the US are a good idea?
Today, 90 percent of the world’s most advanced processor chips are made in Taiwan. With China’s growing military might and Xi Jinping’s aggressive nationalism, this is too much of a risk for the global economy.
From this perspective, efforts to diversify the geography of advanced chip manufacturing are a smart move. This explains why the US, Japan and Europe are all trying to strengthen their countries’ position in the semiconductor supply chain.
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