Only weeks after US president Joe Biden and the Chinese president Xi Jinping met in person to improve ties between the world’s two biggest economies, China filed a dispute with the World Trade Organization, further escalating the conflict between the two countries that intensified when the US introduced sanctions on chips exports earlier this year. According to Bloomberg, Japan and the Netherlands will be joining the US in efforts to tighten chip exports to China, with even semiconductor giants ASML and Tokyo Electron being impacted.
Update from the semiconductor universe
On Monday, China’s commerce ministry said that the WTO complaint was a legal and necessary measure for China to defend its “legitimate rights and interests”, after the US Department of Commerce made it harder for China to buy or develop advanced semiconductor chips. The export controls that the US introduced were aimed at hampering China’s ability to use high-end US technology for military purposes.
Geopolitical risk
Back in 2021, the semiconductor market exceeded $500 billion, but it is estimated to grow to a trillion-dollar industry by the end of the decade. Taiwan is still the global center as it holds more than 90 per cent of global market share in terms of the leading-edge versions of the technology. But growing fears about some form of Chinese military intervention in Taiwan has prompted the US, Japan and Europe governments to push for a localized chip production to ensure the needed supply. Besides being an integral part of pretty much all modern devices, semiconductors are also a matter of national security and economy, with COVID-19 already showing how bad things can get when there is a supply shortage.
According to SEMI’s September report, a US-based semiconductor industry organization, at least 81 new chip facilities are to be built between 2021 and 2025, with 10 in Europe, 14 in the US and 21 in Taiwan.
Europe and the US are determined not to be left behind
Earlier this year, the European Commission revealed it will be investing €43 billion in an effort to encourage the world’s biggest chipmakers to set up factories on European grounds, including TSMC, the world’s biggest contract chipmaker.
Brussels hopes the investments will double the EU’s share of the global semiconductor market from the present state that accounts for less than 10 per cent to 20 per cent by end of the decade. A US giant, Intel, has commited €17 billion for a mega-site in Germany. European chipmakers like STMicroelectronics and Infineon are also expanding their facilities in Europe.
Europe has its jewels such as WISeKey International Holding WKEY, a leading cybersecurity AI and IoT firm, that just launched The One Humanity ID platform on December 8th. The platform empowers key initiatives related to the trade of NFT art pieces and other human interactions, confirming that company’s role in helping the world welcome a new era, an era of intelligence.
Europe does have a unique competence and therefore, a secret weapon
Oberkochen, a tiny town in Germany, is headquarters to Carl Zeiss SMT, the only manufacturer of ultra-precise mirrors and lenses used in the world’s most advanced chipmaking equipment. Their equipment has unparalleled accuracy with a precision 200 times greater than the James Webb Space Telescope. One of its most important customers is ASML, the Netherlands-based company that holds a global monopoly on manufacture of the extreme ultraviolet lithography (EUV) machines required to make cutting edge chips. More importantly, without these optics, ASML could not make its EUV machines that even China needs to make more advanced chips which are the building blocks for artificial intelligence, autonomous driving, quantum computing and the technology of tomorrow. It can be said that ASML machines and Zeiss optics hold key of the new era. Therefore, despite being behind, Europe can turn things around with its hidden strength in advanced chipmaking equipment and know how.
Europe and the US still have significant gaps to fill
Despite many manufacturing locations, only one facility in Ireland has the ability to produce chips below 10-nanometre technology but it is not yet fully operational. There is also the challenge posed by the massive amount of required capital and skilled workers to make those plants do what they are intended to. As for the US, President Biden signed a landmark bill to provide $52.7 billion in grants for U.S. semiconductor production and research as well as tax credit for chip plants estimated to be worth $24 billion back in August. But chip design capability and supply remain limited in both presence and scale so many new developments in this race are to be expected with the world winner of the seminconductor war being impossible to predict in this ever changing global climate.
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Source: https://finance.yahoo.com/news/global-semiconductor-race-turning-war-161159076.html