Competition intensifies in the chip industry

Countries that do not want to lose opportunities in semiconductors that drive modern technologies are trying to get ahead of the global competition with their geostrategic initiatives in this field.

The semiconductor sector continues to be the focus of trade between countries and geographic tensions that want to guide technology. On its way to a trillion-dollar market, chips are at the center of an escalating technological “cold war.”

Semiconductors, also known as “microchips”, are the backbone of today’s interconnected world, and have also become one of the elements of trade tension between countries.

According to consulting firm McKinsey, the chip market, which registered $580 billion last year, is projected to reach $1 trillion by 2030.

Although technology-leading countries are investing heavily in chip production, there is still not a single semiconductor facility in the world that can self-sufficiently produce chips.

A CAREER BEYOND EARNING MONEY

Due to the highly complex and interconnected nature of global semiconductor production, supply chain disruptions cause production fragility for many technology products.

While the US leads the way in R&D-intensive activities such as chip design, East Asia is at the forefront of chip manufacturing, which requires access to robust infrastructure and skilled labor . As a leader in assembly, packaging and testing, which requires relatively fewer skills and more capital, China is investing heavily in expanding its value chain.

On the other hand, China and the US rely heavily on Europe to create the “brains of modern electronics.” No advanced chips can be made anywhere in the world without machines from the Netherlands.

Countries like the US, China, Israel, Japan, South Korea, Germany and the UK, who believe that semiconductors, which are of great importance in almost every field of technology, from wearable electronics to healthcare Even electronic systems for vehicles, can create great business opportunities for their economies, while creating strategies in this area, they use incentive systems.

Although the chip fight of China, the US and Europe, which is called the “oil of the 21st century”, has other reasons besides making money, a direct relationship is established between computing power and military power.

COUNTRIES ARE TRYING TO GET ADVANTAGES

While trade wars with China, which began under former US President Donald Trump, have accelerated competition in the chip industry, an unprecedented step was taken last year in the US to lead the world in the production of advanced chips.

The “Chip and Science Act”, signed into law by President Joe Biden on August 9, 2022, was described as a “unique investment opportunity” to increase domestic semiconductor production in the country, while it was noted that the US. The US would strengthen its position against Porcelain.

Within the scope of the $280 billion chip law, which encourages the return of chip production to China, it was claimed that semiconductor factories will be built in the next 6 months, and this construction process alone will create more than 1 million jobs.

Much investment has been made under the law, which aims not only to increase domestic chip production, but also to limit the sale of advanced chips to China to hamper its advances in advanced computers, artificial intelligence and even weapons.

THE EU WANTS TO BE PLACED

In the technological cold war between the world’s superpowers, Europe also took action. In the European Union (EU) an agreement was reached on a plan that includes the provision of 43 billion euros with the “Chip Law” to increase the production of chips in member countries.

Japan also announced regulations to tighten controls on semiconductor exports to China. The Japanese government announced in July at the earliest that it would introduce stricter regulations on the export to China of state-of-the-art semiconductor manufacturing equipment needed for the development of supercomputers and artificial intelligence.

Following China’s chip restrictions, China also placed restrictions on purchases from a US chipmaker for the first time. Following the cybersecurity investigation carried out by the American Micron Technologies in China, the company was prohibited from selling chips and integrated circuits to Chinese companies that carry out critical infrastructure projects.

California-based chipmaker Nvidia’s market value hit $1 trillion on rising demand for artificial intelligence chips, once again revealing the importance of the race in this field.

CHINESE EFFECT

Zhuoran Li, who studies Chinese economics at Johns Hopkins University, also claimed that last year the US increased competition with China in the semiconductor industry and the government was trying to get ahead in the technology war with China with new laws and restrictions.

Arguing that the secret to Chinese companies’ success is producing quality products at generally lower prices, Li said forcing Chinese companies to source local supplies will undermine product quality.

Noting that China is seen to have enough resources to cover the cost of trial and error until it succeeds, Li said the country’s security-oriented industrial policy can also lead to short-term breakthroughs.

Referring to China’s role as a critical market, Li noted that excluding China from the global semiconductor value chain would be ineffective for this reason. (AA)