At the heart of the conflict is the battle to control the design and manufacturing of semiconductors
By Stevenson Jacob, Dr Karamala Areesh Kumar
The rising chip war between the US and China has become one of the top global concerns in recent times. The race for supremacy in semiconductor production has become the main focus in an increasingly tech-driven and turbulent world. The rivalry between the two world powers isn’t just about economics or technology but also about who will shape the future. It is a battle with high stakes, whose outcomes could reshape global equations and the balance of power for decades.
At the heart of this conflict is the battle to control the production of semiconductors, which are crucial to almost all modern electronics, including smartphones, computers, 5G networks, artificial intelligence (AI) and advanced weaponry. The chip war is fueled by economic as well as national security imperatives. It concerns trade restrictions, export controls, technological blockades and intellectual property theft. However, it began as a US-China dispute, as both countries are trying to seize control of the semiconductor industry.
For the United States, maintaining leadership in semiconductor production is crucial for preserving its technological edge. The US is home to prominent semiconductor companies, including Intel, Nvidia and Qualcomm. Acknowledging the vital importance, the US government has prioritised the industry as a foundation for future economic growth, military strength and retaining its influence in setting the tech standards for the world.
The US commitment to defend Taiwan against Chinese military activities has heightened regional tensions
China’s efforts in this struggle represent a drive for self-reliance and a pivotal move toward achieving its larger ambitions. The country had to rely on semiconductor imports, especially from the US and its allies. However, in recent years, China has made significant progress in ending that reliance by developing its semiconductor industry. The government has made enormous investments to integrate domestic chip manufacturing capabilities. Those advances, however, have been counterbalanced by restrictions put in place by the US, including limits on access to advanced chip-making technologies, which posed vital obstacles to China.
Critical Technology
The battle for supremacy also affects countries worldwide, both economically and geopolitically. The disruptions and chip shortages faced by many industries, such as cars, electronics and telecommunications, are one such casualty. The shortages that began in 2020 even forced vehicle manufacturers like Ford and General Motors to scale down production. The chip war has prompted uncertainty in the global marketplace as companies and countries race to lock in chip supplies, sometimes at premium prices.
Big tech companies from the US like Intel, Nvidia and Qualcomm lead the way in the industry, creating top-of-the-line chips for artificial intelligence and 5G. The US also dominates the design and production of chip-making equipment, with firms like Applied Materials and Lam Research offering crucial machinery. However, China, too, has made great strides in recent years.
The country’s biggest chipmaker, Semiconductor Manufacturing International Corporation (SMIC), has gained strength in the last few years, though it still depends on the US for the most advanced chips. Despite having a few established domestic giants like HiSilicon, China still relies on external help to manufacture localised high-end chips. America’s export restrictions have slowed China’s progress, especially for firms aspiring to create the complex manufacturing nodes required for the next-generation chips. Nonetheless, China has remained steadfast in its quest for semiconductor self-sufficiency.
Moves and Countermoves
The chip war is reshaping geopolitics as the US and China fight for the upper hand, altering the balance of power in the global tech ecosystem. The US has increasingly turned to allies like Taiwan, Japan and South Korea to counter China’s growing influence in chip-making. Taiwan’s Semiconductor Manufacturing Company (TSMC) is at the heart of this, with its production capacity deemed critical in keeping the US’ technological lead. As part of this, the US has formed the Chip 4 Alliance to strengthen semiconductor cooperation.
The Chinese government is also investing billions in companies such as SMIC, urging domestic tech firms to create chip designs to reduce imports. Furthermore, China is raising its technological relations with African and Latin American countries and investing in these countries in exchange for strategic markets and resources. These moves are part of China’s strategy to gain a stronger position in global technology and supply chains.
Taiwan Game
This continuing power struggle has wide-ranging geopolitical implications, particularly concerning Taiwan. As a key player in the global semiconductor supply chain, Taiwan has become a significant battlefield for the US and China. Tensions have risen sharply, with China perceiving Taiwan as essential for its aspirations of technological superiority.
At the same time, China is actively pushing for self-reliance to strengthen its technological position. This struggle for dominance extends beyond specific inventions and initiatives; it represents a contest over the future trajectory of global development. As the world’s largest and most advanced chipmaker, TSMC produces cutting-edge semiconductors essential for technologies ranging from smartphones to military systems, making its role in this competition indispensable.
The US commitment to defend Taiwan, especially in response to rising Chinese military activity, has heightened regional tensions. Taiwan’s strategic geopolitical position, combined with its leadership in semiconductor technology, places it at the centre of the chip war.
Opportunities in Conflict
The current conflict and global politics offer a chance to explore various methods of addressing the challenges and improving the semiconductor supply chain. One approach is to establish global semiconductor innovation centres. These centres would serve as collaborative hubs, enabling nations to cooperate in chip development while emphasising innovation and healthy competition. Such centres could facilitate joint tech research and counter monopoly. Countries could pool assets for infrastructure, workforce training and idea generation, thus creating a more robust and diverse semiconductor supply chain.
Additionally, accelerating quantum semiconductor technology is a promising strategy. Countries can lessen their dependence on traditional semiconductor production by advancing quantum computing and quantum chips. Governments, corporations, and educational institutions should invest in this research and form international coalitions dedicated to quantum semiconductor development. This initiative could provide an alternative to the prevailing chip technologies and position nations as leaders in the forthcoming technological advancements. These strategies offer sustainable ways to navigate the political challenges stemming from the chip conflict.
While competition runs deep, there is still an opportunity for collaboration that could create a more secure and stable semiconductor ecosystem. The outcome of this battle will decide who leads in the technologies that define the future.
