Chip War: Who will win?

Like Ukraine-Russia war, the world is now  facing another war, named semiconductor or chip war. The competition between the U.S and China becomes intense for the chip. Semiconductor is an integral part of the electronic and military  industry. What are causes behind this war, what is the current situation, what will be the implications in the future and who will win this war is going to be discussed in this article.

Semiconductors, also known as chips, are the materials that have a conductivity between conductors and insulators. The semiconductors can be consisted of pure elements such as germanium or silicon. Semiconductors use in electronic equipments and devices including diodes, transistors, integrated circuits, consumer products like mobile phones, laptops, game consoles, microwaves, cars. Now it is considered as “The new oil” and ” A 21st century horse shoe nail.” Moreover, semiconductors is the core component in the manufacturing industries. The U.S.A, Asian countries like Taiwan, China, South Korea and Japan are the largest semiconductor producers in the world. Taiwan, China, South Korea’s companies account for 87% of the global market. Supply chain uncertainty, Covid-19 pandemic, the increasing demand of consumers that lead to the world in semiconductor war. Especially, the COVID-19 pandemic played a massive and dimension role in this crisis. Industries were failed to meet the supply and demand of the consumer in that climate, semiconductors companies were lagged behind and unstable to cope with the severe demand pressure from various sectors. According to the semiconductor Industry Association, the global semiconductor sales were hoped to be maximized by 20% in 2021. As demand for consumer electronics decreased, the paucity of advanced elements waned rapidly. Hence, the industry is now dealing with intense stock. The automotive chip insufficiency is now struggling to protect the unwavering supplies of chips. In 2022, they were predicted to rise 9%. The declining of semiconductors production will help to lead the production process of the electronic industries in 2023. By the end of the 2027, silicon market is expected to reach USD70 billion and annual growth rate of 5.1% over the next five years.

The United States of America is the semiconductors race leader in the worldwide market whose market share value was at over $200 billion in 2020. They are also a harbinger in the export of semiconductors 50% of the world market.Basically, semiconductors are the top export goods of the United States of America and they invest more than one-fifth of the sales on research and advancement, second only the pharmaceutical business. America still depends on Taiwan for exporting semiconductors. On the other hand, China is now an emerging major participant in the semiconductor race. Its semiconductor industry has been expanding since 2015. The Semiconductor Industry Association hopes China to excel Taiwan by 2030 with a 24% market share and supported by its ” Made in China 2025″ initiative. China has already devoured Taiwan in the semiconductor business during the previous two years. America always wants to halt China but China’s semiconductor industry continuous to advance at the 9%, its annual sales might reach $114 billion by 2024. In order to Taiwan’s geopolitical kismet precarious, both America and China are racing to make their own malignance as well as self-contained in the semiconductor industry. China works for long to catch up America’s advanced technologies and competes in microchip. The rise of techno-nationalism in china will lead to both the competition and conflict with the U.S.

The U.S has recently passed the CHIPS Act that involve Impressive financial support for science and technology because their main goal is to maintain a magnificent, competitive benefits over China. The most panorama controls on chip imitation, the U.S Department of commerce’s Bureau of Industry and Security (BIS) implements. On October 2022, the Biden Administration amplified its controls on the exports of semiconductors associated inputs and equipments to China. On December 6, Biden visited the site of Taiwan semiconductor Manufacturing Co. new plant in Arizona and called a potential project for the U.S chip supply chain.In mid December, The U.S administration included 36 additional Chinese chip makers from entrancing U.S chip technology, including YMTC.  Not only 40Billion investment delineates the U.S endeavors to attain hegemon over China in chip industry but also America has stepped to strength entrance to flourished semiconductors technology by Chinese companies. It is now crystalline that America has announced a semiconductor war on China.

Now it is a question of  trillion dollars who will win the chip war? Chip war is now a war more than the geopolitical conflict. It is very difficult to determine the winner of the chip war. As the U.S is the global hegemon, some countries will try to make a coalition with the U.S and its allies. The U.S will dominate the semiconductors technology for artificial intelligence and military installation. China takes the conduct in microelectronics like cloud computing and electronic devices. According to some Economists, there will be no winner, only losers will remain. And the ultimate losers are the consumers.

Tamanna Islam
Tamanna Islam
University of Dhaka, Department of International Relations.