Semiconductors, strategic weapon of the economic war between the United States and China

Shares of semiconductor producers fell sharply in early October in Asian markets after Washington announced drastic restrictions on its chip exports to China. France 24 decrypts the strategic issues of this component, used by the United States as a weapon to curb Chinese influence.

The technological war between the United States and China has entered a new phase with the announcement on Friday, October 7, of drastic measures to limit exports of semiconductors to China. US President Joe Biden intends to take advantage of the technological advance of the United States in this strategic sector to curb the hegemonic, economic and military progress of his main rival.

For his part, President Xi Jinping is trying to reduce Chinese dependence with the aim of becoming the world leader in the sector.

Essential to the functioning of our daily devices, as well as to that of advanced technology in the field of armaments, these electronic chips have already been the subject of several disputes between Washington and Beijing.

Already in 2018, the Trump administration banned Chinese telecommunications company ZTE from buying US-designed semiconductors, driving the company to the brink of bankruptcy before finally suspending the measure.

Since then, the Covid-19 crisis has been there, further revealing the strategic value of these chips, the shortage of which has driven up inflation and had a lasting impact on the production of electronic goods internationally. .

To analyze in detail the geopolitical implications of this sector, France 24 spoke with Chris Miller, director of the Eurasia program at the American think tank Foreign Policy Research and author of the best-selling book “Chip War”.

Brussels will inject nearly 50 billion euros into the semiconductor industry ©DR

France 24: Can you explain to us What are semiconductor chips and how have they become so central to the global economy and everyday life?

Chris Miller: Semiconductors are small pieces of silicon in which billions of tiny circuits are etched. These circuits provide the computing power inside almost all devices with a switch: smartphones, computers, data centers, cars or even dishwashers. The average person interacts with dozens or even hundreds of semiconductors every day, almost never seeing them.

This technology, invented in United States, has it played a decisive role for the American military sector ?

America’s computer advantage was crucial during the Cold War. From the earliest days of the missile race, the Pentagon has focused on applying computer power to defense systems. The first major application for chips was in missile guidance systems, but today they are used in everything from communications to sensors to electronic warfare.

Just as anyone interacts with dozens of microchips every day, the military crucially depends on the power and signal processing capability of microchips. Moreover, as the military begins to experiment with more and more autonomous systems, their dependence on these chips only increases.

Do you think President Joe Biden’s move to relocate more chip production to the United States is a wise strategy? ?

Today, 90% of the world’s most advanced processor chips are produced in Taiwan. The TSMC company is the number one manufacturer in the sector, thanks to its enormous size and its extraordinary manufacturing precision. Its state-of-the-art chips power everything from smartphones to PCs to data centers.

If this production were to cease due to a war with China, the cost to the world economy would amount to hundreds of billions of dollars. Given Beijing’s growing military power and Xi Jinping’s aggressive nationalism, this is a risk that has become too great for the global economy.

From this point of view, the effort to diversify areas of advanced chip manufacturing is totally justified. This explains why the United States, Japan and Europe are all trying to strengthen their position in the semiconductor supply chain.

Europe is often considered to be behind in the field of high technology, but a Dutch company, ASML, has managed to carve out a place for itself in this market. What role does she play ?

ASML produces machines essential to the manufacture of these cutting-edge chips. This company specializes in electronic lithography (circuit printing and reproduction technique) and has a 100% market share in the production of the most advanced machines in this field. It has honed these capabilities over the years and today is a key supplier for companies like Samsung, TSMC and Intel.

Do you think that China has the means to equalr, or even surpass the United States in the field of semiconductors ?

For several years, Washington has been concerned about the national security implications of China catching up in the semiconductor sector, particularly in light of Xi Jinping’s “Made in China 2025” initiative, which chips a top priority.

China has invested tens of billions of dollars in government chip development programs. These programs have made it possible to make substantial progress in certain areas, particularly in design.

Overall, however, China lags far behind the capabilities of Taiwan, the United States and South Korea, especially in manufacturing. In addition, all chip production in China now relies on machine tools imported from overseas, mainly from the United States, the Netherlands and Japan.

Article translated from the original, in English, by David Rich

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