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“We Need Them to Drive Our Economy” China vs USA Chip War Over Taiwan Could Change Everything

“We Need Them to Drive Our Economy” China vs USA Chip War Over Taiwan Could Change Everything
Image Credit: United Liberty

The changes in the global supply chain have brought to light a surprising revelation: the world’s largest technological battle is not fought over data centers, artificial intelligence, or even smartphones—it’s for semiconductors. These tiny chips, the brains behind modern electronics, have become the linchpin for dominating international technology and computing power. Here’s the full story.

The Recent Revelations

A recent report by CBN News shared that contrary to common assumptions, the United States does not lead the charge in this multi-billion-dollar industry. The primary goal of the U.S. government is now to maintain its edge over China in what experts are calling the ‘chip war.’

At the heart of this global struggle is the small island of Taiwan, which holds the reins to 92% of the world’s most advanced semiconductor production.

Gordon G. Chang, PhD., author of The Great U.S.-China Tech War, shared Taiwan’s dominance, saying, “When we look at the world’s most advanced chips, Taiwan makes 92% of them. One company in Taiwan makes 92%, and the other 8% are in South Korea.” The linchpin in this semiconductor market is the Taiwan Semiconductor Manufacturing Company (TSMC), with Apple standing as its major customer.

The Leader in the Semiconductor Industry

The significance of Taiwan’s role in the semiconductor industry was shared by Tufts University Associate Professor Chris Miller, author of “Chip War, The Fight for the World’s Most Critical Technology”.

Miller compared TSMC’s 40% share of world oil production and shared the potential economic crisis if the company were to face disruption.

China, a major player in the global technology landscape, spends as much money importing semiconductors as it does importing oil. Interestingly, a significant portion of these chips is purchased from U.S. firms.

The Relationships Between the Countries

The symbiotic relationship among key countries forms a complex international supply chain. The U.S., as the world’s largest market, constitutes almost 40% of the total value of this industry.

According to Miller, obtaining chips involves a global collaboration, including software from the U.S., machine tools from the Netherlands, the U.S., and Japan, ultra-purified chemicals from Japan, and manufacturing capabilities in Taiwan.

The ‘chip war’ took a dramatic turn three years ago when the Trump administration imposed restrictions on China’s tech giant, Huawei, preventing it from acquiring chips developed by the U.S. due to espionage and national security concerns.

The Shock to the Semiconductor Supply Chain

Miller explained the potential consequences of Taiwan being taken over, saying, “If Taiwan was taken over, the shock to the semiconductor supply chain would cause a deep depression in semiconductors worldwide.”

“It’s chips that provide that processing power for facial recognizing algorithms for example. The same capabilities that are technologically done in China could be done here as well and that’s why we need legislation to protect us from either the government or private companies from taking on that surveillance because the processing power that chips have is only going to increase,” Miller added.

The Importance of the Chips

The microchip, produced by Taiwan, plays a crucial role in American warfare, found in F-35 fighter jets, U.S. military-grade weapons, and defense systems. With the global tech ecosystem heavily reliant on these chips, Taiwan has become ground zero for the chip war between the U.S. and China.

Nathan Picarsic from the Foundation for Defense of Democracies shared the importance of accessibility and proximity to chips for both economic prosperity and national security. He said, “We need them to drive our economy. Things that are further away and at the hand of geopolitical adversaries may not be attainable at all times, providing a concern or vulnerability for us and our adversaries.”

The Chips Act

The U.S. response to this critical situation came in the form of the Chips Act, a substantial investment aimed at bringing chip manufacturing and research back to the U.S. However, the challenges are immense; building a chip fabrication plant costs around $20-25 billion for just one facility. TSMC has committed at least $12 billion to construct a chip fabrication plant in Arizona, starting in 2024.

So what are your thoughts? In the ongoing chip war between the U.S. and China, what policies do you think should be implemented to ensure a balance between economic interests and national security concerns?

Conor Jameson
Written By

1 Comment

1 Comment

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    robert eric lowen

    January 24, 2024 at 10:17 am

    We created the situation ourselves by allowing such technology to be produced overseas. This manufacturing should have never been allowed to develop outside the U.S. We appear to have taken this too lightly and should be developing facilities here at multiple locations at full speed. Hopefully- there is a plan in place to remove sensitive technologies from the area in the event of Chinese occupation. It IS COMING.

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