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

Semiconductor maker stocks fell sharply in Asian markets in early October after Washington announced drastic restrictions on its chip exports to China. France 24 decodes the strategic questions of this component, used by the United States as a weapon to contain Chinese influence.

The technology war between the United States and China has entered a new phase with the announcement on Friday, October 7th, of drastic measures to limit semiconductor exports to China. US President Joe Biden intends to use the United States’ technological lead in this strategic sector to curb the hegemonic, economic and military advances of his main competitor.

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

These electronic chips, essential for the functioning of our daily devices as well as for advanced technology in the field of armaments, have already been the subject of several disputes between Washington and Beijing.

Back in 2018, the Trump administration banned Chinese telecom company ZTE from buying US-developed semiconductors, pushing 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, whose scarcity has fueled inflation and had a profound impact on the production of electronic goods on an international scale. .

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

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

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

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

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

America’s computer advantage was crucial during the Cold War. From the earliest days of the rocket race, the Pentagon has focused on harnessing computing power for 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 everyone interacts with dozens of microchips every day, the military depends critically on the power and signal processing capabilities of microchips. Also, as the military begins experimenting with more and more autonomous systems, its reliance on these chips will only increase.

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

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

If this production ceased due to a war with China, the cost to the global economy would be in the hundreds of billions of dollars. With Beijing’s growing military power and Xi Jinping’s aggressive nationalism, that risk has become too great for the global economy.

From this point of view, efforts to diversify areas of advanced chip manufacturing are fully 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 seen as lagging behind when it comes to high technology, but one Dutch company, ASML, has managed to carve out a place in this market. What role does she play ?

ASML manufactures machines that are essential to the manufacture of these state-of-the-art chips. This company specializes in electronic lithography (circuit printing and reproduction technology) and has a 100% market share in manufacturing the most advanced machines in this field. It has honed those skills over the years and is now a key supplier to companies like Samsung, TSMC, and Intel.

Do you think China has the means to do this?r, or even surpass the United States in the field of semiconductors ?

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

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

Overall, however, China lags far behind the capabilities of Taiwan, the United States and South Korea, particularly 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 into English by David Rich

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