Geopolitical competition in chip and semiconductor production is intensifying, particularly between the United States and China, amid rising tensions surrounding Taiwan’s crucial role in the industry. Taiwan produces 60% of the world’s advanced sub-7-nanometer chips, essential for technologies like artificial intelligence (AI), 5G, and military applications. This positions Taiwan as a significant player in the ongoing trade and technology rivalry.
Taiwan Semiconductor Manufacturing Company (TSMC) leads the global microchip sector, supported by other Taiwanese firms like United Microelectronics (UMC) and MediaTek. In addition to TSMC, global competitors include ASML from the Netherlands and South Korean giant Samsung, alongside American firms like Intel, Nvidia, Micron, and Texas Instruments.
To enhance its competitiveness, the US has invested billions in support of TSMC and other chipmakers through the CHIPS and Science Act, with TSMC’s Arizona plant seeing a 4% increase in production compared to its Taiwanese facilities. Conversely, China is expanding its semiconductor production capabilities through companies such as HiSense, Biren, and the Semiconductor Manufacturing International Corporation (SMIC).
The importance of semiconductors extends across various sectors, including smartphones, computers, industrial machinery, and military systems, making them vital for national security and economic strength. As digitalization accelerates, the demand for advanced chips in healthcare, finance, and transportation is expected to rise. The outcome of the US-China chip competition could significantly impact technological dominance in military and economic arenas.
In light of the COVID-19 pandemic and global conflicts, the need for domestic semiconductor production has become more urgent. Experts highlight that AI is projected to drive substantial growth in global semiconductor demand, with estimates suggesting a 20% growth rate due to the increasing need for specialized chips.
While TSMC continues to excel in advanced chip production in Taiwan, there are concerns about the US’s ability to achieve parity. Despite significant investments, the technological capabilities of TSMC’s Arizona plant lag behind those in Taiwan. This has led to the assertion that Taiwan will remain integral to the semiconductor landscape.
The situation emphasizes the importance of balancing global semiconductor supply chains and reducing reliance on Taiwan, which is viewed as vulnerable to Chinese influence. As nations strive for self-sufficiency in semiconductor production, the geopolitical implications of these developments are profound, with experts predicting the emergence of separate supply chains catering to different geopolitical spheres.
As the semiconductor sector evolves, cooperation between countries will be essential to address the complexities and risks inherent in global supply chains.
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