|  | (Source: TechNation News) |
| What are semiconductors? | A semiconductor is a small chip that controls how devices work. They process data, store information, and manage electric signals. Because of this, semiconductors are often called the "brains" of electronics. They are crucial to modern technology. | They are found inside almost every modern electronic device. We don't usually see them, but they are hidden inside the technology we use every day. They are used in smartphones, computers, tablets, and televisions. They are also found in microwaves, washing machines, and fridges. In cars, they manage systems like braking, navigation, and engine control. Even in hospitals, MRI machines and heart monitors rely on them. | Beyond consumer products, they are also used in defense. They are found in satellites, power grids, fighter jets, radars, and missile systems. They also play a key role in energy, transport, and communication. As tech advances, semiconductors are becoming even more essential for things like AI, 5G networks, and space exploration. In short, semiconductors power the digital world and are key to both economic growth and national security. | They are made in a long and complicated process. It requires rare materials, expensive machines, and clean factories. It takes many steps and parts from different countries to make just one chip. | Why are semiconductors so important? | Semiconductors are everywhere. This makes them very valuable. Countries want to make sure they have enough semiconductors for their needs. If they can't get chips, it could hurt their economy, stop industries, and weaken their national defense. | During the COVID-19, many factories shut down. This led to a shortage of semiconductors. As a result, many companies and states struggled to get enough chips. This showed the world just how important and fragile the supply of semiconductors can be. It also launched waves of reshoring efforts. | Investments in semiconductors | The U.S. passed the CHIPS Act to spend billions on building chip plants in America. Over $480B in investments were announced in the past two years. Many are supported by CHIPS Act subsidies. Contributors include: | | The EU passed its own EU CHIPS Act. TSMC, Bosch, Infineon and NXP co-invest in a plant in Germany, backed by the government. Infineon is also working on its €3.5 billion MEGAFAB Project. The EU Commission invests €920 millions on it. Silicon Box is investing €3.2 billions in a chip plant in Italy. Italy contributes with a €1.3 billion aid measure. | TSMC is building 7 new plants at home, and one is under construction in Japan. | Japan announced an additional $5.4 billion funding for Rapidus 2nm chips production at its Hokkaido plant. | The U.S.-China competition | Both the U.S. and China want to lead in technology. They compete in AI, 5G networks, and military systems. Semiconductors are the building blocks of all these technologies. | The U.S. is home to some of the best chip design companies, like Intel, NVIDIA, and AMD. But most of the actual manufacturing takes place in other countries. On top of which are Taiwan and South Korea. Taiwan's TSMC makes over half of the world's advanced chips. | China, on the other hand, wants to make more of its own chips so it doesn't have to rely on other countries. But China is still behind in making high-end semiconductors. This has created tensions between the U.S. and China. | To stop China from gaining advanced chips, the U.S. has put in place export controls. This means that some American technologies can't be sold to Chinese companies. For example, 3 years ago, the U.S. banned sales of high-end chips and chip-making tools to China. The U.S. also convinced other countries like Japan and the Netherlands to do the same. | This has made it harder for China to grow its own chip industry. In return, China started to invest billions of dollars on its chip-making. It is also looking for ways to work around the bans. But China also hit back by using its rare-earth resources as leverage. These elements are also crucial to modern technologies. | Taiwan: a key player in a risky position | Taiwan is at the center of the semiconductor world. As the home of TSMC, it makes many of the world's most advanced chips. But Taiwan is also in a dangerous spot. China sees Taiwan as part of its territory and has said it may take it back by force. If something happens to Taiwan, it could stop the global chip supply, causing big problems for the world economy. | As a result, Taiwan tries to make sure it remains the hub of cutting-edge chipmaking. Earlier this year, the state passed regulations to reinforce its leadership. This prohibits the transfer of their most advanced process nodes abroad. The latest technology and critical IP must stay in the country. | U.S.-led "Chip 4" Alliance | The Chip 4 alliance is a strategic partnership between the United States, Taiwan, South Korea, and Japan. Led by the U.S., the group aims to create a tech bloc. Here are the different objectives of this initiative. | Secure chips supply chains. The goal is to prevent future disruptions and over-reliance on single region or country. Counter China. The alliance aims to limit China's access to cutting-edge technologies. Collaboration. The group will share R&D, coordinate standards and support joint manufacturing ventures. Promote "Friendshoring". New fancy word that means to encourage shifting of supply chains to trusted partners instead of geopolitical rivals. Information sharing. The goal is to increase transparency in supply and demand trends, inventory, and production capacity.
| Each member plays a key role. The U.S. leads in chip design with NVIDIA, Intel, and AMD. Taiwan (through TSMC) is the top manufacturer of advanced chips, crucial for advanced node (3nm, 5nm). South Korea(through Samsung, SK Hynix) specializes in memory chips (DRAM, NAND). But also, in advanced logic chips. Japan supplies key materials, chemicals, and equipment. | The alliance is not a formal treaty. But it represents an effort to build a trusted network of democratic tech powers. | Could this alliance become some kind of Tech NATO in the future? | Decoding geopolitics isn't a job. It's survival. | Joy |
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