June 16, 2024

How ‘Chip War’ Puts Nations in Technology Arms Race

The incredibly complex, high-stakes business of making semiconductors has always been a battle of corporate giants. Now it’s also a race among governments. These critical bits of technology — also known as integrated circuits or, more commonly, just chips — may be the tiniest yet most exacting products ever manufactured. And because they’re so difficult and costly to produce, there’s a worldwide reliance on just a handful of companies, a dependence that was brought into stark relief by shortages during the pandemic. Access to chips has also become a geopolitical weapon, with the US ratcheting up curbs on exports to China to contain the rise of an economic rival.

There’s silicon at the heart of every artificial intelligence breakthrough, range upgrade for electric vehicles or guidance system for hypersonic missiles. Most of the world’s leading chip technology originates in the US. China is the biggest market for the electronic components and has a growing desire to make more of the chips it uses itself. That’s made the industry a focal point for Washington as it tries to limit the rise of its Asian rival and address what it says are national security concerns. For its part Beijing has poured billions into efforts to build its own chip industry and lessen its reliance on imports that are increasingly subject to restrictions by the US. At the same time, Europe and the US are setting aside huge sums of government money to bring back physical production of chips, reducing what they say is a dangerous reliance on a few facilities in East Asia.

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