The Chip War

Chip War

While the U.S. continues to ramp up its military presence in the western Pacific, China is winning the economic war. The tech war is more complex, but China will probably win in that sector, too.

Closely linked to both the economy and high-tech—and even the military—is the chip war. It can be difficult to understand, so let me begin with a brief history.

The term “chip war” refers to the geopolitical and economic competition surrounding the development, production, and control of semiconductor technology, which is critical for a wide range of modern technologies. The chip war is not a single event but rather a series of escalating tensions and actions over several years. Listed below are some key milestones in the escalation of the chip war.

1. Early 1980s: The origins of tensions can be traced back to the early 1980s when the U.S. became concerned about Japan’s rapidly growing dominance in semiconductor manufacturing. This period saw significant competition between American and Japanese companies.

2. 1990s: The rise of South Korea and Taiwan as significant players in the semiconductor industry added to the competitive landscape.

3. Mid-2000s: China began heavily investing in its semiconductor industry as part of its broader strategy to become self-sufficient in critical technologies.

4. 2018-2020: The chip war intensified significantly during this period due to multiple factors:

◦ U.S.-China Trade War: The U.S., under the Trump administration, imposed tariffs on Chinese goods and took actions specifically targeting China’s technology sector.

◦ Huawei Ban: In 2019, the U.S. placed Huawei on an export blacklist, effectively banning U.S. companies from doing business with the Chinese tech giant without a special license. This move was partly driven by concerns over national security and China’s technological advancements.

5. 2020-Present: The chip war has continued to escalate with additional measures:

◦ CHIPS and Science Act (2022): The U.S. passed the CHIPS and Science Act, allocating significant funding to boost domestic semiconductor manufacturing and reduce dependence on foreign suppliers.

◦ Export Controls: The U.S. has imposed stricter export controls on advanced semiconductor technologies, particularly targeting China to curb its access to cutting-edge chip technology.

The term “chip war” broadly encompasses these developments, reflecting the strategic importance of semiconductor technology in global economic and national security contexts. The precise “beginning” of the chip war can be debated, but the current phase of heightened tensions and strategic competition became particularly pronounced around 2018-2019.

For me, the chip war became personal when pResident Donald Trump all but declared war against the Chinese tech giant Huawei, focusing especially on its smartphone. I had never even heard of Huawei and had never owned a smartphone. Trump’s sinister attacks—which included detaining Huawei exe Meng Wanzhou in Canada, where she faced a prison sentence—aroused my curiosity and pissed me off at the same time. I soon became the proud owner of a Huawei smartphone, which is one of my most prized possessions to this day.

But how has the chip war progressed since Trump’s unhinged attacks? Although I have been following the chip war closely for years, it’s still very difficult to understand, so I won’t go into great detail.

In the early years of the chip war, media whores commonly predicted that it would take China “decades” to catch up to the West. Though the Chinese seemed to be floundering in the beginning, they clearly got their act together and have made great strides in the last five or six years.

The U.S. government’s sanctions focused on high-end chips, which are the smallest chips. China sucker punched the U.S. in return by ramping up production of the bigger chips even as it set out to learn how to manufacture cutting edge chips.

An intriguing player in the chip war is the Dutch company ASML, which specializes in the development and manufacturing of photolithography machines used in the manufacture of silicon chips. Taiwan’s TSMC is the world’s leading producer of computer chips, but it is dependent on the Netherlands’ ASML, which is the best in its field.

Pressured by the U.S., the Dutch government has in turn pressured ASML into sanctioning China, which desperately needs its lithography machines. The sanctions have hurt ASML in return, costing it billions of dollars in lost revenue. Even worse, it has motivated China into developing its own lithography machines, which could one day torpedo ASML.

Rather than simply duplicate Western chip-making procedures, the Chinese have experimented with a variety of alternative processes. For example, they have developed their own lithography machines, but they have also pioneered alternatives to photolithography.

A Question of Generations ˆ

I predicted that Huawei’s smartphone would once again be the world’s most popular smartphone by 2025. As of June 2024, it was still far from the #1 spot, but it has nevertheless come back with a bang.

Yet the media claim China is still several generations behind the West in chip production. However, it isn’t clear what they mean by “generation.” Does it equal one nanometer (nm)? In other words, if a country can manufacture 7nm chips, would it take them three generations to learn how to manufacture 4nm chips?

In 2019, the smallest computer chips that China could manufacture were based on 14nm process technology, primarily through China’s Semiconductor Manufacturing International Corporation (SMIC). While this was a significant step forward for China’s semiconductor industry, it still lagged behind the leading-edge technologies of global competitors who were producing 7nm chips and working towards 5nm and smaller nodes.

At the same time, leading global semiconductor manufacturers like TSMC and South Korea’s Samsung were producing chips using 7nm technology, with plans to move to 5nm and beyond. In 2021, IBM announced that it had developed the world’s first 2nm chip technology.

Despite U.S. sanctions, the Chinese were manufacturing computer chips at least as small as 5nm by 2024. That’s nine nanometers smaller than the 14nm chips they were manufacturing in 2019. In other words, they’ve squeezed nine generations into five years, an average of more than three generations per year!

It will presumably take China three more generations to master the manufacture of 2nm chips. Can they do it in one year? And will Western entities move the bar to 1nm in the meantime?

Even if it takes China two or three years to reach the 2nm bar, that would still be an extraordinary achievement. Practically speaking, the smallest silicon chip that can be manufactured is theoretically 1nm. The next step could be a switch from silicon to carbon (graphene) chips. One has to wonder if China might leapfrog the West and become the first to manufacture carbon chips.

Beyond Chips ˆ

Of course, there’s more to the game than computer chips. Huawei’s smartphones are now powered by Harmony OS, which is now competing with Apple’s IOS and Google’s Android. Harmony can also power laptops, which makes it competitive with Microsoft and Apple.

In addition to the innovation the Chinese are so famous for, Harmony gives users a chance to escape Microsoft, Apple, and Google in one fell swoop. While media whores describe Google as something no smartphone owner can live without, intelligent people welcome a chance to escape that corrupt Jewish surveillance company. I cherish my Huawei smartphone largely because it is Google-free. But why stop there?

I just purchased my last Apple MacBook Pro laptop. I upgraded from Mirosoft to Apple two decades ago. It was one of the best moves of my life, as Apple is far superior to Microshaft. However, Apple is grotesquely over-priced, and I’m getting a little tired of its sometimes crappy customer service. And so, I’m planning on buying a Huawei MateBook X laptop, which is half the price of my MacBook. I also want to upgrade to Huawei’s new Pura 70 Ultra smartphone. That’s a lot of money to shell out for high-tech gadgets, but I won’t be buying any more over-priced Apple crap from now on.

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