We are in a time of international upheaval, the economy is showing significant signs of de-dollarization and the blocks of “Non-Western” countries are gaining importance. Moreover, the China-US rivalry is spreading across the spectrum. Control and supply of semiconductor components is one of the main battlegrounds.
Semiconductors have become a key element in the rivalry between China and the U.S. These electronic chips are essential for manufacturing products such as smartphones, computers, cars, aeroplanes, satellites and even weapons. They are found in almost all electronic devices. China has become a crucial player in the semiconductor market. It is one of the largest importers of microchips and is looking to increase its domestic production to become self-sufficient. However, China does not yet have the capacity to manufacture VLSI with the latest technology.
The United States, on the other hand, has dominated the semiconductor industry for decades. It has been at the forefront of research and production of advanced semiconductor technologies. However, in recent years, the U.S. policy of economic protectionism and sanctions against China has created tension in the semiconductor industry.
The U.S. government has also banned the sale of advanced technologies to a few Chinese companies, including Huawei, for political reasons. This has created disruption to the production of smartphones and other electronic devices by Chinese companies. China, on the other hand, is trying to become independent from the US and develop its own semiconductor industry. It is investing heavily in research and production of these technologies. China hade launched an initiative called “Made in China 2025” in 2015, which aims to give the domestic industry greater independence from foreign technologies, including in the semiconductor field.
This race for dominance in the semiconductor industry has important strategic implications. Semiconductors are vital to the defence and security sectors, including encrypted communications, missiles, drones, cybersecurity, and weapons control. The United States has long been dependent on its indigenous semiconductors for its defence supremacy. If China is able to catch up in the production of advanced technologies and become self-sufficient in the semiconductor industry, it could have significant implications for U.S. national security. Moreover, semiconductors are key to many industries, including automotive, aerospace, and information and communication technologies. The semiconductor industry is a key economic driver for both countries and a major strategic issue in the rivalry between China and the United States. This race for dominance in the semiconductor industry has important implications for the national security and economy of both countries. It is interesting to note that China is undertaking metallurgical studies in soils in Manchuria to detect possible sources of raw materials for semiconductors.
American Dominance
The semiconductor industry is a multi-billion dollar market. Since the 1950s, the United States has held supremacy in the semiconductor field and its dominance is still in place today. Let us explore the origins of American domination and how they have maintained their supremacy while limiting European technological development.
The American domination of semiconductors can be found at the end of World War II. Large investments in scientific research and military technologies led to the creation of the Atomic Energy Commission (AEC) in 1946. The AEC’s mission was to develop advanced technologies for military and civilian programs, and their work led to the development of semiconductors. The transistor, one of the first semiconductors, was invented in 1947 at Bell Labs in the United States. Bell Labs scientists quickly realized the advantages of using semiconductors to build electronic circuits. Semiconductors were smaller, faster, and stronger than the vacuum tubes that were used at the time. In 1952, the first integrated circuits were invented, which enabled the mass production of microprocessors. During the 1960s and 1970s, the United States invested heavily in semiconductor research and development, largely due to its military dominance. Military applications, such as satellite navigation, drove the demand for advanced technologies, including semiconductors.
Over the years, the United States has maintained its dominance in the semiconductor field by integrating its technology into all aspects of society. U.S. companies, such as Intel, IBM, Hewlett-Packard, and Texas Instruments, have pioneered the development of semiconductor technology. They also helped create many small companies that contributed to the production of semiconductors. The United States has also invested in the research and development of critical technologies, such as flat panel displays, high-performance batteries, solar panels, and electric cars. These technologies all depend on semiconductors and have allowed the United States to maintain a technological edge over the rest of the world.
While the United States has continued to dominate the semiconductor market, Europe has struggled to keep pace. Although Europe is a region rich in human resources and capital, it has been unable to compete with the United States. Obstacles for European companies include regulation on research, lack of funding for startups and lack of investment in research and development. Over the years, European companies have found it difficult to compete with U.S. companies in semiconductor development and have shied away from this area. However, in recent years, Europe has begun to take a renewed interest in this technology. Companies like Infineon, STMicroelectronics, and NXP Semiconductors have been working to modernize their semiconductor production and make advances in research and development.
Despite this progress, the United States still leads the semiconductor market. Large U.S. companies, such as Apple, Intel, and Qualcomm, are leaders in this field. The U.S. also maintains a strong presence in the Chinese market, where U.S. companies have partnered with Chinese companies to supply semiconductors. In summary, the United States has dominated the semiconductor market since its invention in the 1950s. This dominance has been the result of large investments in research and development, advanced military technologies, and a vibrant entrepreneurial culture. While Europe has been unable to compete with its manufacturing, European companies have recently made significant progress in their semiconductor research and development. However, the United States has maintained its leadership position in the semiconductor market, with American companies continuing to pioneer this critical technology.
China’s Progress
The development of semiconductor technology in China is a hot topic of interest. For the past few years, China has been working hard to catch up with the United States and other countries in the development of semiconductor technologies. Semiconductors are essential components of many electronic and high-tech products such as smartphones, computers, autonomous cars, and supercomputers. China has invested heavily in semiconductor research and development, seeking to become a leading nation in production and innovation in this important field.
China has made significant progress in chip manufacturing, largely through the efforts of the China Semiconductor Industry Association (CSIA). The CSIA works with the Chinese government to support local companies in semiconductor development and to encourage innovation in this field. China has also encouraged foreign investment in this strategic sector. Semiconductor research in China focuses on several key areas. Chinese researchers are working to develop more efficient methods of producing chips, including the use of advanced printing technologies that allow for greater precision and large-scale production.
They are also focusing on researching new materials for semiconductors, including organic materials that could enable advances in areas such as foldable displays and flexible sensors. They are also looking to develop high-performance chips for specific applications such as artificial intelligence, facial recognition, and big data processing. China is a very attractive market for foreign technology companies. However, the Chinese government is seeking to establish China’s technological independence in semiconductors and reduce its dependence on foreign technologies.
To achieve this goal, China has adopted a three-stage strategy to develop a domestic semiconductor industry. In the first stage, China sought to attract foreign investment in the semiconductor industry. In the second stage, it worked with foreign partners to transfer technology, and in the third stage, it invested heavily in research and development to become a leader in the semiconductor industry. China is also focusing on the resources required for semiconductors. They are in the process of tapping large amounts of fresh water from rivers to support this endeavour.
However, despite China’s significant progress in semiconductors, there is still a significant gap with the United States in terms of manufacturing capacity and research and development. The U.S. still has a significant share of the global semiconductor market through companies such as Intel, Qualcomm, and Texas Instruments.
The trade war between China and the United States is also having a significant impact on the semiconductor industry. The U.S. has imposed trade restrictions on Chinese technology companies such as Huawei and ZTE, reducing their access to foreign semiconductor technologies. The Trump administration has also launched an international campaign to persuade allies not to use Chinese 5G equipment, creating a difficult business environment for Chinese semiconductor companies.
Conclusion
Ultimately, the competition between China and the United States to become a leader in semiconductors is a complex challenge. China has invested heavily in semiconductor research and development but needs to close the gap with the U.S. in manufacturing capacity and basic research to become a serious competitor. The ongoing trade war between the two countries could also impact the semiconductor industry in China. However, the growing demand for semiconductors globally ensures that the market is likely to remain competitive and dynamic in the years to come.
Disclaimer: The views and opinions expressed by the author do not necessarily reflect the views of the Government of India and Defence Research and Studies
Title image courtesy: https://engineering-sciences.uniroma2.it/
