BIG IDEA | In the 20th century the world’s biggest economic choke-point involved oil being shipped through the Strait of Hormuz. Soon it will be silicon etched in a few technology parks in South Korea and Taiwan.’

‘In the 20th century the world’s biggest economic choke-point involved oil being shipped through the Strait of Hormuz.’

• ‘Soon it will be silicon etched in a few technology parks in South Korea and Taiwan.’

‘As America has lost ground in making chips, it has sought to ensure that China lags behind, too.’

• ‘For several years America has enforced an intensifying embargo on China, which imports over $300bn-worth of chips a year because it lacks the manufacturing capability to meet its own needs.’
• ‘The American tech embargo began as a narrow effort against Huawei over national security, but bans and restrictions now affect at least 60 firms, including many involved in chips. SMIC, China’s chip champion, has just been put on a blacklist, as has Xiaomi, a smartphone firm.’
• ‘The cumulative effect of these measures is starting to bite. In the last quarter of 2020 TSMC’s sales to Chinese clients dropped by 72%.’

‘In response, China is shifting its state-capitalist machine into its highest gear in order to become self-sufficient in chips faster.’

• ‘Although chips have featured in government plans since the 1950s it is still five to ten years behind.’
• ‘A $100bn-plus subsidy kitty is being spent freely: last year over 50,000 firms registered that their business was related to chips—and thus eligible.’
• ‘Top universities have beefed up their chip programmes.’
• ‘If the era of advanced chips being made in America may be drawing to a close, the age of their manufacture in China could be beginning.’

My Take

Many commentators suggest that the quest for semiconductors is one more reason why China might invade Taiwan. For me that's pretty far down on the list bu not to be discounted.