Moore’s law predicts that transistors per silicon chip double every two years, doubling a computer’s capabilities as the chips reduce in size. Every time this law seems to have reached its expiry date, new technology creeps into the industry and proves skeptics wrong.
Now, this technology has become a key weapon in the US-China Trade War. US and China are scrambling for access to its latest and most powerful version to determine who wins the Artificial Intelligence tech race.
For decades, the Intel name has been one of the only names associated with the chipmaking industry, but there is no longer just one silicon chip in the market. The uses have grown to power not only storage and graphics but also artificial intelligence.
The industry’s new superpower is a Taiwanese company called TSMC, often called the number one manufacturer of cutting-edge silicon chips. Unlike Intel, TMSC doesn’t sell its chips; it makes them for other companies.
Lasting through the decades in this industry is no easy feat. The technology is constantly changing, and merely setting up a factory costs 25 billion dollars. And the stakes for having control of this technology are as high as they were during the space race in the 20th century. Geopolitical power lies with the country that can collect and process data the fastest, and the key to that is these silicon chips. The future is most likely 3D. Stacking layers of silicon to up the density in a given volume will increase the computation capabilities.
TSMC is at the frontline of this battle, and while it would seem that the company would side with the US, given that Taiwan wants to be free of China. Economically, China has enormous amounts of money invested in Taiwan, and with such an interlinked economy, this is far from feasible.
Another player in this war is the Dutch company, ASML. Out of the ten companies in the chip lithography market a decade ago, it was the only one that could keep up and stay relevant. The Trump administration put pressure on the Dutch Government to halt their technology’s sale to any Chinese customer. This seems to be working for now as the shipment of equipment has been successfully delayed.
The pandemic has also increased the importance of these chips in the past year. Electric car makers in every region, including the US and China, have had to cut back production due to a shortage of chips. Sales of new cars had fallen off, and the sales predictions made at the time did not account for a rebound in sales. The carmaker supply chains have come up against the slow-moving process of semiconductor manufacturing.
No player is likely to opt-out of this battle. Even with the US actively trying to deny China access to equipment, China is pouring vast amounts of money into research and might overtake the US in this fight for control of the chip economy.
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