Chip war: what are semiconductors and why are they at the heart of a ‘technology cold war’?

this is well Tobin a small town in the Netherlands a country right here in Europe when we think of the Netherlands we often picture this and this or him who's known for that and that and for many the Netherlands is also synonymous with yeah that but did you know that currently the Netherlands and more precisely the small town of weltoven is at the heart of massive geopolitical tensions between two Global superpowers the US and China to really understand how veldhoven got into this situation we need to take a closer look at what's causing all the tension how the European Union fits into the mix and then we'll look at what we can expect to happen next the ongoing situation which some are referring to as a cold war between the US and China does not revolve around territory or religion instead this conflict is about technology and in particular microchips before looking into why they're so crucial let's start with what they are and what they do the first microchip looked like that and was created in 1959 by this man Robert noise who later co-founded Intel and let's get one thing straight can I conductor Chet integrated circuit all I used to mean roughly the thing though this is Chris Miller and he's the author of this book Chip War the fight for the world's most critical technology so my conductor is a piece of silicon usually quite small the size of a fingernail that has carved into it billion of tiny circuit and each of these circuits is turned on or off by a device called a transistor which is like a big electronic switch when it turns its circuit on it produces the one when it turns perfect off it reaches a zero and this is how all of the ones and zeros that undergird all digital Computing are produced so all of the data we store all of the data we processed and all tiny circuits flipping on and off um billions of times on the chip inside of our computers our iPhones or our data centers and the more transistors on that tiny piece of static [Music] today the chip in your phone has billions in addition to becoming more and more powerful over time semiconductors have also become an extremely important part of our lives today [Music] he holds a doctorate in applied sciences from the Catholic University of UVA and is specialized in advanced transistors but also in cars dishwashers microwaves coffee makers and the number of chips that we rely on every day is growing every single year almost never see semiconductors because they're buried deep inside of the devices rely on the typical person will make use of thousands of semiconductors and of course their daily life the deployment in almost every object we use in our daily lives has made them an extremely lucrative market and it keeps getting bigger from an industry worth 412 billion dollars worldwide in 2019 to 580 billion dollars in 2022 and it's expected to reach the trillions by 2030. so while the tension if it's a growing Market that brings money to the different players involved all to do with the relationship between those different players and to understand that we need to look at the supply chain for semiconductors so the semiconductor supply chain is is quite complex given the high tech nature of this good and given the high degree of specialization that is needed to produce them this is Nicholas Poitier research fellow at brugel a think tank based in Brussels devoted to policy research on economic issues and as a result we see quite a division of labor globally with different countries and different economies play specific roles in in the value chain to make it easy we can divide the chain into three main parts the first part is the design of the chips which is basically laying out the the kind of structures that's going to be on the chip in the end when it's produced and this design stage is mostly done in the United States second step is the manufacturing of the chips and this is mostly done in East Asia specifically here in Taiwan which represents more than 65 percent of the manufacturing Market and here in South Korea which accounts for more than 15 percent and the last step is the assembly and packaging of the chips basically putting them into actual products you and I buy the leader here is no big surprise China plays a very big role when it comes to actually the goods that are produced using these chips so now you're starting to see the problem in an industry that is extremely interconnected China is at the end of the chain heavily dependent on the chip designs made in the US and the manufacturing power of Taiwan to understand the extent of the problem for China you also need to understand that not all chips are made equal low-end chips are for example the ones used in your car to check if your door is open or closed or if your windscreen wiper is on or off on the other hand when we talk high-end we talk about laptops smartphones this kind of I.T Goods but not only that the dance Computing has always been harnessed by an elegant and by military um arms of government whether it's the British computers in Bletchley Park that rack not decodes during the second world war or the U.S news of supercomputers to track Soviet submarines during the Cold War there's a direct relationship between computing power and military power at the high end Taiwan and South Korea are the ones that are relevant here I more than just rally in Taiwan makes 92 percent of the high-end chips in the world Samsung and South Korea eight percent they are the markets of high-end chips this means China is dependent on Taiwan and the US for both its basic chips the ones we find in our coffee makers or fridges and for its Advanced chips the ones used in military equipment and advanced computing now let's go back to Europe and belt open for a moment Europe is a bit outside this main streamline of production we're not we're not really big at the design on ships we're not really big in the production of chips but we are a very vital component when it comes to when it comes to the broader ecosystem the machines on which these chips are produced come from the Netherlands and only from there and more precisely from Bell tovo home to asml the world's leading supplier to the semiconductor industry is public [Music] izations from the Netherlands but asml is not the only company in Europe that matters let's go to oberkoken a small town not that far to the east of Stuttgart in Germany the home of Carl Zeiss smt the sole producer of the mirrors and lenses used in the world's most sophisticated chipmaking equipment without them no fancy machines at asml and without the machines no high-end chips in Taiwan so as you can see the global manufacturer of semiconductors is complex and Incredibly interconnected so why is that a problem well firstly superpowers like the US and China don't want to be reliant on each other for a product that's so vital in today's world unfortunately we produce zero percent of these Advanced tips now and China's trying to move away ahead of us but according to the SE U.S is trying to stop China from getting access to these Advanced ships uh because if it does uh the US government believed it will apply these to defense and to intelligence systems we need these semiconductors not only for those Javelin missiles but also for weapon systems of the future that are going to be even more reliant on Advanced chips today I'm signing the law the chips and science act a once in a generation investment in America itself the United States must lead the world in the production of these Advanced chips this law will do exactly that and that was the US's reaction to the situation taking unprecedented steps with its chips and science act a bill that not only boosts its National chip production but also limits the sale of advanced chips to China to block them from getting ahead in advanced competing AI or even weapons of war we see now Chip's policies not just pursuing Supply security supply goals or industrial policy goals but really also geopolitical goals and the bill doesn't just affect the US and China it includes restrictions that forbid anyone from selling certain chips and Manufacturing equipment to China if there is a U.S component or design involved and remember who's the world leader in chip design yes the US so it puts pressure on companies and countries all around the globe So In This Global Chip War the US seems to be winning it's attempting to choke China's access to the technology while at the same time offering grants and subsidies to companies making semiconductors in the U.S and if you're wondering what the European Union's reaction to all of that is the College of commissioner has adopted today the European chips act yes their own chips act in the European ships act we are combining investment regulatory framework and the necessary strategic Partnerships to make Europe a leader in this market all right so the EU chips act in Euros of policy driven investment until 2030 but when we look into it actually only around 15 billion of that is new the rest was already being invested and compared to the 280 billion dollars of the U.S chips and science acts [Music] so the European chips Act is is a reaction to two things it's on the one hand the reaction to this kind of new geopolitical role that ships are playing now in in direction to you seeing that China and us are investing big in the sector and asking itself should we do this as well but it's also a reaction to the shortages that have haunted some important new Industries the automotive in particular we've set ourselves the goal to have in 2030 20 of the global market share of chips production here in Europe that would double its global market share and Chip production but currently this is a part that the EU isn't very good at so is it even possible certainly not everyone is focusing right now on production of chips not just to you but also China the US who is most credible certainly not the youth by concentrating on increasing its chip production is the EU barking up the wrong tree [Music] the target should be much more to make sure that we maintain this technology Edge where we have it the chipset really goes for the most thought of the part the most crowded part the most expensive part and I think that is a bit of a mistake when it comes to strategic autonomy there's around a half a trillion dollars of chips sold each year but they're far more important than that because the devices that rely on constitute most manufacturing output which makes the risk of shortages extremely worrying the world economy will be sent into a deep depression because in manufacturing of all types of goods will be immediately disrupted no more smartphones a big disruption for cars dishwashers coffee makers we would be taking the graded manufacturing crisis since the Great Depression of the 1920s [Music] and the Great Depression has begun

Channel: Euronews Next

Views: 2,554

Keywords: Cold War, Europe, Semiconductor, Technology, biztech-news, gb_death_injury_news-ent, gs_busfin, gs_busfin_economy, gs_busfin_indus, gs_business_misc, gs_politics, gs_science_misc, gs_tech_computing, gs_war_conflict, gt_mixed, gv_military, manufacturing, mlitary power, neg_facebook_2021, neg_nespresso, neg_saudiaramco, next, next.next-explainers, pos_equinor, pos_facebook, pos_pmi, pos_ukraine-russia, power struggle, shadow9hu7_pos_ukrainecrisis, sm_politics

Id: s-NEMttMLd0

Length: 13min 2sec (782 seconds)

Published: Thu May 18 2023