A microchip war has brewed quietly between the US and China for several years. But now it is turning turbulent. China is set to become the world’s leading semiconductor superpower. The semiconductor industry will double in size to more than $1trn by 2030, and China will account for approximately 60% of that growth.
More than 30% of the US semiconductor industry’s revenues are derived from sales in China. In addition, China is by far the biggest market for the South Korean chip suppliers Samsung Electronics and SK Hynix. In Europe, more than 20% of Netherlands-based ASML’s revenues come from China. Fellow European companies STMicroelectronics, Infineon and NXP are also heavily reliant on Chinese buying power.
This explains Nancy Pelosi’s provoking visit to Taiwan, where 92% of the most advanced semiconductors are manufactured. It also explains the recently proposed CHIPS Act, a 53B dollar semiconductor stimulus bill to be signed by Joe Biden this week. The fight to lead the 4th industrial revolution is candent and will likely continue to be one of the fundamental factor shaking the planet’s geopolitical chessboard. An edge in semiconductors can give a country power to control the world.