Semiconductors … an American national security issue

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Interest in the global semiconductor issue began with the United States banning the supply of US semiconductors to the Chinese company Huawei.

Then it expanded this ban by imposing a ban on supplying Huawei and other Chinese technology companies with semiconductors produced outside the United States and based on American technology.

And interest in the subject has moved to all parts of the world with insufficient production of semiconductors for global demand for them, with the increasing demand for some products as a result of working from home, following the spread of the Corona virus, as the demand for electronic products increased from computers to gaming devices for entertainment, and finally The automotive industry has been affected with a shortage of semiconductors that go into making it.

As a result, auto makers have reduced their production from Tokyo to Detroit, in the United States. And it became difficult to find some electronic products at sales fairs. What all of this has in common is the surprising and cascading shortage of semiconductors.

Semiconductors, also known as integrated circuits or just chips, may be precise, but they are among the most difficult parts to manufacture on a global scale. This level of difficulty has forced an increasing dependence on two Asian manufacturers – Taiwan Semiconductor Manufacturing Company and Samsung Electronics – as it is estimated that Taiwan and South Korea control about 81% of global semiconductor smelters. And an escalating conflict between the world’s two largest economies, the United States and China, has exacerbated dependence, with the United States cutting off supplies of semiconductors to certain Chinese customers.

World leaders from Washington to Beijing are now placing the supply of semiconductors as a top priority for their governments, to keep factories running and to maintain national security, as the chip shortage has become an issue of national security par excellence. Hundreds of billions will be spent in a wide range of sectors in the coming years in a chip race with geopolitical implications as well as economic implications.

It is estimated that the Taiwan Semiconductor Manufacturing Corporation alone will spend about $ 100 billion over the next three years building factories and purchasing equipment and machinery to increase its production capacity.

Washington has realized that only a handful of the missing parts can shut down auto factories across the country, challenge worker safety and hurt prospects for recovery from the Covid-19 pandemic. Government officials in the United States, Germany and Japan have appealed to Taiwan to supply more chips to avert economic disaster.

China has realized that the United States is able to choke off the supply of chips for its major companies, a threat that Chinese President Xi Jinping and the Chinese Communist Party see as intolerable. Beijing will pump more than $ 100 billion into efforts to build its chip industry domestically. Xi made technological development a national priority in the fourteenth five-year plan that was discussed in the Chinese legislature and approved last March. In this context, China seeks to acquire the skill of manufacturing third-generation semiconductors, an industry that is considered very recent even in major industrialized countries such as Japan and the United States.

The clear conclusion so far is that governments and companies will struggle for years to come over supremacy in the semiconductor space. Taiwan and South Korea are well positioned in this regard, which gives them both economic and geopolitical strength. The United States and China should invest heavily to preserve the best in the industry or risk losing their global leadership.

With the United States realizing its vulnerability in this area, and endangering its national security, President Biden’s senior advisers for national security and the economy are scheduled to meet on April 12 with semiconductor and auto companies to discuss the global shortage of semiconductors.

National Security Adviser Jack Sullivan and National Economic Council Director Brian Dies will discuss the effects of the semiconductor chip shortage and next steps with industry leaders.

Official sources in the US administration added that the White House is also interfering with Congress and allies abroad on this issue.

The companies invited to the meeting include automobile and semiconductor makers, as well as technology companies and medical device companies. They include Samsung Electronics, the automaker General Motors, and global semiconductor foundries.

The shortage of semiconductor chips is due to the increased demand for microprocessors at a time of the epidemic, with consumers’ demand for laptops, networking and communications devices at home as they shift to work and study from home.

Automakers have been forced to keep some of their plants idle in North America due to delays in their semiconductor chips.

The Biden administration is studying incentives that could be introduced to increase domestic production of semiconductors and reduce exposure to overseas supply chains. Last month, Intel announced plans to invest $ 20 billion in two new factories in Arizona, while Samsung and Taiwan semiconductor maker both committed to building more production capacity in the United States. Lawmakers are pushing for grant funding that will move through Congress this spring in a broader effort to compete with China. Separately, US semiconductor companies have lobbied for a refundable tax exemption to taxpayers even though it is not included in the planned measures.

Thus, the semiconductor issue has transformed within one year from an issue in the global conflict between the United States and China, to a national security issue that concerns all industrialized countries of the world, with the current production capacity insufficient to meet the demand for it. While China is heading during the next few years to put huge investments to provide the semiconductors it needs domestically, the United States tends to try to increase incentives for American and international manufacturers to set up production plants in the United States.

Opinions and information contained in opinion articles express the opinion of the author and do not reflect the direction of the newspaper





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