For more than a century, the scramble for oil unleashed wars that forced unusual coalitions and sparked diplomatic rows. Now the world’s two biggest economies are fighting over another precious resource: semiconductors, the chips that power our everyday life.
These tiny fragments of silicon are at the heart of a $500bn industry that is expected to double by 2030. And whoever controls the supply chains – a tangled network of companies and countries that make the chips – holds the key to being an unrivaled superpower.
China wants the technology to produce chips. That’s why the US, a source of much of the tech, is cutting Beijing off. The two countries are thus clearly engaged in an arms race in the Asia Pacific.
A semiconductor, also known as a semi, or chip, is a material product usually comprised of silicon, which conducts electricity more than an insulator, such as glass, but less than a pure conductor, such as copper or aluminum.
They can be found in thousands of products, such as computers, smartphones, appliances, gaming hardware, and medical equipment. Advanced chips are used to power supercomputers, artificial intelligence, and military hardware. They were invented in the US, but over time East Asia emerged as a manufacturing hub, largely because of government incentives, including subsidies.
The US is rapidly ramping up efforts to try to hobble China’s progress in the semiconductor industry. The United States fears that China’s use of the technology poses a threat to its national security. For now, the US is winning – but the chip war it has declared on China is reshaping the global economy.
