In October 2022, some of the world's largest car manufacturers faced a major problem. Swedish luxury car brand Volvo announced that the company is closing one of its group factories for a week.
Japan's Toyota Car Company also had to do something similar. Toyota had to reduce its production target. The reason for this was not due to the decrease in demand for vehicles but due to the shortage of a part used in making cars.
This part was a semiconductor i.e. microchip. During the Corona epidemic, the demand for microchips increased so much that it became very difficult to meet it. But even after two years, there was no significant improvement in the supply of semiconductors.
Taiwan is the most prominent country making microchips. Now the US and China themselves are spending billions of dollars to build microchips. Is it political for them to protect their interests or political?
All-rounder chip
Microchips are also used in mobile phones and computer operating systems to advanced computers and medical machines. A microchip is a wire structure on a silicon chip as thin as a wafer.
There are many types of semiconductors i.e. microchips. Such as a memory chip in which data is stored. There is also a logic chip that is used in the computer's processor and the third is the advanced microchip which is very powerful. This chip is used in complex computing and supercomputers through Artificial Intelligence, it is used in self-driving cars.
Jason Shu, a senior researcher in global politics related to microchips at the Harvard Kennedy Center and a former Taiwan congressman, speaks on the importance of microchips, "When a new drug is made through artificial intelligence, advanced microchips are used to process complex information related to it. It is very important from the point of view of technology.
Jason has played an important role in the development policy related to technology. He explains, "The development of advanced microchips runs on the principle of Morse Law. That is, every two years, the size of the new generation chip becomes smaller, but it becomes twice as powerful and its power to process complex and huge data doubles and the size is halved.
The size of the microchip is measured in nanometers. The advanced microchip being made in Taiwan is only three nanometers. How small its size is can be gauged from the fact that about two and a half million advanced chips are equal to one inch.
Microchips are powerful, but making them is equally complex. The process of making them takes place in the advanced lab. These labs are called fabs.
Jason has gone to such a lab and talking about it, "These labs look like they are futuristic in a future era. People working there are wearing strange types of suits. There are complex and preseason devices. It feels like it's the set of a film like Mission Impossible."
Like hollywood's big films, this fab is also very expensive. Their budget is very high. It costs up to $20 billion to build a fab lab and takes years to build.
"These are state-of-the-art and sophisticated labs, where microchips are made from specific machines and equipment," says Jason Xu, drawing attention to the complex processes of these labs.
"Only a handful of companies in the world make these machines. This is not an ordinary factory that you can make from brick and steel. It is very complex and highly trained and skilled engineers work here. It can't be easily copied."
Another feature of Fab Labs is that they never close. "In labs, engineers work in two or three shifts. There have been constant changes in them, here the construction process keeps changing. Taiwan will continue to be leading in this area and you can see how precious it is to the world.
Taiwan's technology rules
The microchip was first created in the 1950s by Jack Qb, a tech engineer at Texas Instruments, a US-based company. These chips were earlier used pocket calculators. Then it started being used in mobile phones and other electronic products.
Professor Chris Miller of Tufts University explains that Taiwan has been a major country in electronic products for the last fifty years.
He says, "In the 1970s, an engineer named Morris Chen was invited by the Taiwan government to build a chip making company in Taiwan and he established the Taiwan Semiconductor Manufacturing Company.
Taiwan Semiconductor Manufacturing Company (TSMC) accounts for 40 percent of the market for old general microchips worldwide. This company also partners with Apple Company. Last year, TSMC created more than twelve thousand types of products for more than five thousand companies.
Chris Miller says, "Most of these microchips are exported to China. There, its use makes mobile phones and many electronic things supplied around the world.
"It is not important where these microchips are sent first. The truth is that the electronic products in which these microchips are used are sold worldwide. Accordingly, many countries of the world are customers of Taiwan's microchips.
Before Taiwan reached the top position in this industry, japanese and US companies were ahead of it, which mostly made memory chips and logic chips.
Chris says, "Now the chip industry is divided into two parts. One is the companies that design chips and the other that produces them. Earlier, the company that designed the microchip also produced it. Now many companies, such as Apple, AMD and Nvidia, only design the chip and produce it from another company. Now TSMC is the largest manufacturer of advanced chips.
China's stakes
China is the world's largest consumer of microchips and Taiwan's TSMC has two microchip plants in China. China wants to be self-sufficient to meet the needs of microchips.
Lindsay Gorman, a senior researcher in emerging technology at the GERMAN Marshall Fund in the US, believes That China wants a bigger role in the chip industry to modernize its military and manufacture weapons that curb human rights.
Lindsay Gorman says, "China created a $ 2014 billion fund in 22 to make microchips itself so that its dependence on companies not only in Taiwan but also in other countries would be reduced in this matter. For this, China is aggressively trying to attract technical talent and is trying to bring taiwanese engineers in particular. For this, he is luring them with a huge increase in salary, housing at a cheaper price and airfare to go home up to eight times a year and many other inducements.
Chinese President Xi Jinping has reaffirmed China's priority in the region.
Lindsay Gorman says that recently she emphasized on developing the chip industry in China, saying that it is very important for China.
She says that this industry is very important for China's ambition to become a superpower in the world.
Military tensions between China and Taiwan are at their peak for the first time in many years. Taiwan considers itself an independent country and China considers Taiwan its part. There is a concept called Silicon Shield, that is, silicon is the protective shield against China's attack on Taiwan. This means that China will think many times before attacking taiwan because of its dependence on Taiwan for silicon microchip supplies. But the US also needs this microchip, so it will support Taiwan.
On the gap between China and Taiwan, Lindsay says, "There are historical differences between China and Taiwan, but the microchip industry has given it a new dimension. Along with regional supremacy, it is now becoming a front of technology fight between China and the US.
To stop China, the US has imposed many export restrictions so that China does not easily get advanced microchips.
Talking about these microchips, Lindsay Gorman says, "These are not the microchips that are installed in the car's air bag or washing machine. It is used in modern powerful and precision military weapons. They are used in artificial intelligence machines and supercomputers, using which China monitors its country's Muslim minority in Xinjiang.
Citing human rights violations, the US has imposed several export restrictions on China, which is now proving costly. But is it having a bad effect on China?
According to Lindsay Gorman, this is having an impact and curbing China's ambition. But at the same time, the US has also left some interesting temporary exceptions in these export restrictions.
Lindsay says, "Many companies have been excluded from the scope of this ban for a year and they can continue to make their equipment in China for a year. These include TSMC. What will be done after a year is not clear."
Can China retaliate against this move? Because the silicon from which microchips are made is available in large quantities in China. Meanwhile, an urgent and reasonable question is whether China can stop this raw material from going out?
Lindsay Gorman believes that China can think of doing this, but these silicon is also available in other such countries and they are allies of America.
Looking for silicon chips
Judy Hayes, who works in Stephen Noya Policy Research and specializes in global and regional politics related to microchip, says that it is not easy for any country to get close to Taiwan in microchip production in a few years. The reason for this is that she considers the complex process of construction.
Judy Hayes explains that the chip is developed at three levels and it is difficult without the mutual cooperation of countries. The first level is the design of advanced microchip, in which america is at the forefront.
Judy says on other levels of production, "Manufacturing involves hundreds of processes for which the microchip company needs a variety of raw materials, chemicals, and equipment, which come from different countries. It will also require mutual cooperation of many countries. A lot of equipment is available in Asia, but many of the equipment and engineers who wear special trunksuits come from Europe.
Testing and packaging of microchips is the last level of production.
Regarding this microchip made with the participation of different countries, Judy says, "This work is mostly done in China and Malaysia. But for this, many types of chemicals and equipment are also needed. These goods are brought to America. It's like a puzzle that is made by combining different parts."
To compete with a company like TSMC, any country will have to maintain this production chain. In October, US President Joe Biden said in a tweet that the US would lead microchip production. The European Union is also in this race along with the United States. Both have made laws for investment in it.
"Both laws provide subsidies to promote microchip production to increase the competitiveness of their companies and create state-of-the-art fab labs in the country. But both have set different conditions for this subsidy.
She further says, "The US condition is that the subsidized production company cannot invest in China. According to EU rules, the subsidized company can sell its goods to China after meeting the EU's chip supply requirements.
Judy Hayes believes that government subsidies will be beneficial but will not be able to go beyond a company like TSMC.
There are ups and downs in the coordination of demand and supply of anything. But the raw materials, technical skills and means required to supply chips to meet the needs of the world are available. But due to this small technology in size, Taiwan is stuck between superpowers like America and China. China is spending billions of dollars on this technology to match the US and the US is spending billions of dollars to prevent it from reaching there.
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