Whats Next For The Chip Industry

Whats Next For The Chip Industry

The Netherlands and Japan reportedly agreed to codify some US export control rules in their countries. But the devil is in the fine print. "There are definitely votes for the Americans," said Lee, who lives in Germany. "But there are also some loud voices suggesting that simply following and crushing America would be bad for Europe's interests." Peter Wennink, CEO of Dutch lithography equipment ASML, said his company had "sacrificed" export controls because US companies benefited.

Differences between countries may increase over time. "The history of coalitions limiting these technologies shows that they have become complex to manage over time and require active management to operate," Miller said.

Taiwan is in a very difficult situation. Due to geographical proximity and historical ties, its economy is closely related to that of China. Many Taiwanese chip companies like TSMC are selling to Chinese companies and building factories there. In October, the United States granted TSMC a one-year exemption from export restrictions, but that exemption cannot be renewed when it expires in 2023. I don't see that anytime soon.

"Therefore, Taiwanese companies should be careful with the uncertainty," Hsu said. That doesn't mean they'll pull out of all Chinese operations, but they may invest more in overseas facilities, like the two chip factories TSMC plans to build in Arizona.

As Taiwan's chip industry aligns with the United States and solidifies alliances around US export control regimes, the once-globalized semiconductor industry is moving closer to ideological divisions. "In fact, we are on the verge of entering a two-chip world," Hsu said, with the United States and its allies representing one of those worlds and China and several countries in Southeast Asia and the Middle East representing the other. , Eurasia and Africa, where China advances its technology. Countries that have traditionally relied on China's financial aid and trade deals with the country are likely to adopt Chinese standards when building their digital infrastructure, Hsu said.

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Although it will happen very slowly, Hsu says this breakup is starting to feel inevitable. The government should start making contingency plans if that happens, he said: "It should be Plan B: What is our strategy in China?"

This story is part of MIT Technology Review's What's Next series, where we look at industries, trends and technologies to get a first look at the future.

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