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The chip sector is seen as America’s playground, but China has been taking strong steps in recent years, forcing rivals not to stay still. Over the years, the technology arms race between the US and China has covered everything from smartphones and mobile devices to social networks and artificial intelligence. However, a new battleground is emerging, which is the chip – an indispensable component in smartphones, computers, cars, home appliances and many other electronic products.
On August 9, President Joe Biden signed a new law that promoted the America’s semiconductor industry, one of the efforts to solve the long-lasting shortage of computer chips, as well as reduce the dependence of production on other countries, such as China. The new law – the CHIPS & Science Act aimed to promote domestic semiconductor manufacturing, as well as provide incentives for research and development. The plan also included an additional $53 billion grant package to the US National Science Foundation (NSF), the US Department of Commerce and the US National Institute of Standards and Technology (NIST).
China has long been considered as the dominant force in the sector of technology manufacturing. However, according to recent research by the Center for Strategic and International Studies, the country of billions of people is also quickly gaining a position in the semiconductor market, in which it is the global leader in assembly, packaging, manufacturing and testing, and ranked fourth (followed by US) in wafer fabrication – an important factor in chip production.
In recent years, China’s increased focus on its domestic semiconductor manufacturing capacity has begun to bring about benefits. According to data from the Semiconductor Industry Association (SIA) in 2020, China’s semiconductor sales increased by more than 30% compared to the same period in 2019, reaching nearly 40 billion USD.
The US is gaining the heat
America is currently depending on China in terms of the production of semiconductor and technology products. US companies such as Apple, Google, Microsoft… all have partners who set up factories in this country.
US Treasury Secretary Janet Yellen has repeatedly praised the importance of “making friends” with other countries. He also emphasized the shift of supply chains to US allies such as South Korea and Japan, while continuing to minimize the technology industry’s dependence on China.
Not only the US, but Europe is currently spending tens of billions of dollars to promote the semiconductor industry. For its part, China is still taking solid steps, trying to develop its semiconductor industry as part of a five-year plan announced by Beijing last year.
“There is a growing recognition that technology will determine who wins in the global economy in the future,” Kenton Thibaut, a member of the Atlantic Council’s Digital Forensic Research Lab in Washington DC, told CNN. Business.
However, Ms. Thibaut believed that China’s autonomy in the semiconductor sector is not easy. “Full autonomy in chip manufacturing is easier said than done, as it requires layers of technology and expertise. It is very hard to achieve the first rank in the entire supply chain of semiconductor”, said she.
The US is promoting its manufacturing
There has been a shift from China to the US. TSMC, Taiwan’s largest chip processing company in the world, has started a plan to invest 12 billion USD to build a factory in Arizona, expected to
be completed and put into operation from 2024. Another Taiwanese manufacturer, GlobalWafers, also recently committed 5 billion USD to build a wafer silicon factory in Texas.
Previously, SK Group and Samsung, two Korea firms also began to increase their presence in the technology manufacturing sector in the US through tens-of-billions-dollar plans to build factories. Domestic semiconductor companies such as Intel do the same.
According to experts, the CHIPS & Science Act is likely to encourage more companies to set up their factories in the US. “Building factories is a process that consumes a lot of money and time. Therefore, companies only make a move when they are encouraged by money and good policies,” commented Associate Professor Zachary Collier of Radford University.
According to the announcement of President Biden, CHIPS & Science Act’s $53 billion funding package will be spent over the next five years to expand U.S. semiconductor manufacturing, including $1.5 billion for telecommunications companies to compete with Chinese companies such as Huawei. Businesses investing in semiconductor manufacturing will also receive a 25% tax deduction.
Collier estimated that the US is now occupying approximate 1/4 of the global demand for semiconductors, but the output produced by domestic companies only occupied around 12%. Previously, TSMC’ Financial Report Quarter II/2022 indicated that North America was currently occupying up to 65% of the total revenue, while this figure is 10% for China and 5% for Japan.
“More companies are investing in the US because of favorable policies, but the replacement of China in a short time may not be easily done”, said Collier.
As Thibaut states, China has currently a big advantage in terms of the existing infrastructure system, as well as the ability to provide products for any countries it wants. “The US and other countries who have the same goals need to develop a long-term strategy. They not only compete with China, but also provide themselves viable solutions for the actual demand”, told Thibaut.
In addition, experts also claim that although countries have been trying to establish domestic manufacturing facilities, they will not be able to separate themselves from the global supply chain, especially in a complex sector such as semiconductor. “This is genuinely a huge network. No matter how greatly localized it is, the mutual dependence is inevitable. This is still an issue of globalization, one way or another”, Collier also stated.
Source : VnExpress