Why Making Computer Chips Has Become Such a Big Deal
Chipmaking has become an increasingly precarious and exclusive business. New plants have a price tag of more than $20 billion, take years to build and need to be run flat-out for 24 hours a day to turn a profit.
The scale required has reduced the number of companies with leading-edge technology to just three — Taiwan Semiconductor Manufacturing Co. (TSMC), South Korea’s Samsung Electronics Co. and Intel Corp. of the US.
TSMC and Samsung act as so-called foundries, providing outsourced manufacturing for companies around the world. The world’s biggest tech firms are dependent on access to the best manufacturing, most of which is located in Taiwan.
The US imposed tighter export controls in 2023 on some chips and chipmaking equipment to stop China from developing capabilities that Washington regards as potential military threats, such as supercomputers and AI. It’s also pressed allies to tighten restrictions on China’s access to chip technology, aiming at plugging holes in export controls, and moved to restrict its own imports of Chinese chips.
Leading Chinese tech companies including Huawei Technologies Co have been placed on a so-called US entity list, meaning American chip technology suppliers must get government approval to sell to these blacklisted companies.
The European Union has forged its own $46.3 billion plan to expand local manufacturing capacity. The European Commission estimates that public and private investments in the sector will total more than $108 billion. The goal is to double the bloc’s output to 20% of the global market by 2030.
Bloomberg 15 maj 2024
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