1. Strengthening a Transnational Semiconductor Industry
- Author:
- James Lewis
- Publication Date:
- 06-2022
- Content Type:
- Special Report
- Institution:
- Center for Strategic and International Studies
- Abstract:
- If data is the new oil, it could be said that chips are the new steel—a fundamental component of national power similar to the foundational role steel production played in the industrial age. As such, semiconductor chips are a natural focus for government intervention and support to accelerate growth and build secure supply chains. The specific goals for U.S. semiconductor policy are to increase reliability and trust in supply, reinforce all elements of chip-making capacity, and reduce China’s role in the supply chain. Chip production is based on complex, globally distributed, specialized supply chains involving many stages in production, including specialized materials, production equipment, design and related software, fabrication, testing, and packaging. In some stages of production, labor costs are important; in others, it is capital costs because a cutting-edge fabrication plant, or fab, can cost more than $12 billion. Taiwan, South Korea, the United States, Japan, Singapore, and China are the leading chip-producing nations. There are also important facilities (often subsidiaries of a leading producer) in Europe, Southeast Asia, South America, and Israel. This global distribution has led some to push for greater production in the United States, but trying to “reshore” a global supply chain spread across many countries would be counterproductive if the goal is a reliable and more productive supply chain. The problem is China, not global production. The politics of the chip industry are generally favorable to the United States. One leading producer, South Korea, is a treaty ally and faces less risk of disruption from China than does Taiwan. Another leading producer, Japan, is one of the most important U.S. security partners and, with the United States, dominates the production of semiconductor manufacturing equipment (SME). ASML, another leading producer of SME, based in the Netherlands, is also an important ally. Singapore, while it would prefer not to be caught in a battle between giants, is also a dependable partner. These countries share democratic values and in many instances are treaty allies. The global distribution of chip-making in countries friendly to the United States is an advantage.
- Topic:
- Science and Technology, transnationalism, Emerging Technology, and Semiconductors
- Political Geography:
- Global Focus