The chips are down as Taiwan holds the aces in a vital game

Image by Kesu01 | Bigstockphoto

Chips were always critical in the technology industry, and the moment that the US and China cut off each other’s access to their supply, trouble was always ahead.

Now chips are in short supply and Governments and corporations are racing to solve the problem.

And right in the middle, in an already precarious political position, lies Taiwan.

In the West, Intel has announced a massive new initiative to increase its supply of chips. It is obviously well placed to do so.

In the East (depending on where you sit), Chinese companies are making similar announcements, notably Xiaomi.

As globalisation turns to isolation, new rivalries have sprung up and old ones have been rekindled.

The chip race has begun.

Whether the US and its allies lead in the world of chip innovation or whether China is right up there with them is an interesting debate and probably a moot one.

The real problem is that two-thirds of the world’s supply of chips comes from Taiwan. The US has now stated that collaboration between the two countries must be solidified as a priority. TSMC and Samsung have plans to set up factories in the US to reap the benefits of a Government happy to throw billions of dollars at the problem.

China, too, offers huge subsidies to boost its reliance on homegrown chips and away from those outsourced to other countries.

One problem is that we will see many different countries work at many different speeds as co-operation dries up and competition speeds up. On the one hand, it could boost innovation as the incentives allow companies to pay top dollar for the talent to design better and better chips.

On the other, it could spell disaster for years of trying to make global standards work. Nationalism could reverse global trends such as seamless roaming and make it almost impossible to make your 6G or 7G phone work when you are abroad.

This situation focused on the smallest of components – chips – could also trigger the largest of nightmares. The fact that Taiwan wants to remain separate and is being supported by one superpower is cause for some tension. The fact that another superpower strongly disagrees ramps up the tension in the South China Sea by, well, frightening factors.

Be the first to comment

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.