Since 2018, the USA and China have been engaged in a trade war. Semiconductor technology has been a key point. US exports of semiconductors to China have been declining as China ramps up on technology and fabrication.TSMC (Taiwan-based, the World’s largest fabricator of semiconductors and supplier to key, strategic US customers including Aerospace, Defence and Space) has been under constant threat from China over territorial issues. China, Taiwan, South Korea, Japan, and EMEA comprise over 80% of the world’s semiconductor supply chain. Altercation between China and the USA over Taiwan could cause global supply chain problems. Since 2018, the USA has passed various sanctions banning its companies and allies from exporting critical technology for semiconductors to China. One major technology is EUV Lithography machines, manufactured by ASML a Dutch company; needed to produce 2-3 Nanometre Chips.

One Nanometre is a Billionth of a Meter. Semiconductors are measured in Nanometres-the distance between the two closest components on a semiconductor. TSMC and Samsung produce 3 Nanometre semiconductors; TSMC is also setting up a 2 Nanometre plant in Taiwan for commissioning in 2025. The benefit of having a low Nanometre count is the ability to compress hundreds of billions of transistors onto a semiconductor. This increases the processing power and speed of semiconductors and reduces power consumption. At this moment the AMD MI 300 X chip boasts 153 Billion transistors and Cerebras has yet to commercialise a semiconductor with a reported 2.6 Trillion transistors.

Why is a low Nanometre count strategically so important? High-end processors are needed in AI, Aerospace, Defence, High technology, Medical Science, and Space. The USA and its allies would rather keep control over it for strategic reasons. For this reason, President Biden of the USA introduced The CHIPS and Science Act 2022, providing subsidies of US $53 Billion and R&D funds of US$ 170 Billion to attract the semiconductor industry back to the USA.

Last year, Huawei surprised the world by launching a new 5 G phone Kiris 9000S with a 7-9 Nanometre chip produced by SMIC ( Semiconductor Manufacturing International Corporation, a Chinese Government-owned semiconductor company with a reported facility to manufacture up to 5 Nanometre semiconductors). Eager Chinese consumers, goaded by Chinese Govt. propaganda, bought large volumes of the new 5G handsets, causing a setback in the sale of the Apple iPhone in China.

The launch of Huawei Kiris 9000S has created a cloud of anxiety and confusion in the industry and on the capability of China to produce high-end semiconductors with access to in-house technology. The actual specs of the semiconductor are clouded in uncertainty. The USA has stated that they do not have evidence that China can produce 7 Nanometre semiconductors at scale. The Chip Wars are accelerating!