tag:theconversation.com,2011:/global/topics/semiconductors-7158/articlesSemiconductors – The Conversation2024-03-28T01:37:12Ztag:theconversation.com,2011:article/2264012024-03-28T01:37:12Z2024-03-28T01:37:12ZQuantum computing just got hotter: 1 degree above absolute zero<figure><img src="https://images.theconversation.com/files/584893/original/file-20240327-26-7h2dj1.JPG?ixlib=rb-1.1.0&rect=11%2C2%2C1985%2C1266&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Diraq</span></span></figcaption></figure><p>For decades, the pursuit of quantum computing has struggled with the need for extremely low temperatures, mere fractions of a degree above absolute zero (0 Kelvin or –273.15°C). That’s because the quantum phenomena that grant quantum computers their unique computational abilities can only be harnessed by isolating them from the warmth of the familiar classical world we inhabit.</p>
<p>A single quantum bit or “qubit”, the equivalent of the binary “zero or one” bit at the heart of classical computing, requires a large refrigeration apparatus to function. However, in many areas where we expect quantum computers to deliver breakthroughs – such as in designing new materials or medicines – we will need large numbers of qubits or even whole quantum computers working in parallel.</p>
<p>Quantum computers that can manage errors and self-correct, essential for reliable computations, are anticipated to be gargantuan in scale. Companies like Google, IBM and PsiQuantum are preparing for a future of entire warehouses filled with cooling systems and consuming vast amounts of power to run a single quantum computer.</p>
<p>But if quantum computers could function at even slightly higher temperatures, they could be much easier to operate – and much more widely available. In new research <a href="https://www.nature.com/articles/s41586-024-07160-2">published in Nature</a>, our team has shown a certain kind of qubit – the spins of individual electrons – can operate at temperatures around 1K, far hotter than earlier examples.</p>
<h2>The cold, hard facts</h2>
<p>Cooling systems become less efficient at lower temperatures. To make it worse, the systems we use today to control the qubits are intertwining messes of wires reminiscent of <a href="https://en.wikipedia.org/wiki/ENIAC">ENIAC</a> and other huge computers of the 1940s. These systems increase heating and create physical bottlenecks to making qubits work together.</p>
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<a href="https://theconversation.com/how-long-before-quantum-computers-can-benefit-society-thats-googles-us-5-million-question-226257">How long before quantum computers can benefit society? That's Google's US$5 million question</a>
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<p>The more qubits we try to cram in, the more difficult the problem becomes. At a certain point the wiring problem becomes insurmountable. </p>
<p>After that, the control systems need to be built into the same chips as the qubits. However, these integrated electronics use even more power – and dissipate more heat – than the big mess of wires. </p>
<h2>A warm turn</h2>
<p>Our new research may offer a way forward. We have demonstrated that a particular kind of qubit – one made with a quantum dot printed with metal electrodes on silicon, using technology much like that used in existing microchip production – can operate at temperatures around 1K.</p>
<p>This is only one degree above absolute zero, so it’s still extremely cold. However, it’s significantly warmer than previously thought possible. This breakthrough could condense the sprawling refrigeration infrastructure into a more manageable, single system. It would drastically reduce operational costs and power consumption.</p>
<p>The necessity for such technological advancements isn’t merely academic. The stakes are high in fields like drug design, where quantum computing promises to revolutionise how we understand and interact with molecular structures.</p>
<p>The research and development expenses in these industries, running into billions of dollars, underscore the potential cost savings and efficiency gains from more accessible quantum computing technologies.</p>
<h2>A slow burn</h2>
<p>“Hotter” qubits offer new possibilities, but they will also introduce new challenges in error correction and control. Higher temperatures may well mean an increase in the rate of measurement errors, which will create further difficulties in keeping the computer functional. </p>
<p>It is still early days in the development of quantum computers. Quantum computers may one day be as ubiquitous as today’s silicon chips, but the path to that future will be filled with technical hurdles. </p>
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<a href="https://theconversation.com/explainer-quantum-computation-and-communication-technology-7892">Explainer: quantum computation and communication technology </a>
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<p>Our recent progress in operating qubits at higher temperatures is as a key step towards making the requirements of the system simpler.</p>
<p>It offers hope that quantum computing may break free from the confines of specialised labs into the broader scientific community, industry and commercial data centres.</p><img src="https://counter.theconversation.com/content/226401/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Dzurak works at Diraq. Through Diraq, he receives funding from Australian Research Council (ARC), UNSW Sydney, US Army Research Office (ARO), the US Air Force Office of Scientific Research (AFOSR) and the Australian Government, among other organisations.</span></em></p><p class="fine-print"><em><span>Andre Saraiva works at Diraq. Through Diraq, he receives funding from Australian Research Council (ARC), UNSW Sydney, US Army Research Office (ARO), the US Air Force Office of Scientific Research (AFOSR) and the Australian Government, among other organisations.</span></em></p>Quantum computers that work at slightly higher temperatures could be cheaper and more accessible.Andrew Dzurak, Scientia Professor Andrew Dzurak, CEO and Founder of Diraq, UNSW SydneyAndre Luiz Saraiva De Oliveira, Solid State Physicist, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2258792024-03-26T21:21:40Z2024-03-26T21:21:40ZClimate change puts global semiconductor manufacturing at risk. Can the industry cope?<figure><img src="https://images.theconversation.com/files/583587/original/file-20240321-28-sznorf.jpg?ixlib=rb-1.1.0&rect=0%2C18%2C3095%2C2037&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The chip manufacturing industry of the 21st century is the most significant industry, geopolitically speaking, as oil was in the 20th century.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p><a href="https://theconversation.com/what-is-a-semiconductor-an-electrical-engineer-explains-how-these-critical-electronic-components-work-and-how-they-are-made-188337">Semiconductors</a> are the basic building blocks of microchips. These technological marvels are in everything from lightbulbs and toothbrushes to cars, trains and planes, not to mention the vast array of electronics that have become integral to many people’s daily lives. </p>
<p>The 21st century chip manufacturing industry has been described as “<a href="https://mondediplo.com/2021/08/03morozov">at least as significant geopolitically as oil was in the 20th</a>.” But semiconductor manufacturing <a href="https://www.cnbc.com/2024/02/29/climate-change-could-push-chip-prices-higher-heres-how.html">requires vast quantities of water to keep machinery cool</a> and <a href="https://semiconductor.samsung.com/us/support/tools-resources/fabrication-process/eight-essential-semiconductor-fabrication-processes-part-1-what-is-a-wafer/">wafer sheets</a> free of debris, and the unfolding climate emergency puts the industry at risk.</p>
<p>Despite the industry’s dependence on water, little attention has been paid to how changing environmental conditions may impact it. Reporting by <a href="https://www.simonandschuster.com/books/Chip-War/Chris-Miller/9781982172008">journalists</a> and <a href="https://www.jstor.org/stable/resrep39833">think tanks</a> tend to overlook climate as a risk factor for the future of the industry. </p>
<p>Yet, globally and regionally there are signs of trouble. Taiwan, for example, produces about <a href="https://www.bcg.com/publications/2021/strengthening-the-global-semiconductor-supply-chain">90 per cent</a> of the world’s most advanced semiconductors and has been experiencing a significant <a href="https://s3.eu-central-1.amazonaws.com/interconnectedrisks/reports/2022/Case-studies/TR_220830_TaiwanDrought.pdf">drought since 2021</a>. </p>
<p>The drought is bad enough that Taiwanese <a href="https://www.nytimes.com/2021/04/08/technology/taiwan-drought-tsmc-semiconductors.html">farmers are being paid</a> to keep their fields fallow so water that would otherwise go to agriculture can be fed into semiconductor manufacturing plants. Taiwanese manufacturing plants have even had to resort to trucking water from one <a href="https://education.nationalgeographic.org/resource/watershed/">watershed</a> to another to overcome shortages.</p>
<p>Publicly available data <a href="https://www.wri.org/data/aqueduct-global-maps-30-data">on climate change-induced water stress</a>, combined with data on the location of existing, planned and announced <a href="https://www.cell.com/iscience/fulltext/S2589-0042(24)00012-9">semiconductor manufacturing facilities around the world</a>, all point to global patterns of concern for the future of semiconductor manufacturing.</p>
<h2>Looming water shortages ahead</h2>
<p>No matter the climate change scenario considered — whether optimistic, business-as-usual or pessimistic — <a href="https://doi.org/10.1016/j.isci.2024.108791">a minimum of 40 per cent</a> of all existing semiconductor manufacturing plants are located in watersheds that are anticipated to experience high or extremely high water stress risk by 2030. </p>
<p>High-risk watersheds are those in which 40 to 80 per cent of the total renewable surface and ground water available for all purposes (e.g., irrigation, industrial, domestic use) are in use. Extremely high-risk watersheds are those in which greater than 80 per cent of the total renewable surface and ground water are in use.</p>
<p>Much of the recent concern expressed over semiconductor manufacturing paints the issue in geopolitical terms about interstate rivalry, especially <a href="https://theconversation.com/why-the-american-technological-war-against-china-could-backfire-219158">between China and the United States</a>. </p>
<p>Both the <a href="https://www.nist.gov/chips">U.S.</a> and <a href="https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/european-chips-act_en">Europe</a> have announced major government funding for the semiconductor manufacturing industry, especially to bring back the facilities of companies that <a href="https://www-sup.stanford.edu/books/extra/?id=33228&i=Preface.html">spent decades setting up manufacturing capacity outside of those regions</a>. However, the manufacturing facilities being announced or under construction in the U.S. and Europe are all located in regions that are already facing significant water stress. </p>
<p><a href="https://www.cnbc.com/2021/06/04/why-intel-tsmc-are-building-water-dependent-chip-plants-in-arizona.html">Intel, Taiwan Semiconductor Manufacturing Company</a> (TSMC) and <a href="https://www.kvue.com/video/money/economy/boomtown-2040/boomtown-major-growth-on-the-way-for-taylor-texas/269-1f0df1f8-3ab0-49a9-86ce-7d4899fda6e7">Samsung</a> are all building new facilities in the southwestern U.S. — a region that has been under <a href="https://www.azwater.gov/drought/drought-frequently-asked-questions#">official drought conditions since 1994</a>. In 2021, the U.S. Bureau of reclamation made its first ever <a href="https://www.usbr.gov/newsroom/news-release/3950?filterBy=year&year=2021">shortage declaration for the Colorado River basin</a>.</p>
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Read more:
<a href="https://theconversation.com/a-global-semiconductor-shortage-highlights-a-troubling-trend-a-small-and-shrinking-number-of-the-worlds-computer-chips-are-made-in-the-us-156700">A global semiconductor shortage highlights a troubling trend: A small and shrinking number of the world's computer chips are made in the US</a>
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<p>Future climate change scenarios suggest more than 40 per cent of all new semiconductor manufacturing facilities announced since 2021 will be in watersheds likely to experience high- or extremely high-risk water stress scenarios. </p>
<p>Put simply, climate change and water shortages is creating risks for semiconductor manufacture in both the short- and long-term.</p>
<h2>The state of the industry</h2>
<p>Semiconductor manufacturing facilities are multi-billion dollar investments. One does not simply pick a facility up from one location and plunk it down elsewhere if local water conditions become problematic.</p>
<p>As worrying as the future might be for the sector, aggregate water stress risks only tell part of the story. The importance of <a href="https://doi.org/10.1016/j.isci.2024.108791">particular nodes</a> in global production networks for semiconductors is another key factor. </p>
<p>For example, TSMC is widely acknowledged as a world leader in manufacturing advanced semiconductors for companies like <a href="https://asia.nikkei.com/Business/Companies/Taiwan-s-TSMC-wields-souped-up-iPhone-chips-to-overpower-rivals">Apple</a>, <a href="https://www.aljazeera.com/economy/2024/3/19/tech-giant-nvidia-unveils-higher-performing-superchips-to-power-ai">Nvidia</a> and <a href="https://www.extremetech.com/computing/cerebras-unveils-cs-3-wafer-scale-ai-chip-with-900000-cores-and-4-trillion">Cerebras</a>. Yet, the facilities where TSMC manufactures for those companies are located in just three sites in Taiwan. This makes the global production networks that manufacture these technologies quite fragile. Semiconductors, especially the most advanced ones, rely on a network of only a handful of facilities like TSMC’s. </p>
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<img alt="A glass-fronted building with a sign on it that says tsmc" src="https://images.theconversation.com/files/583588/original/file-20240321-24-ufk6df.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/583588/original/file-20240321-24-ufk6df.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/583588/original/file-20240321-24-ufk6df.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/583588/original/file-20240321-24-ufk6df.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/583588/original/file-20240321-24-ufk6df.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/583588/original/file-20240321-24-ufk6df.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/583588/original/file-20240321-24-ufk6df.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">TSMC is widely acknowledged as a world leader in manufacturing advanced semiconductors for well-known companies like Apple.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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<p>Customers of those facilities cannot easily switch to another supplier in the face of a disruption, so issues that arise at a single facility can cascade through global supply chains. This can impact a wide variety of commodities that make use of semiconductors, as was <a href="https://spectrum.ieee.org/chip-shortage">experienced during the COVID-19 pandemic</a>.</p>
<p>Major semiconductor manufacturers like Intel and TSMC claim to take water stewardship seriously. Yet, their own company <a href="https://esg.tsmc.com/download/file/2021_sustainabilityReport/english/e-all.pdf">reports suggest there may be trouble ahead</a>. Despite TSMC’s investments in water reclamation and recycling, the company anticipates being able to provide only two-thirds of the daily water consumption needed at its Taiwan-based facilities. </p>
<p>Intel, meanwhile, claims to achieve <a href="https://www.intel.com/content/www/us/en/corporate-responsibility/csr-report-builder.html">net positive water use</a> across its manufacturing network as a whole. But, it <a href="https://www.theregister.com/2022/07/13/intels_net_positive_water_use/">manages this achievement</a> only by counting surplus water at locations in one part of the world against water deficits at its facilities elsewhere.</p>
<h2>A concerning future ahead</h2>
<p>It is not going to be easy — or cheap — to overcome the chronic water stress risks for the semiconductor industry arising from the unfolding climate emergency. <a href="https://mondediplo.com/2023/07/11water-grenoble-microchips">Conflicts</a> already exist between the sector and <a href="https://www.nytimes.com/2021/04/08/technology/taiwan-drought-tsmc-semiconductors.html">other water users</a>. </p>
<p>Even as individual companies make impressive water use efficiency improvements, these efforts do not automatically result in systemic efficiencies across semiconductor production networks. And no amount of efficiency will ever overcome the problem of the water that is needed for semiconductor manufacturing also being needed by other users. </p>
<p>It may still be possible to avoid some of the worst consequences of locking in future water stress for the sector by rethinking the location of future facilities that have been announced, but are not yet under construction. </p>
<p>Without secure access to large volumes of water there are no semiconductors, and without semiconductors there are no electronics. The climate emergency is a major driver of water stress both now and in the future. Can the tech sector cope? It remains to be seen.</p><img src="https://counter.theconversation.com/content/225879/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Josh Lepawsky receives funding from the Social Sciences and Humanities Research Council (SSHRC). </span></em></p>Global semiconductor manufacturing is already under geopolitical stress, but climate change ups the ante.Josh Lepawsky, Full Professor of Geography, Memorial University of NewfoundlandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2258542024-03-21T17:26:20Z2024-03-21T17:26:20ZAI’s excessive water consumption threatens to drown out its environmental contributions<p>Water is needed for development, production and consumption, yet we are overusing and polluting an unsubstitutable resource and system. </p>
<p>Eight safe and just boundaries for five domains (climate, biosphere, water, nutrients and aerosols) have been identified beyond which there is significant harm to humans and nature and the risk of crossing tipping points increases. Humans have already crossed the <a href="https://doi.org/10.1038/s41586-023-06083-8">safe and just Earth System Boundaries for water</a>. </p>
<p>To date, seven of the eight boundaries have been crossed, and although the aerosol boundary has not been crossed at the global level, it has been crossed at city level in many parts of the world.</p>
<p>For water, the safe and just boundaries specify that surface water flows should not fluctuate more than 20 per cent relative to the natural flow on a monthly basis; while groundwater withdrawal should not be more than the <a href="https://www.sciencedirect.com/topics/earth-and-planetary-sciences/groundwater-recharge">recharge rate</a>. Both of these boundaries have been crossed.</p>
<p>These thresholds have been crossed even though the minimum needs of the world’s poorest to access water and sanitation services <a href="https://www.unicef.org/wash#:%7E:text=Worldwide%2C%202.2%20billion%20people%20still,to%20handwashing%20facilities%20with%20soap">have not been met</a>. Addressing these needs will put an even greater pressure on <a href="https://doi.org/10.1038/s41893-022-00995-5">already-strained water systems</a>.</p>
<h2>AI’s potential</h2>
<p>Technological optimists argue that artificial intelligence (AI) holds the potential to solve the world’s water problems. Supporters of AI argue that it can help achieve both the environmental and social <a href="https://doi.org/10.1038/s41467-019-14108-y">Sustainable Development Goals</a> (SDGs), for example by designing systems to address shortages of teachers and doctors, increase crop yields and manage our energy needs.</p>
<p>In the past decade, research into this area has grown exponentially, with potential applications including increasing <a href="https://ieeexplore.ieee.org/document/8622984">water efficiency and monitoring in agriculture</a>, <a href="https://ieeexplore.ieee.org/document/10058801">water security</a> and <a href="https://doi.org/10.1016/j.psep.2019.11.014">enhancing wastewater treatment</a>. </p>
<p>AI-powered biosensors can more accurately <a href="https://doi.org/10.1016/j.gsd.2022.100888">detect toxic chemicals in drinking water</a> than current quality monitoring practices.</p>
<p>The potential for AI to change the water used in <a href="https://doi.org/10.1109/ACCESS.2022.3232485">agriculture</a> is evident through the building of smart machines, robots and sensors that optimize farming systems. </p>
<p>For example, <a href="https://doi.org/10.1109/ACCESS.2022.3232485">smart irrigation</a> automates irrigation through the collection and analysis of data to optimize water usage by <a href="https://www.sciencedirect.com/science/article/pii/S2772427122000791">improving efficiency</a> and <a href="http://article.sapub.org/10.5923.j.ijnc.20170701.01.html">detecting leakage</a>. </p>
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<a href="https://images.theconversation.com/files/583274/original/file-20240320-20-ot4d8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="rows of lettuce beds" src="https://images.theconversation.com/files/583274/original/file-20240320-20-ot4d8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/583274/original/file-20240320-20-ot4d8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/583274/original/file-20240320-20-ot4d8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/583274/original/file-20240320-20-ot4d8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/583274/original/file-20240320-20-ot4d8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/583274/original/file-20240320-20-ot4d8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/583274/original/file-20240320-20-ot4d8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">A smart irrigation system for green oak lettuce in Chiang Mai, Thailand.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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<p>As international development scholars who study the relationship between water, the environment and global inequality, we are curious about whether AI can actually make a difference or whether it exacerbates existing challenges. Although there is peer-reviewed literature on the use of AI for managing water and the SDGs, there are no peer-reviewed papers on the direct and indirect implications of AI on water use. </p>
<h2>AI and water use</h2>
<p>Initial research shows that AI has a significant water footprint. It uses water both for <a href="https://puiij.com/index.php/research/article/view/39/23">cooling the servers</a> that power its computations and for producing the energy it consumes. As AI becomes more integrated into our societies, its water footprint will inevitably grow. </p>
<p>The growth of ChatGPT and similar AI models has been hailed as “<a href="https://bootcamp.uxdesign.cc/is-chatgpt-the-new-google-5fdd0170c861">the new Google</a>.” But while a single Google search requires <a href="https://doi.org/10.1109/MSPEC.2010.5466789">half a millilitre of water in energy</a>, ChatGPT consumes <a href="https://doi.org/10.48550/arXiv.2304.03271">500 millilitres of water for every five to 50 prompts</a>. </p>
<p>AI <a href="https://puiij.com/index.php/research/article/view/39">uses</a> and <a href="https://doi.org/10.1016/j.jclepro.2014.08.061">pollutes</a> water through related hardware production. Producing the AI hardware involves resource-intensive mining for rare materials such as silicon, germanium, gallium, boron and phosphorous. Extracting these minerals has a <a href="https://doi.org/10.5897/JGRP2015.0495">significant impact on the environment and contributes to water pollution</a>. </p>
<p>Semiconductors and microchips require large volumes of water in the <a href="https://doi.org/10.1016/j.watcyc.2023.01.004">manufacturing stage</a>. Other hardware, such as for various <a href="https://doi.org/10.1021/acs.analchem.5b01653">sensors</a>, also have an associated water footprint.</p>
<p>Data centres provide the physical infrastructure for training and running AI, and their energy consumption <a href="https://www.iea.org/reports/electricity-2024">could double by 2026</a>. Technology firms using water to run and cool these data centres potentially require water withdrawals of 4.2 to 6.6 billion cubic metres by 2027.</p>
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<a href="https://images.theconversation.com/files/583276/original/file-20240320-30-2qnook.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="an aerial view of uniformly arranged rectangular buildings" src="https://images.theconversation.com/files/583276/original/file-20240320-30-2qnook.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/583276/original/file-20240320-30-2qnook.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=383&fit=crop&dpr=1 600w, https://images.theconversation.com/files/583276/original/file-20240320-30-2qnook.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=383&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/583276/original/file-20240320-30-2qnook.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=383&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/583276/original/file-20240320-30-2qnook.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=481&fit=crop&dpr=1 754w, https://images.theconversation.com/files/583276/original/file-20240320-30-2qnook.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=481&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/583276/original/file-20240320-30-2qnook.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=481&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Microsoft data centers located in Noord-Holland, The Netherlands.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>By comparison, <a href="https://sustainability.google/reports/google-2023-environmental-report/.">Google’s data centres</a> used over 21 billion litres of potable water in 2022, an increase of 20 per cent on its 2021 usage.</p>
<p>Training an AI at the computing level of a human brain for one year can cost <a href="https://doi.org/10.5281/zenodo.7855594">126,000 litres of water</a>. Each year the computing power needed to train AI <a href="https://openai.com/research/ai-and-compute">increases tenfold</a>, requiring more resources. </p>
<p>Water use of big tech companies’ data centres is grossly underestimated — for example, the <a href="http://www.aquatechtrade.com/news/industrial-water/microsoft-data-centre-uses-too-much-water">water consumption at Microsoft’s Dutch data centre was four times their initial plans</a>. Demand for water for cooling will only <a href="https://procido.com/2023/09/27/how-artificial-intelligence-ai-is-stealing-your-drinking-water/">increase</a> because of rising average temperatures due to climate change.</p>
<h2>Conflicting needs</h2>
<p>The technology sector’s water demand is so high that communities are protesting against it as it threatens their livelihoods. Google’s data centre in drought-prone The Dalles, Ore. is sparking concern as it uses a <a href="https://www.oregonlive.com/silicon-forest/2022/12/googles-water-use-is-soaring-in-the-dalles-records-show-with-two-more-data-centers-to-come.html">quarter of the city’s water</a>. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/9Kqfdq8ljUI?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">The Associated Press looks at Google’s water consumption in The Dalles, Ore.</span></figcaption>
</figure>
<p>Taiwan, responsible for 90 per cent of the world’s <a href="https://www.economist.com/special-report/2023/03/06/taiwans-dominance-of-the-chip-industry-makes-it-more-important">advanced semiconductor chip production</a>, has resorted to cloud seeding, water desalination, interbasin water transfers and halting irrigation for 180,000 hectares <a href="https://www.nytimes.com/2021/04/08/technology/taiwan-drought-tsmc-semiconductors.html">to address its water needs</a>. </p>
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Read more:
<a href="https://theconversation.com/the-microchip-industry-would-implode-if-china-invaded-taiwan-and-it-would-affect-everyone-206335">The microchip industry would implode if China invaded Taiwan, and it would affect everyone</a>
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<h2>Locating data centres</h2>
<p>As water becomes increasingly expensive and scarce in relation to demand, companies are now strategically placing their data centres in the <a href="https://news.mongabay.com/2023/11/the-cloud-vs-drought-water-hog-data-centers-threaten-latin-america-critics-say/">developing world</a> — even in dry sub-Saharan Africa, <a href="https://www.howwemadeitinafrica.com/africas-data-centre-boom/156344/">data centre investments are increasing</a>. </p>
<p>Google’s planned data centre in Uruguay, which recently suffered its <a href="https://hir.harvard.edu/running-dry-the-battle-for-water-security-in-uruguay-and-why-it-foreshadows-a-greater-issue/">worst drought in 74 years</a>, would require 7.6 million litres per day, <a href="https://www.theguardian.com/world/2023/jul/11/uruguay-drought-water-google-data-center">sparking widespread protest</a>. </p>
<p>What emerges is a familiar picture of geographic inequality, as developing countries find themselves caught in a dilemma between the economic benefits offered by international investment and the strain this places on local water resources availability. </p>
<p>We believe there is sufficient evidence for concern that the rapid uptake of AI risks exacerbating the water crises rather than help addressing them. As yet, there are no systematic studies on the AI industry and its water consumption. Technology companies have been tightlipped about the water footprint of their new products. </p>
<p>The broader question is: Will the social and environmental contributions of AI be overshadowed by its huge water footprint?</p><img src="https://counter.theconversation.com/content/225854/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joyeeta Gupta receives funding from the Netherlands Enterprise Agency (RVO), under grant number 5000005700 and case number 31184622</span></em></p><p class="fine-print"><em><span>Hilmer Bosch receives funding from the Netherlands Enterprise Agency (RVO), under grant number 5000005700 and case number 31184622</span></em></p><p class="fine-print"><em><span>Luc van Vliet receives funding from the Netherlands Enterprise Agency (RVO), under grant number 5000005700 and case number 31184622</span></em></p>Artificial intelligence promises revolutionary solutions to global challenges, but the water costs to produce and power AI hardware and infrastructure may exceed the benefits.Joyeeta Gupta, Professor, Social and Behavioural Sciences, University of AmsterdamHilmer Bosch, Postdoctoral researcher on the Global Commission on the Economics of Water, University of AmsterdamLuc van Vliet, Researcher, Human Geography, University of AmsterdamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2246372024-03-05T19:11:02Z2024-03-05T19:11:02ZWhat is a GPU? An expert explains the chips powering the AI boom, and why they’re worth trillions<figure><img src="https://images.theconversation.com/files/579746/original/file-20240305-26-fy5cnb.jpg?ixlib=rb-1.1.0&rect=804%2C1247%2C2236%2C1299&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AMD</span></span></figcaption></figure><p>As the world rushes to make use of the latest wave of AI technologies, one piece of high-tech hardware has become a surprisingly hot commodity: the graphics processing unit, or GPU. </p>
<p>A top-of-the-line GPU can sell for <a href="https://www.tomshardware.com/tech-industry/artificial-intelligence/nvidias-h100-ai-gpus-cost-up-to-four-times-more-than-amds-competing-mi300x-amds-chips-cost-dollar10-to-dollar15k-apiece-nvidias-h100-has-peaked-beyond-dollar40000">tens of thousands of dollars</a>, and leading manufacturer NVIDIA has seen its market valuation <a href="https://www.reuters.com/technology/nvidia-set-close-with-2-trillion-valuation-dell-stokes-ai-rally-2024-03-01/">soar past US$2 trillion</a> as demand for its products surges.</p>
<p>GPUs aren’t just high-end AI products, either. There are less powerful GPUs in phones, laptops and gaming consoles, too.</p>
<p>By now you’re probably wondering: what is a GPU, really? And what makes them so special?</p>
<h2>What is a GPU?</h2>
<p>GPUs were originally designed primarily to quickly generate and display complex 3D scenes and objects, such as those involved in video games and <a href="https://en.wikipedia.org/wiki/Computer-aided_design">computer-aided design</a> software. Modern GPUs also handle tasks such as <a href="https://en.wikipedia.org/wiki/Video_codec">decompressing</a> video streams. </p>
<p>The “brain” of most computers is a chip called a central processing unit (CPU). CPUs can be used to generate graphical scenes and decompress videos, but they are typically far slower and less efficient on these tasks compared to GPUs. CPUs are better suited for general computation tasks, such as word processing and browsing web pages.</p>
<h2>How are GPUs different from CPUs?</h2>
<p>A typical modern CPU is made up of between 8 and 16 “<a href="https://en.wikipedia.org/wiki/Multi-core_processor">cores</a>”, each of which can process complex tasks in a sequential manner.</p>
<p>GPUs, on the other hand, have thousands of relatively small cores, which are designed to all work at the same time (“in parallel”) to achieve fast overall processing. This makes them well suited for tasks that require a large number of simple operations which can be done at the same time, rather than one after another. </p>
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Read more:
<a href="https://theconversation.com/demand-for-computer-chips-fuelled-by-ai-could-reshape-global-politics-and-security-224438">Demand for computer chips fuelled by AI could reshape global politics and security</a>
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<p>Traditional GPUs come in two main flavours. </p>
<p>First, there are standalone chips, which often come in add-on cards for large desktop computers. Second are GPUs combined with a CPU in the same chip package, which are often found in laptops and game consoles such as the PlayStation 5. In both cases, the CPU controls what the GPU does.</p>
<h2>Why are GPUs so useful for AI?</h2>
<p>It turns out GPUs can be repurposed to do more than generate graphical scenes. </p>
<p>Many of the machine learning techniques behind artificial intelligence (AI), such as <a href="https://en.wikipedia.org/wiki/Deep_learning">deep neural networks</a>, rely heavily on various forms of “matrix multiplication”. </p>
<p>This is a mathematical operation where very large sets of numbers are multiplied and summed together. These operations are well suited to parallel processing, and hence can be performed very quickly by GPUs.</p>
<h2>What’s next for GPUs?</h2>
<p>The number-crunching prowess of GPUs is steadily increasing, due to the rise in the number of cores and their operating speeds. These improvements are primarily driven by improvements in chip manufacturing by companies such as <a href="https://www.anandtech.com/show/21241/tsmc-2nm-update-two-fabs-in-construction-one-awaiting-government-approval">TSMC</a> in Taiwan. </p>
<p>The size of individual transistors – the basic components of any computer chip – is decreasing, allowing more transistors to be placed in the same amount of physical space. </p>
<p>However, that is not the entire story. While traditional GPUs are useful for AI-related computation tasks, they are not optimal.</p>
<p>Just as GPUs were originally designed to accelerate computers by providing specialised processing for graphics, there are accelerators that are designed to speed up machine learning tasks. These accelerators are often referred to as “data centre GPUs”. </p>
<p>Some of the most popular accelerators, made by companies such as AMD and NVIDIA, started out as traditional GPUs. Over time, their designs evolved to better handle various machine learning tasks, for example by supporting the more efficient “<a href="https://en.wikipedia.org/wiki/Bfloat16_floating-point_format">brain float</a>” number format. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/579743/original/file-20240305-26-pixv44.jpg?ixlib=rb-1.1.0&rect=965%2C333%2C1891%2C1253&q=45&auto=format&w=1000&fit=clip"><img alt="A photo of an iridescent computer chip against a black background." src="https://images.theconversation.com/files/579743/original/file-20240305-26-pixv44.jpg?ixlib=rb-1.1.0&rect=965%2C333%2C1891%2C1253&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/579743/original/file-20240305-26-pixv44.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/579743/original/file-20240305-26-pixv44.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/579743/original/file-20240305-26-pixv44.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/579743/original/file-20240305-26-pixv44.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/579743/original/file-20240305-26-pixv44.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/579743/original/file-20240305-26-pixv44.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">NVIDIA’s latest GPUs have specialised functions to speed up the ‘transformer’ software used in many modern AI applications.</span>
<span class="attribution"><a class="source" href="https://nvidianews.nvidia.com/multimedia/search?origin=multimedia&keywords=h100">NVIDIA</a></span>
</figcaption>
</figure>
<p>Other accelerators, such as Google’s <a href="https://en.wikipedia.org/wiki/Tensor_Processing_Unit">Tensor Processing Units</a> and Tenstorrent’s <a href="https://tenstorrent.com/frequently-asked-questions/">Tensix Cores</a>, were designed from the ground up for speeding up deep neural networks.</p>
<p>Data centre GPUs and other AI accelerators typically come with significantly more memory than traditional GPU add-on cards, which is crucial for training large AI models. The larger the AI model, the more capable and accurate it is.</p>
<p>To further speed up training and handle even larger AI models, such as ChatGPT, many data centre GPUs can be pooled together to form a supercomputer. This requires more complex software in order to properly harness the available number crunching power. Another approach is to create a single very large accelerator, such as the “<a href="https://www.cerebras.net/blog/wafer-scale-processors-the-time-has-come/">wafer-scale processor</a>” produced by Cerebras.</p>
<h2>Are specialised chips the future?</h2>
<p>CPUs have not been standing still either. Recent CPUs from AMD and Intel have built-in low-level instructions that speed up the number-crunching required by deep neural networks. This additional functionality mainly helps with “inference” tasks – that is, using AI models that have already been developed elsewhere. </p>
<p>To train the AI models in the first place, large GPU-like accelerators are still needed.</p>
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Read more:
<a href="https://theconversation.com/clampdown-on-chip-exports-is-the-most-consequential-us-move-against-china-yet-192738">Clampdown on chip exports is the most consequential US move against China yet</a>
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<p>It is possible to create ever more specialised accelerators for specific machine learning algorithms. Recently, for example, a company called Groq has produced a “<a href="https://wow.groq.com/lpu-inference-engine/">language processing unit</a>” (LPU) specifically designed for running large language models along the lines of ChatGPT. </p>
<p>However, creating these specialised processors takes considerable engineering resources. History shows the usage and popularity of any given machine learning algorithm tends to peak and then wane – so expensive specialised hardware may become quickly outdated. </p>
<p>For the average consumer, however, that’s unlikely to be a problem. The GPUs and other chips in the products you use are likely to keep quietly getting faster.</p><img src="https://counter.theconversation.com/content/224637/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Conrad Sanderson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Originally designed to speed up computer graphics, GPUs have become a hot commodity as AI workhorses.Conrad Sanderson, Research Scientist & Team Leader, CSIROLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2244382024-03-04T13:41:42Z2024-03-04T13:41:42ZDemand for computer chips fuelled by AI could reshape global politics and security<figure><img src="https://images.theconversation.com/files/578585/original/file-20240228-18-rudxyy.jpg?ixlib=rb-1.1.0&rect=28%2C0%2C6361%2C3592&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/close-silicon-die-being-extracted-semiconductor-2262331365">IM Imagery / Shutterstock</a></span></figcaption></figure><p>A global race to build powerful computer chips that are essential for the next generation of artificial intelligence (AI) tools could have a major impact on global politics and security. </p>
<p>The US is currently leading the race in the design of these chips, also known as semiconductors. But most of the manufacturing is carried out in Taiwan. The debate has been fuelled by the call by Sam Altman, CEO of ChatGPT’s developer OpenAI, for <a href="https://www.wsj.com/tech/ai/sam-altman-seeks-trillions-of-dollars-to-reshape-business-of-chips-and-ai-89ab3db0">a US$5 trillion to US$7 trillion</a> (£3.9 trillion to £5.5 trillion) global investment to <a href="https://venturebeat.com/ai/sam-altman-wants-up-to-7-trillion-for-ai-chips-the-natural-resources-required-would-be-mind-boggling/">produce more powerful chips</a> for the next generation of AI platforms. </p>
<p>The amount of money Altman called for is more than the chip industry has spent in total since it began. Whatever the facts about those numbers, overall projections for the AI market are mind blowing. The data analytics company GlobalData <a href="https://www.globaldata.com/media/technology/generative-ai-will-go-mainstream-2024-driven-adoption-specialized-custom-models-multimodal-tool-experimentation-says-globaldata/">forecasts that the market will be worth US$909 billion</a> by 2030.</p>
<p>Unsurprisingly, over the past two years, the US, China, Japan and several European countries have increased their budget allocations and put in place measures to secure or maintain a share of the chip industry for themselves. China is catching up fast and is <a href="https://thediplomat.com/2023/09/china-boosts-semiconductor-subsidies-as-us-tightens-restrictions/">subsidising chips, including next-generation ones for AI</a>, by hundreds of billions over the next decade to build a manufacturing supply chain. </p>
<p>Subsidies seem to be the <a href="https://www.reuters.com/technology/germany-earmarks-20-bln-eur-chip-industry-coming-years-2023-07-25/">preferred strategy for Germany too</a>. The UK government has announced its <a href="https://www.ukri.org/news/100m-boost-in-ai-research-will-propel-transformative-innovations/#:%7E:text=%C2%A3100m%20boost%20in%20AI%20research%20will%20propel%20transformative%20innovations,-6%20February%202024&text=Nine%20new%20research%20hubs%20located,help%20to%20define%20responsible%20AI.">plans to invest £100 million</a> to support regulators and universities in addressing challenges around artificial intelligence. </p>
<p>The economic historian Chris Miller, the author of the book Chip War, <a href="https://www.dw.com/en/ai-chip-race-fears-grow-of-huge-financial-bubble/a-68272265">has talked about how powerful chips have become a “strategic commodity”</a> on the global geopolitical stage.</p>
<p>Despite the efforts by several countries to invest in the future of chips, there is currently a shortage of the types currently needed for AI systems. Miller recently explained that 90% of the chips used to train, or improve, AI systems are <a href="https://www.siliconrepublic.com/future-human/chip-war-semiconductors-supply-tech-geopolitics-chris-miller">produced by just one company</a>.</p>
<p>That company is the <a href="https://www.tsmc.com/english">Taiwan Semiconductor Manufacturing Company (TSMC)</a>. Taiwan’s dominance in the chip manufacturing industry is notable because the island is also the focus for tensions between China and the US. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/the-microchip-industry-would-implode-if-china-invaded-taiwan-and-it-would-affect-everyone-206335">The microchip industry would implode if China invaded Taiwan, and it would affect everyone</a>
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<p>Taiwan has, for the most part, <a href="https://www.taiwan.gov.tw/content_3.php#:%7E:text=The%20ROC%20government%20relocated%20to,rule%20of%20a%20different%20government.">been independent since the middle of the 20th century</a>. However, Beijing believes it should be <a href="https://www.reuters.com/world/asia-pacific/china-calls-taiwan-president-frontrunner-destroyer-peace-2023-12-31/">reunited with the rest of China</a> and US legislation requires Washington to <a href="https://www.congress.gov/bill/96th-congress/house-bill/2479#:%7E:text=Declares%20that%20in%20furtherance%20of,defense%20capacity%20as%20determined%20by">help defend Taiwan if it is invaded</a>. What would happen to the chip industry under such a scenario is unclear, but it is obviously a focus for global concern.</p>
<p>The disruption of supply chains in chip manufacturing have the potential to bring entire industries to a halt. Access to the raw materials, such as rare earth metals, used in computer chips has also proven to be an important bottleneck. For example, China <a href="https://securityconference.org/en/publications/munich-security-report-2024/technology/">controls 60% of the production of gallium metal</a> and 80% of the global production of germanium. These are both critical raw products used in chip manufacturing.</p>
<figure class="align-center ">
<img alt="Sam Altman" src="https://images.theconversation.com/files/578592/original/file-20240228-30-178em0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/578592/original/file-20240228-30-178em0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/578592/original/file-20240228-30-178em0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/578592/original/file-20240228-30-178em0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/578592/original/file-20240228-30-178em0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/578592/original/file-20240228-30-178em0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/578592/original/file-20240228-30-178em0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">OpenAI CEO Sam Altman has called for a US$5 trillion to $7 trillion investment in chips to support the growth in AI.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/openai-ceo-sam-altman-attends-artificial-2412159621">Photosince / Shutterstock</a></span>
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<p>And there are other, lesser known bottlenecks. A process called <a href="https://research.ibm.com/blog/what-is-euv-lithography">extreme ultraviolet (EUV) lithography</a> is vital for the ability to continue making computer chips smaller and smaller – and therefore more powerful. <a href="https://www.asml.com/en">A single company in the Netherlands, ASML</a>, is the only manufacturer of EUV systems for chip production.</p>
<p>However, chip factories are increasingly being built outside Asia again – something that has the potential to reduce over-reliance on a few supply chains. Plants in the US are being subsidised to the tune of <a href="https://securityconference.org/en/publications/munich-security-report-2024/technology/">US$43 billion and in Europe, US$53 billion</a>. </p>
<p>For example, the Taiwanese semiconductor manufacturer TSMC is planning to build a multibillion dollar facility in Arizona. When it opens, that factory <a href="https://theconversation.com/the-microchip-industry-would-implode-if-china-invaded-taiwan-and-it-would-affect-everyone-206335">will not be producing the most advanced chips</a> that it’s possible to currently make, many of which are still produced by Taiwan.</p>
<p>Moving chip production outside Taiwan could reduce the risk to global supplies in the event that manufacturing were somehow disrupted. But this process could take years to have a meaningful impact. It’s perhaps not surprising that, for the first time, this year’s Munich Security Conference <a href="https://securityconference.org/en/publications/munich-security-report-2024/technology/">created a chapter devoted to technology</a> as a global security issue, with discussion of the role of computer chips. </p>
<h2>Wider issues</h2>
<p>Of course, the demand for chips to fuel AI’s growth is not the only way that artificial intelligence will make major impact on geopolitics and global security. The growth of disinformation and misinformation online has transformed politics in recent years by inflating prejudices on both sides of debates. </p>
<p>We have seen it <a href="https://www.jstor.org/stable/26675075">during the Brexit campaign</a>, during <a href="https://journals.sagepub.com/doi/10.1177/20563051231177943">US presidential elections</a> and, more recently, during the <a href="https://apnews.com/article/israel-hamas-gaza-misinformation-fact-check-e58f9ab8696309305c3ea2bfb269258e">conflict in Gaza</a>. AI could be the ultimate amplifier of disinformation. Take, for example, deepfakes – AI-manipulated videos, audio or images of public figures. These could easily fool people into thinking a major <a href="https://www.theguardian.com/us-news/2024/feb/26/ai-deepfakes-disinformation-election">political candidate had said something they didn’t</a>.</p>
<p>As a sign of this technology’s growing importance, at the 2024 Munich Security Conference, 20 of the world’s largest tech companies <a href="https://news.microsoft.com/2024/02/16/technology-industry-to-combat-deceptive-use-of-ai-in-2024-elections/">launched something called the “Tech Accord”</a>. In it, they pledged to cooperate to create tools to spot, label and debunk deepfakes. </p>
<p>But should such important issues be left to tech companies to police? Mechanisms such as the EU’s Digital Service Act, the UK’s Online Safety Bill as well as frameworks to regulate AI itself should help. But it remains to be seen what impact they can have on the issue.</p>
<p>The issues raised by the chip industry and the growing demand driven by AI’s growth are just one way that AI is driving change on the global stage. But it remains a vitally important one. National leaders and authorities must not underestimate the influence of AI. Its potential to redefine geopolitics and global security could exceed our ability to both predict and plan for the changes.</p><img src="https://counter.theconversation.com/content/224438/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alina Vaduva is affiliated with the Labour Party, as a member and elected councillor in Dartford, Kent. </span></em></p><p class="fine-print"><em><span>Kirk Chang does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The effects of AI’s growth on global security could be difficult to predict.Kirk Chang, Professor of Management and Technology, University of East LondonAlina Vaduva, Director of the Business Advice Centre for Post Graduate Students at UEL, Ambassador of the Centre for Innovation, Management and Enterprise, University of East LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2237582024-02-26T17:19:23Z2024-02-26T17:19:23ZRed Sea crisis: with fears of a UK tea shortage, worries are brewing over other crucial commodities<figure><img src="https://images.theconversation.com/files/577598/original/file-20240223-22-io12k4.jpg?ixlib=rb-1.1.0&rect=0%2C5%2C3408%2C2149&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/close-big-cup-tea-brewing-using-1854472879">Stockah/Shutterstock</a></span></figcaption></figure><p>British people are known around the world for their love of tea. This is borne out by the statistics: a staggering <a href="https://www.ibisworld.com/united-kingdom/market-research-reports/tea-processing-industry/">50 billion cups of tea</a> are consumed on average in the UK every year.</p>
<p>Most of this tea is made using black tea leaves, most of which are not produced in the UK. Thus, shipping disruption caused by attacks on merchant vessels in the Red Sea, through which an estimated <a href="https://www.bbc.com/future/article/20240119-red-sea-crisis-how-global-shipping-is-being-rerouted-out-of-danger">12% of global trade</a> passes each year, has <a href="https://www.thetimes.co.uk/article/black-tea-shortage-2024-britain-supply-issues-w2rzxt9tv">sparked fears</a> of a national tea shortage.</p>
<p>The attacks, which are being carried out by the Yemeni Houthi rebel militant group in support of Hamas, have forced shipping companies to redirect around the southern tip of Africa – a journey that can take up to three weeks longer.</p>
<p>Two of the UK’s biggest suppliers of tea, Tetley and Yorkshire Tea, have announced that they are <a href="https://www.bbc.co.uk/news/business-68284391">monitoring</a> their supply chains closely for any potential disruptions. And customers have <a href="https://www.standard.co.uk/business/business-news/tea-drinkers-warned-over-supply-issues-facing-supermarkets-b1138702.html">reported</a> reduced stocks of tea in supermarkets across the UK.</p>
<p>It is no surprise that tea is vulnerable to supply chain disruption. The <a href="https://www.steepedcontent.com/blogs/blog/tea-supply-chain">tea supply chain</a> is a complex global network, involving producers, processors, auctions and wholesalers, packers, distributors and retailers.</p>
<p>The UK imports primarily unprocessed tea from countries in <a href="https://www.foodingredientsfirst.com/news/tea-trouble-red-sea-attacks-impede-tetley-supplies-amid-shipping-disruptions.html">south Asia and east Africa</a>. This tea is then packaged and blended <a href="https://www.cbi.eu/sites/default/files/market-information/cbi_2016_-_tea_-_pfs_uk_-_final_draft_-_adjusted.pdf">within the UK</a> for both domestic and export markets. Only around 10% of the packaged tea sold in the UK is supplied by companies from overseas.</p>
<p>But tea is <a href="https://www.reuters.com/world/uk/britains-tea-supply-facing-disruption-red-sea-crisis-2024-02-13/">one of many items</a> to be caught up in the supply chain crisis. The disruption is affecting supplies across various other sectors too, including <a href="https://theconversation.com/what-the-red-sea-crisis-could-mean-for-the-electric-vehicle-industry-and-the-planet-221074">electric cars</a> and liquified natural gas – and it could prove costly.</p>
<p>The UK is particularly reliant on <a href="https://theconversation.com/the-uk-carbon-dioxide-shortage-still-hasnt-been-resolved-here-are-some-long-term-answers-176910">natural gas</a> for the production of carbon dioxide, a gas that is essential for everything from NHS operations to keeping food fresh while it is transported. </p>
<h2>Not so unpredictable</h2>
<p>The disruption caused by the Red Sea attacks is considered by some to have been an entirely unpredictable occurrence of what is known as a <a href="https://www.logupdateafrica.com/shipping/another-black-swan-event-red-sea-blues-for-supply-chains-1350712">“black swan”</a> event. But this crisis is the latest in a long line of shocks to global supply networks that have occurred over the past decade. </p>
<p>Whether it was the 2011 tsunami off the coast of Japan, Brexit, COVID, US trade sanctions on China, or the war in Ukraine, the fact of the matter is that supply chains are now experiencing disruption more often than they used to. </p>
<p>There are two reasons for this. First, organisations have become increasingly reliant on distant countries for the manufacturing and supply of routine and critical components. </p>
<p>Sometimes this decision is made because of the natural advantage these countries hold. For example, China currently <a href="https://www.nytimes.com/2009/09/01/business/global/01minerals.html">accounts for 93%</a> of the global production of so-called rare earth elements, which are used in the components of many of the devices we use every day. But most of the time these decisions are driven by an organisation’s pursuit of lowering its cost of operation. </p>
<p>Second, a focus on just-in-time production, where businesses focus on producing precisely the amount they need and delivering it as close as possible to the time their customers need it, has reduced the buffer against supply chain shocks.</p>
<h2>Building resilient supply networks</h2>
<p>Organisations need to diversify their supply chains by developing alternate sources of supply. Many businesses already spread their source of materials over multiple suppliers across different regions to ensure quality, the continuity of supply, and to minimise costs.</p>
<p>For less complex components, such as packaging (cardboard, plastic bags and bubble wrap) or raw materials (metals and plastic), multiple sourcing is often practised through competitive tendering and reverse auctions; where the sellers bid for the prices at which they are willing to sell their goods and services. </p>
<p>However, for more complex products, the development of alternate sources of supply needs to be done strategically. One of the most important steps to improve supply chain resilience is to reduce reliance on global suppliers through processes called “onshoring”, “nearshoring” and “friendshoring”. </p>
<p>Onshoring is where components are sourced from suppliers located within domestic national borders. Nearshoring is a similar strategy where a company moves its supply to neighbouring countries. And <a href="https://www.weforum.org/agenda/2023/02/friendshoring-global-trade-buzzwords/">friendshoring</a> is where organisations transfer their production away from geopolitical rivals to friendlier countries. </p>
<p>The US, for example, has traditionally relied on Taiwan and South Korea for its <a href="https://www.cnbc.com/2021/04/12/us-semiconductor-policy-looks-to-cut-out-china-secure-supply-chain.html">supply of semiconductors</a> (computer chips). But geopolitical tensions with China, coupled with a global shortage of semiconductors, have forced the US to look for suppliers in countries closer to home, while also exploring the potential of <a href="https://www.theguardian.com/business/2023/aug/28/phoenix-microchip-plant-biden-union-tsmc">moving chip manufacturing</a> to the US.</p>
<p>Geographical and climate factors restrict the onshoring of tea cultivation to the UK. But these supply strategies could help businesses manage the risk of supply chain disruption to other, potentially more critical, commodities.</p>
<figure class="align-center ">
<img alt="A large glass building under construction in a desert." src="https://images.theconversation.com/files/577617/original/file-20240223-22-675qmd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/577617/original/file-20240223-22-675qmd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/577617/original/file-20240223-22-675qmd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/577617/original/file-20240223-22-675qmd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/577617/original/file-20240223-22-675qmd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/577617/original/file-20240223-22-675qmd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/577617/original/file-20240223-22-675qmd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Taiwanese microchip manufacturer TSMC are building a plant in Phoenix, Arizona.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/phoenix-arizona-march-08-2023-ongoing-2272666939">Around the World Photos/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Making supply chains more agile</h2>
<p>The frequency with which global supply chains are now becoming disrupted means that organisations must rethink their supply chain strategies, evolving from being efficient and lean to flexible and agile. </p>
<p>An agile supply chain strategy will require businesses to maintain adequate inventory levels to guard against a situation where stock runs out. These inventory levels must be informed by real-time – or as close to real-time as possible – data on customer demand.</p>
<p>The disruption to the UK’s tea supply highlights the vulnerability of supplies of everyday essentials to unexpected events. But businesses can make sure they are better prepared for the occurrence of an unexpected event by enhancing the resilience of their supply chain through diversification and agility.</p><img src="https://counter.theconversation.com/content/223758/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jas Kalra does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Tea supplies are under threat as a shipping crisis continues in the Red Sea.Jas Kalra, Associate Professor of Operations & Project Management, Manchester Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2229582024-02-13T12:45:09Z2024-02-13T12:45:09ZChina’s chip industry is gaining momentum – it could alter the global economic and security landscape<figure><img src="https://images.theconversation.com/files/574634/original/file-20240209-20-qhpgx6.jpg?ixlib=rb-1.1.0&rect=7%2C0%2C4977%2C3337&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/cropped-image-engineer-showing-computer-microchip-151125485">Dragon Images/Shutterstock</a></span></figcaption></figure><p>China’s national champions for computer chip – or semiconductor – design and manufacturing, HiSilicon and Semiconductor Manufacturing International Corporation (SMIC), are making waves in Washington. </p>
<p>SMIC was long considered a laggard. Despite being the recipient of billions of dollars from the Chinese government since its founding in 2000, it remained far from the technological frontier. But that perception — and the self-assurance it gave the US — is changing. </p>
<p>In August 2023, Huawei launched its high-end Huawei Mate 60 smartphone. According to the Center for Strategic and International Studies (an American think tank based in Washington DC), the launch <a href="https://www.ft.com/content/327414d2-fe13-438e-9767-333cdb94c7e1">“surprised the US”</a> as the chip powering it showed that Chinese self-sufficiency in HiSilicon’s semiconductor design and SMIC’s manufacturing capabilities were catching up at an alarming pace.</p>
<p>More recent news that Huawei and SMIC are scheming to mass-produce so-called 5-nanometre processor chips in <a href="https://www.ft.com/content/b5e0dba3-689f-4d0e-88f6-673ff4452977">new Shanghai production facilities</a> has only stoked further fears about leaps in their next-generation prowess. These chips remain a generation behind the current cutting-edge ones, but they show that China’s move to create more advanced chips is well on track, despite US export controls.</p>
<p>The US has long managed to maintain its clear position as the frontrunner in chip design, and has ensured it was close allies who were supplying the manufacturing of cutting-edge chips. But now it faces formidable competition from China, who’s technological advance carries profound economic, geopolitical and security implications.</p>
<h2>Semiconductors are a big business</h2>
<p>For decades, chipmakers have sought to make ever more compact products. Smaller transistors result in lower energy consumption and faster processing speeds, so massively improve the performance of a microchip. </p>
<p>Moore’s Law — the expectation that the number of transistors on a microchip doubles every two years — has remained valid in chips designed in the Netherlands and the US, and manufactured in Korea and Taiwan. Chinese technology has therefore remained years behind. While the world’s frontier has moved to 3-nanometre chips, Huawei’s <a href="https://thediplomat.com/2023/09/what-does-huaweis-homemade-chip-really-mean-for-chinas-semiconductor-industry/">homemade chip</a> is at 7 nanometres. </p>
<p>Maintaining this distance has been important for economic and security reasons. Semiconductors are the backbone of the modern economy. They are critical to telecommunications, defence and artificial intelligence.</p>
<p>The US push for <a href="https://eastasiaforum.org/2021/05/19/geopolitics-and-the-push-for-made-in-the-usa-semiconductors/">“made in the USA”</a> semiconductors has to do with this systemic importance. Chip shortages <a href="https://www.cnbc.com/2023/07/28/how-the-world-went-from-a-semiconductor-shortage-to-a-major-glut.html">wreak havoc</a> on global production since they power so many of the products that define contemporary life. </p>
<p>Today’s military prowess even directly relies on chips. In fact, according to the <a href="https://www.csis.org/analysis/semiconductors-and-national-defense-what-are-stakes">Center for Strategic and International Studies</a>, “all major US defence systems and platforms rely on semiconductors.” </p>
<p>The prospect of relying on Chinese-made chips — and the backdoors, Trojan horses and control over supply that would pose — are unacceptable to Washington and its allies.</p>
<h2>Stifling China’s chip industry</h2>
<p>Since the 1980s, the US has helped establish and maintain a distribution of chip manufacturing that is dominated by South Korea and Taiwan. But the US has recently sought to safeguard its technological supremacy and independence by bolstering its <a href="https://www.cnbc.com/2023/10/17/how-the-chips-act-is-aiming-to-restore-a-us-lead-in-semiconductors.html">own manufacturing ability</a>.</p>
<p>Through large-scale <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/">industrial policy</a>, billions of dollars are being poured into US chip manufacturing facilities, including a multi-billion dollar <a href="https://www.theguardian.com/business/2023/aug/28/phoenix-microchip-plant-biden-union-tsmc">plant in Arizona</a>. </p>
<figure class="align-center ">
<img alt="A large factory under construction on a clear, sunny day." src="https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">TSMC, the world’s largest chipmaker, building an advanced semiconductor factory in the US state of Arizona.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/phoenix-arizona-march-08-2023-ongoing-2272665185">Around the World Photos/Shutterstock</a></span>
</figcaption>
</figure>
<p>The second major tack is exclusion. The Committee on Foreign Investment in the United States has subjected <a href="https://theconversation.com/whats-at-stake-in-trumps-war-on-huawei-control-of-the-global-computer-chip-industry-124079">numerous investment and acquisition deals</a> to review, ultimately even blocking some in the name of US national security. This includes the high-profile case of <a href="https://www.economist.com/business/2018/03/08/cfius-intervenes-in-broadcoms-attempt-to-buy-qualcomm">Broadcom’s attempt to buy Qualcomm</a> in 2018 due to its China links.</p>
<p>In 2023, the US government issued an <a href="https://sanctionsnews.bakermckenzie.com/us-government-issues-executive-order-restricting-us-outbound-investment-in-advanced-technologies-involving-countries-of-concern-china/">executive order</a> inhibiting the export of advanced semiconductor manufacturing equipment and technologies to China. By imposing stringent export controls, the US aims to impede China’s access to critical components. </p>
<p>The hypothesis has been that HiSilicon and SMIC would continue to stumble as they attempt self-sufficiency at the frontier. The US government has called on its friends to adopt a unified stance around excluding chip exports to China. Notably, ASML, a leading Dutch designer, has <a href="https://www.theguardian.com/technology/2024/jan/02/asml-halts-hi-tech-chip-making-exports-to-china-reportedly-after-us-request#:%7E:text=1%20month%20old-,ASML%20halts%20hi%2Dtech%20chip%2Dmaking%20exports%20to,China%20reportedly%20after%20US%20request&text=A%20Dutch%20manufacturer%20has%20cancelled,government%2C%20it%20has%20been%20reported.">halted shipments</a> of its hi-tech chips to China on account of US policy. </p>
<p>Washington has also <a href="https://economictimes.indiatimes.com/tech/technology/china-quietly-recruits-overseas-chip-talent-as-us-tightens-curbs/articleshow/103004607.cms?from=mdr">limited talent flows</a> to the Chinese semiconductor industry. The regulations to limit the movements of talent are motivated by the observation that even “godfathers” of semiconductor manufacturing in Japan, Korea and Taiwan <a href="https://eastasiaforum.org/2022/09/28/washington-shores-up-friends-in-the-semiconductor-industry/">went on to work</a> for Chinese chipmakers — taking their know-how and connections with them. </p>
<p>This, and the <a href="https://www.reddit.com/r/taiwan/comments/154x9vt/tsmc_delays_us_chip_fab_opening_says_us_talent_is/">recurring headlines</a> about the need for more semiconductor talent in the US, has fuelled the clampdown on the outflow of American talent. </p>
<p>Finally, the US government has explicitly targeted China’s national champion firms: Huawei and SMIC. It banned the sale and import of equipment from <a href="https://asia.nikkei.com/Politics/International-relations/US-China-tensions/After-Huawei-5G-chip-debut-U.S.-lawmakers-call-for-tighter-export-controls#:%7E:text=After%20the%20U.S.%20government%20put,SMIC%20has%20also%20been%20blacklisted.">Huawei in 2019</a> and has <a href="https://www.aljazeera.com/economy/2023/9/15/us-republicans-demand-full-sanctions-charges-against-chinas-huawei-smic">imposed sanctions on SMIC</a> since 2020. </p>
<h2>What’s at stake?</h2>
<p>The <a href="https://ig.ft.com/sites/business-book-award/books/2022/winner/chip-war-by-chris-miller/">“chip war”</a> is about economic and security dominance. Beijing’s ascent to the technological frontier would mean an economic boom for China and bust for the US. And it would have profound security implications.</p>
<p>Economically, China’s emergence as a major semiconductor player could disrupt existing supply chains, reshape the division of labour and distribution of human capital in the global electronics industry. From a security perspective, China’s rise poses a heightened risk of vulnerabilities in Chinese-made chips being exploited to compromise critical infrastructure or conduct cyber espionage. </p>
<p>Chinese self-sufficiency in semiconductor design and manufacturing would also undermine Taiwan’s “silicon shield”. Taiwan’s status as the <a href="https://theconversation.com/the-microchip-industry-would-implode-if-china-invaded-taiwan-and-it-would-affect-everyone-206335">leading manufacturer</a> of semiconductors has so far deterred China from using force to attack the island.</p>
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Read more:
<a href="https://theconversation.com/the-microchip-industry-would-implode-if-china-invaded-taiwan-and-it-would-affect-everyone-206335">The microchip industry would implode if China invaded Taiwan, and it would affect everyone</a>
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<p>China is advancing its semiconductor capabilities. The economic, geopolitical and security implications will be profound and far-reaching. Given the stakes that both superpowers face, what we can be sure about is that Washington will not easily acquiesce, nor will Beijing give up.</p><img src="https://counter.theconversation.com/content/222958/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>China is making chip progress despite US efforts to contain its industry.Robyn Klingler-Vidra, Associate Dean, Global Engagement | Associate Professor in Entrepreneurship and Sustainability, King's College LondonSteven Hai, Affiliate Fellow, King’s Institute for Artificial Intelligence, King’s College London, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2158042023-10-19T04:59:00Z2023-10-19T04:59:00ZQuantum computers in 2023: how they work, what they do, and where they’re heading<figure><img src="https://images.theconversation.com/files/554450/original/file-20231018-29-xrpphz.jpg?ixlib=rb-1.1.0&rect=17%2C43%2C5757%2C3800&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A complex cooling rig is needed to maintain the ultracold working temperatures required by a superconducting quantum computer.</span> <span class="attribution"><a class="source" href="https://newsroom.ibm.com/media-quantum-innovation">IBM</a></span></figcaption></figure><p>In June, an IBM computing executive claimed <a href="https://www.nytimes.com/2023/06/14/science/ibm-quantum-computing.html">quantum computers were entering the “utility” phase</a>, in which high-tech experimental devices become useful. In September, Australia’s Chief Scientist Cathy Foley went so far as to declare “<a href="https://www.chiefscientist.gov.au/news-and-media/its-time-australia-leverage-our-resources-and-tech-skills-prosper-new-economy">the dawn of the quantum era</a>”. </p>
<p>This week, Australian physicist <a href="https://www.abc.net.au/news/science/2023-10-16/prime-minister-science-prize-michelle-simmons-quantum-physics/102979096">Michelle Simmons won the nation’s top science award</a> for her work on developing silicon-based quantum computers.</p>
<p>Obviously, quantum computers are having a moment. But – to step back a little – what exactly <em>are</em> they? </p>
<h2>What is a quantum computer?</h2>
<p>One way to think about computers is in terms of the kinds of numbers they work with.</p>
<p>The digital computers we use every day rely on whole numbers (or <em>integers</em>), representing information as strings of zeroes and ones which they rearrange according to complicated rules. There are also analogue computers, which represent information as continuously varying numbers (or <em>real numbers</em>), manipulated via electrical circuits or spinning rotors or moving fluids.</p>
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Read more:
<a href="https://theconversation.com/theres-a-way-to-turn-almost-any-object-into-a-computer-and-it-could-cause-shockwaves-in-ai-62235">There's a way to turn almost any object into a computer – and it could cause shockwaves in AI</a>
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<p>In the 16th century, the Italian mathematician Girolamo Cardano invented another kind of number called <em>complex numbers</em> to solve seemingly impossible tasks such as finding the square root of a negative number. In the 20th century, with the advent of quantum physics, it turned out complex numbers also naturally describe the fine details of light and matter.</p>
<p>In the 1990s, physics and computer science collided when it was discovered that some problems could be solved much faster with algorithms that work directly with complex numbers as encoded in quantum physics. </p>
<p>The next logical step was to build devices that work with light and matter to do those calculations for us automatically. This was the birth of quantum computing.</p>
<h2>Why does quantum computing matter?</h2>
<p>We usually think of the things our computers do in terms that mean something to us — balance my spreadsheet, transmit my live video, find my ride to the airport. However, all of these are ultimately computational problems, phrased in mathematical language. </p>
<p>As quantum computing is still a nascent field, most of the problems we know quantum computers will solve are phrased in abstract mathematics. Some of these will have “real world” applications we can’t yet foresee, but others will find a more immediate impact.</p>
<p>One early application will be cryptography. Quantum computers will be able to crack today’s internet encryption algorithms, so we will need quantum-resistant cryptographic technology. Provably secure cryptography and a fully quantum internet would use quantum computing technology.</p>
<figure class="align-center ">
<img alt="A microscopic view of a square, iridescent computer chip against an orange background." src="https://images.theconversation.com/files/554626/original/file-20231018-19-68uhls.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/554626/original/file-20231018-19-68uhls.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=395&fit=crop&dpr=1 600w, https://images.theconversation.com/files/554626/original/file-20231018-19-68uhls.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=395&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/554626/original/file-20231018-19-68uhls.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=395&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/554626/original/file-20231018-19-68uhls.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=496&fit=crop&dpr=1 754w, https://images.theconversation.com/files/554626/original/file-20231018-19-68uhls.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=496&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/554626/original/file-20231018-19-68uhls.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=496&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Google has claimed its Sycamore quantum processor can outperform classical computers at certain tasks.</span>
<span class="attribution"><span class="source">Google</span></span>
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</figure>
<p>In materials science, quantum computers will be able to simulate molecular structures at the atomic scale, making it faster and easier to discover new and interesting materials. This may have significant applications in batteries, pharmaceuticals, fertilisers and other chemistry-based domains.</p>
<p>Quantum computers will also speed up many difficult optimisation problems, where we want to find the “best” way to do something. This will allow us to tackle larger-scale problems in areas such as logistics, finance, and weather forecasting.</p>
<p>Machine learning is another area where quantum computers may accelerate progress. This could happen indirectly, by speeding up subroutines in digital computers, or directly if quantum computers can be reimagined as learning machines.</p>
<h2>What is the current landscape?</h2>
<p>In 2023, quantum computing is moving out of the basement laboratories of university physics departments and into industrial research and development facilities. The move is backed by the chequebooks of multinational corporations and venture capitalists. </p>
<p>Contemporary quantum computing prototypes – built by <a href="https://www.ibm.com/quantum">IBM</a>, <a href="https://quantumai.google/">Google</a>, <a href="https://ionq.com/">IonQ</a>, <a href="https://www.rigetti.com/">Rigetti</a> and others – are still some way from perfection. </p>
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Read more:
<a href="https://theconversation.com/error-correcting-the-things-that-go-wrong-at-the-quantum-computing-scale-84846">Error correcting the things that go wrong at the quantum computing scale</a>
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<p>Today’s machines are of modest size and susceptible to errors, in what has been called the “<a href="https://thequantuminsider.com/2023/03/13/what-is-nisq-quantum-computing/">noisy intermediate-scale quantum</a>” phase of development. The delicate nature of tiny quantum systems means they are prone to many sources of error, and correcting these errors is a major technical hurdle.</p>
<p>The holy grail is a large-scale quantum computer which can correct its own errors. A whole ecosystem of research factions and commercial enterprises are pursuing this goal via diverse technological approaches. </p>
<h2>Superconductors, ions, silicon, photons</h2>
<p>The current leading approach uses loops of electric current inside superconducting circuits to store and manipulate information. This is the technology adopted by <a href="https://quantumai.google/hardware">Google</a>, <a href="https://www.ibm.com/topics/quantum-computing">IBM</a>, <a href="https://www.rigetti.com/what-we-build">Rigetti</a> and others. </p>
<p>Another method, the “trapped ion” technology, works with groups of electrically charged atomic particles, using the inherent stability of the particles to reduce errors. This approach has been spearheaded by <a href="https://ionq.com/technology">IonQ</a> and <a href="https://www.honeywell.com/us/en/company/quantum">Honeywell</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/554627/original/file-20231018-29-hte4r6.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Illustration showing glowing dots and patterns of light." src="https://images.theconversation.com/files/554627/original/file-20231018-29-hte4r6.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/554627/original/file-20231018-29-hte4r6.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=519&fit=crop&dpr=1 600w, https://images.theconversation.com/files/554627/original/file-20231018-29-hte4r6.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=519&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/554627/original/file-20231018-29-hte4r6.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=519&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/554627/original/file-20231018-29-hte4r6.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=653&fit=crop&dpr=1 754w, https://images.theconversation.com/files/554627/original/file-20231018-29-hte4r6.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=653&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/554627/original/file-20231018-29-hte4r6.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=653&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">An artist’s impression of a semiconductor-based quantum computer.</span>
<span class="attribution"><a class="source" href="https://www.sqc.com.au">Silicon Quantum Computing</a></span>
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</figure>
<p>A third route of exploration is to confine electrons within tiny particles of semiconductor material, which could then be melded into the well-established silicon technology of classical computing. <a href="https://sqc.com.au/">Silicon Quantum Computing</a> is pursuing this angle.</p>
<p>Yet another direction is to use individual particles of light (photons), which can be manipulated with high fidelity. A company called PsiQuantum is designing <a href="https://www.nature.com/articles/s41467-023-36493-1">intricate “guided light” circuits</a> to perform quantum computations. </p>
<p>There is no clear winner yet from among these technologies, and it may well be a hybrid approach that ultimately prevails.</p>
<h2>Where will the quantum future take us?</h2>
<p>Attempting to forecast the future of quantum computing today is akin to predicting flying cars and ending up with cameras in our phones instead. Nevertheless, there are a few milestones that many researchers would agree are likely to be reached in the next decade.</p>
<p>Better error correction is a big one. We expect to see a transition from the era of noisy devices to small devices that can sustain computation through active error correction.</p>
<p>Another is the advent of post-quantum cryptography. This means the establishment and adoption of cryptographic standards that can’t easily be broken by quantum computers.</p>
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Read more:
<a href="https://theconversation.com/quantum-computers-threaten-our-whole-cybersecurity-infrastructure-heres-how-scientists-can-bulletproof-it-196065">Quantum computers threaten our whole cybersecurity infrastructure: here's how scientists can bulletproof it</a>
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<p>Commercial spin-offs of technology such as quantum sensing are also on the horizon.</p>
<p>The demonstration of a genuine “quantum advantage” will also be a likely development. This means a compelling application where a quantum device is unarguably superior to the digital alternative.</p>
<p>And a stretch goal for the coming decade is the creation of a large-scale quantum computer free of errors (with active error correction). </p>
<p>When this has been achieved, we can be confident the 21st century will be the “quantum era”.</p><img src="https://counter.theconversation.com/content/215804/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christopher Ferrie receives funding from the Australian Research Council. He is a co-founder of quantum startup Eigensystems. </span></em></p>After decades of hype, quantum computers are on the verge of becoming useful. Here’s a refresher on why they’re such a big dealChristopher Ferrie, Senior Lecturer, UTS Chancellor's Postdoctoral Research and ARC DECRA Fellow, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2088592023-10-02T19:11:50Z2023-10-02T19:11:50ZWhat has the Nobel Prize in Physics ever done for me?<figure><img src="https://images.theconversation.com/files/551265/original/file-20230930-15-nkkytb.jpeg?ixlib=rb-1.1.0&rect=53%2C0%2C6000%2C3997&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/luminous-white-led-bulb-on-wooden-2096282497">Shutterstock</a></span></figcaption></figure><p>Each October, physics is in the news with the awarding of the Nobel Prize. The work acknowledged through this most prestigious award often seems far removed from our everyday lives, with prizes given for things like “<a href="https://www.nobelprize.org/prizes/physics/1966/">optical methods for studying Hertzian resonances in atoms</a>” and “<a href="https://www.nobelprize.org/prizes/physics/1999/">elucidating the quantum structure of electroweak interactions</a>”.</p>
<p>However, these lauded advances in our basic understanding of the world often have very real, practical consequences for society.</p>
<p>To take just a few examples, Nobel-winning physics has given us portable computers, efficient LED lighting, climate modelling and radiation treatment of cancer. </p>
<h2>Thin magnets and portable computers</h2>
<p>In 2007, the physics Nobel was awarded jointly to Peter Grünberg and Albert Fert for the discovery of “<a href="https://www.nobelprize.org/prizes/physics/2007/press-release/">giant magnetoresistance</a>”. </p>
<p>In the late 1980s, Grünberg and Fert (and their research groups) were independently studying very thin layers of magnets. They both noticed that electricity flowed through the layers differently depending on the direction of the magnetic fields.</p>
<p>These teams were looking to understand fundamental properties of very thin magnets. However, their findings led to something we now take for granted: portable computers. </p>
<figure class="align-center ">
<img alt="A photo of an opened hard drive on a yellow background." src="https://images.theconversation.com/files/551266/original/file-20230930-27-sxcuty.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/551266/original/file-20230930-27-sxcuty.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/551266/original/file-20230930-27-sxcuty.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/551266/original/file-20230930-27-sxcuty.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/551266/original/file-20230930-27-sxcuty.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/551266/original/file-20230930-27-sxcuty.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/551266/original/file-20230930-27-sxcuty.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The ‘giant magnetoresistance’ effect won its discoverers the 2007 Nobel Prize in Physics – and made portable hard drives possible.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/hard-disk-drive-open-cover-computer-2115380288">Shutterstock</a></span>
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<p>At the time, most computers stored information on a hard disk drive made of a magnetic material. To read the information from the drive, a very small and very accurate magnetic field sensor is needed. </p>
<p>The discovery of giant magnetoresistance allowed for the development of far more sensitive sensors, which in turn made hard disk drives and computers smaller. (Today, magnetic hard disk drives are being overtaken by even smaller <a href="https://en.wikipedia.org/wiki/Solid-state_drive">solid state drives</a>.)</p>
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<a href="https://theconversation.com/how-to-store-data-on-magnets-the-size-of-a-single-atom-82601">How to store data on magnets the size of a single atom</a>
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<p>In short, we would not have laptops without the discovery that won the 2007 Nobel Prize in Physics. </p>
<p>The effect of this research – like that of so much fundamental research – was completely unanticipated.</p>
<h2>A light bulb moment</h2>
<p>Sometimes, however, physics research does have a practical goal all along. One such example is the quest for energy-efficient lighting.</p>
<p>Old-fashioned incandescent light bulbs are highly inefficient. Because they work by heating a wire until it glows, they waste a lot of energy as heat. In fact, less than 10% of the energy they consume goes to producing light. </p>
<p>In the 1980s, scientists realised light emitting diodes, or LEDs – small electronic components that emit light of a specific colour – would make more efficient light sources. But there was a problem. Although red and green LEDs had been developed in the middle of the twentieth century, nobody knew how to make a blue LED.</p>
<p>LEDs are thin sandwiches of materials that respond to electricity in a very particular way. When an electron moves from one energy level to another inside the material, it emits light of a specific colour. </p>
<p>All three colours of light (red, green and blue) would be needed to produce the kind of white light people want in their homes and workplaces. </p>
<figure class="align-center ">
<img alt="A photo of a strip of blue LED lights against a dark background." src="https://images.theconversation.com/files/551274/original/file-20231001-19-qlom3i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/551274/original/file-20231001-19-qlom3i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/551274/original/file-20231001-19-qlom3i.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/551274/original/file-20231001-19-qlom3i.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/551274/original/file-20231001-19-qlom3i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/551274/original/file-20231001-19-qlom3i.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/551274/original/file-20231001-19-qlom3i.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The invention of blue LEDs made it possible to create white light far more efficiently than with incandescent bulbs.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/vertical-shot-blue-led-tape-glowing-2101501642">Shutterstock</a></span>
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<p>In the early 1990s, in the culmination of almost 30 years of work by many groups, the missing blue LEDs were found. In 2014, Isamu Akasaki, Hiroshi Amano and Shuji Nakamura <a href="https://www.nobelprize.org/prizes/physics/2014/press-release/">received the physics Nobel</a> for the discovery. </p>
<p>The layers of material chosen to make up the sandwich, plus the quality of each layer, had to be refined in order to make the first blue LED. Since the initial discovery, materials scientists have continued to improve the design and manufacture to make blue LEDs more efficient.</p>
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Read more:
<a href="https://theconversation.com/your-phone-screen-just-won-the-nobel-prize-in-physics-32456">Your phone screen just won the Nobel Prize in physics</a>
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<p>Lighting accounts for up to 20% of total electricity consumption. LEDs use roughly <a href="https://www.sustainability.vic.gov.au/energy-efficiency-and-reducing-emissions/save-energy-in-the-home/lighting/choose-the-right-led-lighting">one sixth as much energy</a> as incandescent light bulbs. They also last much longer, with a lifetime of around 25,000 hours. </p>
<h2>Climate models, radiation and beyond</h2>
<p>Environmental endeavours are probably not what springs to mind when you think of the Nobel Prize in Physics. Yet another example also comes to mind, the study of a chaotic and complex system with great importance to us all: Earth’s climate.</p>
<p>Half of the 2021 Nobel Prize in Physics was given to Syukuro Manabe and Klaus Hasselmann, scientists who developed <a href="https://www.nobelprize.org/prizes/physics/2021/summary/">early models for Earth’s weather and climate</a>. Their work also linked global warming to human activity.</p>
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<img alt="A black and white photograph portrait of a woman." src="https://images.theconversation.com/files/551275/original/file-20231001-17-ef6emp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/551275/original/file-20231001-17-ef6emp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=815&fit=crop&dpr=1 600w, https://images.theconversation.com/files/551275/original/file-20231001-17-ef6emp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=815&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/551275/original/file-20231001-17-ef6emp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=815&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/551275/original/file-20231001-17-ef6emp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1025&fit=crop&dpr=1 754w, https://images.theconversation.com/files/551275/original/file-20231001-17-ef6emp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1025&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/551275/original/file-20231001-17-ef6emp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1025&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Marie Curie was awarded the Nobel Prize in Physics in 1903 for her work on radioactivity.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Marie_Curie#/media/File:Marie_Curie_c._1920s.jpg">Wikimedia</a></span>
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<p>Of the 222 people awarded the physics Nobel since 1901, <a href="https://theconversation.com/and-then-there-were-three-finally-another-woman-awarded-a-nobel-prize-in-physics-104323">only three have been women</a>. The most famous of those three is perhaps Marie Curie, who took home one quarter of the prize in 1903. </p>
<p>Curie’s work on understanding how atoms can decay into other kinds of atoms, producing nuclear radiation, profoundly changed life in the twentieth century.</p>
<p>The study of nuclear radiation led to the development of nuclear weapons, but also to radiation treatment for cancer. And further, it has led to carbon dating to determine the age of artefacts, allowing us to better understand <a href="https://www.ansto.gov.au/news/radiocarbon-dating-supports-aboriginal-occupation-of-south-australia-for-29000-years">ancient civilisations</a>. </p>
<p>So when we find out who is awarded the 2023 Nobel Prize in Physics, no matter what it’s for – and prospects include research on quantum computing, “slow light” and “self-assembling matter” – we can be sure of one thing. The awarded research will likely end up affecting our lives in extraordinary ways that may not at first be apparent.</p><img src="https://counter.theconversation.com/content/208859/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Karen Livesey does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The science that wins the Nobel Prize in Physics each year can be hard to get your head around – but it often has real everyday implications.Karen Livesey, Senior Lecturer of Physics, University of NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2094612023-07-21T13:54:00Z2023-07-21T13:54:00ZHere’s how China is responding to US sanctions – with blocking laws and other countermeasures<figure><img src="https://images.theconversation.com/files/538636/original/file-20230720-29-6r6648.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">U.S. sanctions have further strained relations between the two superpowers.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/cargo-containers-with-chinese-and-united-states-royalty-free-image/943639230">narvikk/iStock/Getty Images Plus</a></span></figcaption></figure><p>After a recent meeting between U.S. Treasury Secretary Janet Yellen and officials in Beijing, China released a statement <a href="https://www.reuters.com/world/china-urges-practical-us-action-sanctions-after-yellen-talks-2023-07-10/#:%7E:text=BEIJING%2C%20July%2010%20(Reuters),with%20senior%20officials%20in%20Beijing.">demanding “practical action”</a> over the issue of sanctions. The implication was that the punitive measures – imposed by the U.S. government on <a href="https://www.forbes.com/sites/anthonytellez/2023/02/08/here-are-all-the-us-sanctions-against-china/?sh=37ae897115b4">hundreds of Chinese individuals and entities</a> over the past few years – impede any alleviation of the strained relations between the two economic giants.</p>
<p>The statement followed a <a href="https://www.nbcnews.com/news/world/china-rejects-meeting-defense-chiefs-lloyd-austin-li-shangfu-rcna86732">testy encounter in May 2023</a> in which Chinese Defense Minister Li Shangfu refused to meet his American counterpart because of sanctions. Clearly, the economic measures are hurting China – prompting not only tough words but also countermeasures to limit their impact.</p>
<p>As a professor of law and an <a href="https://scholar.google.ae/citations?user=PSk6YAUAAAAJ&hl=en">expert on international trade</a>, I study both how the U.S. sanctions China and how China attempts to counter these sanctions. I also analyze whether China’s countermeasures are working.</p>
<h2>How sanctions work</h2>
<p>Economic sanctions are considered an important <a href="https://www.gao.gov/assets/nsiad-92-106.pdf">foreign policy tool</a> that can be used to influence and change the behavior of countries. </p>
<p>The sanctions on China have been imposed for a myriad of reasons, including as punishment for <a href="https://home.treasury.gov/news/press-releases/jy0070">human rights abuses</a>, <a href="https://www.cnbc.com/2023/02/10/us-sanctions-six-chinese-tech-companies-for-supporting-spy-balloon-programs.html">espionage activities</a> and <a href="https://apnews.com/article/china-russia-us-ukraine-sanctions-59fa76b79b69b7489039b4d0ee5dd14b">supporting Russia’s war efforts in Ukraine</a>. Some sanctions are intended to restrict China’s technological capabilities by <a href="https://carnegieendowment.org/2022/10/27/biden-s-unprecedented-semiconductor-bet-pub-88270">limiting access to key tech suppliers</a>.</p>
<p>To be successful, the sanctioning country must have the economic clout to inflict economic damage on the other country and thus force change. </p>
<p>In the case of China, sanctions have harmed <a href="https://www.imf.org/en/Blogs/Articles/2019/05/23/blog-the-impact-of-us-china-trade-tensions">producers and consumers</a> in both countries. They have also benefited certain third countries – for example, through <a href="https://unctad.org/publication/trade-and-trade-diversion-effects-united-states-tariffs-china">trade diversion</a> that replaces Chinese exporters with suppliers from other countries.</p>
<p>Traditionally, sanctions have targeted entire countries. For example, since February 2022 the U.S. has imposed <a href="https://home.treasury.gov/news/press-releases">sweeping sanctions against Russia</a> for its invasion of Ukraine. In addition, the U.S. has imposed <a href="https://www.state.gov/cuba-sanctions/">multiple sanctions against Cuba</a> over the past 65 years in a failed attempt to force regime change.</p>
<p>Economic sanctions can be primary or secondary. With <a href="https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=5792&context=flr">primary sanctions</a>, the U.S., for example, forbids imports of any product from the country being sanctioned. Primary sanctions also bar all U.S. companies from doing any business with the country or entities within it. </p>
<p>In <a href="https://www.cnas.org/publications/reports/sanctions-by-the-numbers-u-s-secondary-sanctions">secondary sanctions</a>, the U.S. refuses to engage in business with any company that has a business relationship with the country being sanctioned. In its most extreme form, <a href="https://ustr.gov/sites/default/files/2013%20NTE%20Arab%20League%20Final.pdf">these sanctions also prohibit</a> conducting business with a company that has a relationship with another company that in turn has a relationship with the sanctioned country.</p>
<h2>Targeting individuals and businesses</h2>
<p>In recent years, U.S. sanctions against China have become more targeted against specific individuals, products and companies. For example, the Office of Foreign Assets Control of the Treasury Department publishes a <a href="https://ofac.treasury.gov/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists">list of Specially Designated Nationals</a> against which sanctions apply. Individuals and businesses on the list have their assets blocked, and U.S. citizens are prohibited from dealing with them. There are <a href="https://www.treasury.gov/ofac/downloads/ctrylst.txt">hundreds of Chinese individuals and businesses</a> on the list, including <a href="https://www.reuters.com/world/asia-pacific/us-sanctions-seven-chinese-individuals-over-hong-kong-crackdown-2021-07-16/">officials in China’s Hong Kong liaison office</a> and major corporations such as <a href="https://www.steptoeinternationalcomplianceblog.com/2020/12/ofac-adds-chinese-tech-company-ceiec-to-sdn-list-issues-general-license-38-authorizing-wind-down-activities/">China National Electronic Import-Export Company</a>. </p>
<p>Also, the U.S. Commerce Department, through its Bureau of Industry, <a href="https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file">implemented export controls</a> in October 2022 on certain exports to China, such as advanced computing equipment and semiconductor parts. These export controls were put in place because of concerns over <a href="https://www.csis.org/analysis/choking-chinas-access-future-ai">China’s defense modernization</a>.</p>
<p>In response to the secondary sanctions and the <a href="https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=1151&context=jil">complex enforcement and compliance issues</a> they create for governments and businesses alike, the <a href="https://finance.ec.europa.eu/eu-and-world/open-strategic-autonomy/extraterritoriality-blocking-statute_en">European Union</a> and countries including <a href="https://laws-lois.justice.gc.ca/eng/acts/f-29/page-1.html">Canada</a> and the <a href="https://www.gov.uk/guidance/protection-of-trading-interests">U.K.</a> have enacted what are called blocking statutes. Blocking statutes typically allow an individual or business to not comply with U.S. laws and require individuals and businesses to notify authorities about any U.S. sanction enforcement measures.</p>
<figure class="align-center ">
<img alt="Pedestrian walks past a Huawei store and billboard" src="https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Chinese telecom giant Huawei reported a decline in revenue due to U.S. sanctions.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/pedestrians-pass-a-sign-of-huawei-mobile-phone-in-yichang-news-photo/1246320157">CFOTO/Future Publishing via Getty Images</a></span>
</figcaption>
</figure>
<h2>China’s countermeasures</h2>
<p>The Chinese government has taken several countermeasures to retaliate against U.S. sanctions in recent years. </p>
<p>In 2020, the Ministry of Commerce in China issued the <a href="http://english.mofcom.gov.cn/article/policyrelease/questions/202009/20200903002580.shtml">Unreliable Entity List</a>. A person or company is designated as “unreliable” if Chinese authorities deem them to be harming national security or development interests of China or applying discriminatory measures against a Chinese entity. Punitive measures – such as trade and investment restrictions and fines – may be imposed on them for conduct that is contrary to China’s national interests. So far, <a href="https://sanctionsnews.bakermckenzie.com/china-added-two-us-companies-to-the-unreliable-entities-list/">two U.S. aerospace and defense companies</a> have been listed as unreliable entities.</p>
<p>In addition, in 2021 the Chinese Ministry of Commerce issued the <a href="http://english.mofcom.gov.cn/article/policyrelease/questions/202101/20210103029708.shtml">Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures</a>. A Chinese blocking statute, the rules require any Chinese citizen, business or other organization that is restricted or prohibited by U.S. sanctions from engaging in normal economic activities with a third nonsanctioning country to report such matters to the Chinese authorities. </p>
<p>China also enacted the <a href="https://oxfordpoliticalreview.com/2022/08/30/china-should-not-over-rely-on-its-anti-foreign-sanctions-law/">Anti-Foreign Sanctions Law</a> in 2021. This law authorizes China to take action – such as restrictions on visas and who can enter or exit the country – when a foreign country adopts what China sees as discriminatory measures against any Chinese citizen or organization. In addition, censured individuals or businesses can be slapped with a freezing of assets and prevented from doing business in China. Also, a Chinese individual or business can bring a case before Chinese courts and ask for an injunction from or damages for having to comply with foreign sanctions. </p>
<p>Unfortunately, the effectiveness of these countermeasures is unclear. There are no available statistics to determine whether they have mitigated the impact of U.S. sanctions. </p>
<h2>Caught in the middle</h2>
<p>The U.S. and China are <a href="https://www.belfercenter.org/sites/default/files/files/publication/GreatEconomicRivalry_Final_2.pdf">economic superpowers</a>. Imposing sanctions and countersanctions can <a href="https://www.piie.com/blogs/trade-and-investment-policy-watch/coming-clash-over-hong-kong-sanctions">make it difficult</a> for any foreign country or company that wants to do business in both countries. It is, in effect, asking them to pick sides.</p>
<p>Some individuals and companies within both China and the U.S. may opt to adopt a pragmatic approach to the sanctions and continue to do business either directly or indirectly. But by doing so they risk being fined by U.S. authorities. </p>
<p>Or, they may try to circumvent these sanctions and countersanctions by working with businesses in other countries instead, or find different ways to <a href="https://foreignpolicy.com/2023/06/21/china-united-states-semiconductor-chips-sanctions-evasion/">inoculate themselves from the effects of sanctions</a>. Both the U.S. and China are likely to not push sanctions too hard, so as not to engage in a full-blown trade war.</p>
<p>Workarounds for businesses that trade with both the U.S. and China are critical when the sanctioning country – typically the U.S. – has a monopoly over the particular goods or technology in question. For example, there is no short-term fix for Chinese telecom giant Huawei when the U.S. denies it access to critical semiconductors, since <a href="https://thediplomat.com/2022/07/bidens-uphill-battle-to-restructure-the-global-semiconductor-sector/">the U.S. has a monopoly on semiconductors</a>. Eventually, semiconductors will be produced in China, but not for several years. In the meantime, <a href="https://www.nytimes.com/2023/03/31/business/huawei-annual-earnings-2022.html">Huawei has seen a decline in revenue</a> and shifted money toward more research and development.</p>
<p>The <a href="https://www.cnbc.com/2021/04/26/huawei-focuses-on-software-as-us-sanctions-hurt-hardware-business.html">experience of Huawei</a> underscores why Beijing is eager to find a way to counter U.S. sanctions. It seems that at least for now China has settled on a policy of blocking tactics at home while upping rhetoric on the international stage.</p><img src="https://counter.theconversation.com/content/209461/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bashar Malkawi does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>China has responded to US sanctions with its own set of punitive measures. An expert on international trade explains the standoff and what it means for countries and companies caught in the middle.Bashar Malkawi, Professor of Law, University of ArizonaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2091562023-07-07T14:44:47Z2023-07-07T14:44:47ZChina’s gallium and germanium controls: what they mean and what could happen next<p>From August, China is to <a href="https://www.bbc.co.uk/news/business-66093114">restrict exports</a> of gallium and germanium, two critical elements for making semiconductor chips. With China dominating the supply of both elements, exporters will now need special licences to get them out of the country. The move has the potential to harm a range of western tech manufacturers that use these elements to make their products. </p>
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<p>The move is <a href="https://edition.cnn.com/2023/03/08/tech/dutch-china-chips-ban-hnk-intl/index.html">reportedly in response</a> to western restrictions of equipment vital for making semiconductor devices (and <a href="https://theconversation.com/clampdown-on-chip-exports-is-the-most-consequential-us-move-against-china-yet-192738">was forewarned</a> in an previous article in The Conversation). Above all, the <a href="https://www.mckinsey.com/industries/public-sector/our-insights/the-chips-and-science-act-heres-whats-in-it">US CHIPS and Science Act</a> of 2022 curtailed exports of high-end microchips and technology to China, potentially affecting Beijing’s capacity for high-performance computing in areas such as defence. <a href="https://www.bbc.co.uk/news/business-66093114">Other nations</a> such as Japan and the Netherlands have also imposed restrictions. </p>
<p>So how important are the new Chinese restrictions and what are the implications likely to be?</p>
<h2>The importance of gallium and germanium</h2>
<p>Silicon is the most widely used material in semiconductors, and is very abundant. But germanium and gallium have specific properties that are hard to replicate and lend themselves to <a href="https://foreignpolicy.com/2023/07/06/china-tech-us-metal-export-yellen-gallium-germanium/">certain niche applications</a>. These get incorporated into countless devices such as smartphones, laptops, solar panels and medical equipment, as well as defence applications. </p>
<p>Both elements are also crucial to technological advancement over the next few years. Germanium is particularly useful in space technologies such as solar cells because it is <a href="https://www.umicore.com/en/newsroom/powering-up-space-stations-with-germanium/#:%7E:text=Since%20germanium%20is%20more%20resistant,from%2015%20to%2020%20years.">more resistant</a> to cosmic radiation than silicon. With the physical limits of silicon being approached in some technologies, increased use of germanium <a href="https://theconversation.com/with-silicon-pushed-to-its-limits-what-will-power-the-next-electronics-revolution-46287">is mooted</a> as a way of overcoming these limits. <a href="https://theconversation.com/with-silicon-pushed-to-its-limits-what-will-power-the-next-electronics-revolution-46287">It is already used</a> in small quantities in some semiconductors to improve things like electron flow and thermal conductivity. </p>
<p>As for gallium, 95% of it is used in a material called gallium arsenide, which is used in semiconductors with higher performance and lower power-consumption applications than silicon. These are <a href="https://think.ing.com/articles/china-strikes-back-in-the-tech-war-restricting-exports-of-gallium-and-germanium/#:%7E:text=About%2095%25%20of%20all%20gallium,pressure%20sensors%20for%20touch%20switches.">used in things</a> like blue and violet LEDs and microwave devices.</p>
<p>Meanwhile, gallium nitride is used in semiconductors in components for things like electric vehicles, sensors, high-end radio communications, LEDs and Blu-Ray players. Its use <a href="https://www.grandviewresearch.com/industry-analysis/gan-gallium-nitride-semiconductor-devices-market">is expected</a> to grow significantly.</p>
<p>Both gallium and germanium are on the <a href="https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials_en">European Union</a> and <a href="https://www.usgs.gov/news/national-news-release/us-geological-survey-releases-2022-list-critical-minerals">US lists</a> of critical elements. The <a href="https://www.gov.uk/government/publications/uk-critical-mineral-strategy/resilience-for-the-future-the-uks-critical-minerals-strategy">UK considers</a> gallium to be critical to its manufacturing interests, though <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1097298/resilience_for_the_future_the_uks_critical_minerals_strategy.pdf">sees germanium</a> as less important. </p>
<h2>Where they come from</h2>
<p>China controls about <a href="https://www.reuters.com/markets/commodities/where-are-strategic-materials-germanium-gallium-produced-2023-07-04/">60% of</a> all germanium supplies. The element is derived in two main ways, as a by-product of zinc production and from coal. These respectively account for <a href="https://www.crmalliance.eu/germanium">about 75%</a> and <a href="https://www.crmalliance.eu/germanium">25% of</a> the total supply. China dominates germanium that comes from zinc production. The US is one of the alternative suppliers, with deposits in Alaska and Tennessee and additional refining capacity in Canada. But as it stands, the US is still <a href="https://pubs.usgs.gov/periodicals/mcs2023/mcs2023-germanium.pdf">over 50% reliant</a> on imported germanium. </p>
<p>Germanium from coal has several drawbacks. Two of the main producers are Russia and Ukraine, and the war <a href="https://americanaffairsjournal.org/2022/08/russia-ukraine-and-the-critical-materials-energy-nexus/">has affected</a> supplies to the west from both countries. In the years 2017-20, <a href="https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-germanium.pdf">Russia was supplying 9%</a> of the US germanium requirement, for instance, but this is now likely to have stopped. In response to the Chinese restrictions, Russia plans to <a href="https://www.reuters.com/article/russia-metals/update-1-russias-rostec-says-ready-to-boost-germanium-output-for-domestic-market-idINL1N38R15L">increase germanium production</a> for its domestic market. This may at least alleviate global demand, even if it won’t help the west directly. </p>
<p>Germanium from coal is also <a href="https://www.waferworld.com/post/modern-sources-of-germanium">at the mercy</a> of the power industry, since <a href="https://www.sciencedirect.com/science/article/pii/S1383586621006912?casa_token=t-zP7ZH26V8AAAAA:4RGyCuDjClhRHikBL7S-ytHbfTAXik_QBXc-LYXItLrCdSSsJ-9WqVlj_CD3T4OGY3pnojnWY_8">certain coals</a> rich in the element are burned as an energy source. In addition, germanium from coal will become more difficult as much of the world seeks to <a href="https://theconversation.com/winds-of-change-britain-now-generates-twice-as-much-electricity-from-wind-as-coal-89598">phase out coal power</a>, which again could tighten supplies. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/536314/original/file-20230707-15-c9ygua.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="An open coal pit" src="https://images.theconversation.com/files/536314/original/file-20230707-15-c9ygua.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/536314/original/file-20230707-15-c9ygua.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/536314/original/file-20230707-15-c9ygua.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/536314/original/file-20230707-15-c9ygua.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/536314/original/file-20230707-15-c9ygua.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/536314/original/file-20230707-15-c9ygua.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/536314/original/file-20230707-15-c9ygua.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Germanium from coal has an uncertain future.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/coal-mining-open-pit-637050169">Mark Agnor</a></span>
</figcaption>
</figure>
<p>With gallium, China accounts for around <a href="https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-gallium.pdf">80% of</a> the world supply, deriving it mainly from aluminium production. There’s actually no shortage of gallium, but even before the new controls, the supply was restricted by a lack of <a href="https://www.sciencedirect.com/science/article/pii/S0301420715001233?casa_token=7Rbj3TAQXzUAAAAA:DdHBJgDqiIbNqTy4TpfkQsJWaUAhmqbJm6mPcpDpX2IhVGJ-K-sYZXCztaPxetQ-BmmiBwaIxaU">production capacity</a>.</p>
<p>Gallium is also obtained by recycling <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/9781118755341.ch7">semiconductor wafers</a>, which are thin slices of semiconductor used in electronic circuits. But once the circuits are integrated into products, the quantities of gallium in each one are so small that it becomes challenging to recycle. A <a href="https://www.nature.com/articles/s41467-021-27829-w">Nature Communications paper in 2022</a> noted that gallium is “almost never functionally recycled” once it reaches final products.</p>
<h2>The implications</h2>
<p>The full impact of China’s new export regime depend on a number of factors, including the severity of the controls in practice, and the response of western governments and companies. As it stands, the controls look likely to lead to higher prices for gallium and germanium, as well as longer delivery times. </p>
<p>This could make it more expensive and difficult for western companies to produce electronic devices, which could in turn lead to higher prices for consumers. It could also make it more difficult for western companies to compete with Chinese companies. In an echo of how the global microchip shortage during the COVID pandemic considerably <a href="https://theconversation.com/yes-the-global-microchip-shortage-is-covids-fault-no-it-wont-end-any-time-soon-161903">affected tech manufacturing</a>, this points to a significant impact on the global economy. </p>
<p>The long-term effects of the controls are difficult to predict because so many factors are involved. Stockpiles of the elements should help to some extent: the <a href="https://www.jpost.com/international/article-749129">US has said</a> it holds inventory of germanium, though not gallium. </p>
<p>Western manufacturers may be forced to diversify their supply chains by obtaining components containing the elements from countries to which China is willing to export. This could lead to increased costs and complexity. </p>
<p>Another avenue is to increase production from alternative sources. In the past, germanium has been derived from minerals mined in <a href="https://www.waferworld.com/post/modern-sources-of-germanium">Germany, Latin America and Africa</a>, so these options may come back on the table. There is also the potential to invest in researching devices that are less reliant on these critical materials, but that would take time to bear fruit.</p>
<p>Clearly, the move is a significant escalation in the tech war between China and the west. The concern is that it could go further: China dominates the <a href="https://finance.yahoo.com/news/eu-pushing-china-narrow-scope-171751697.html?guccounter=2">supply of</a> a whole range of vital materials known as <a href="https://theconversation.com/boris-johnson-promises-a-uk-offshore-wind-revolution-but-china-holds-the-monopoly-on-vital-rare-earth-metals-147645">rare earth metals</a>, as well as other materials which <a href="https://www.visualcapitalist.com/chinas-dominance-in-clean-energy-metals/">are required</a> for the clean energy transition. Even before the escalation in hostilities over the past couple of years, <a href="https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds431_e.htm">China had used</a> its dominance over certain materials as leverage in trade disputes. </p>
<p>So this latest development is concerning to say the least. At a time when the <a href="https://theconversation.com/why-are-so-many-climate-records-breaking-all-at-once-209214">international challenges</a> faced by humanity are greater than ever, the emergence of a new resource nationalism is the last thing anyone needed.</p><img src="https://counter.theconversation.com/content/209156/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gavin Harper receives funding from the UKRI Interdisciplinary Circular Economy Centre for Technology Metals (Met4Tech) Grant EP/V011855/1, The Faraday Institution ReLIB Project Grant FIRG0027 and EPSRC: Thermal Recovery of Functional Coatings (TReFCo) Grant EP/W019167/1. </span></em></p>Welcome to the new age of resource nationalism.Gavin D. J. Harper, Research Fellow, Birmingham Centre for Strategic Elements & Critical Materials, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2058202023-06-27T12:23:57Z2023-06-27T12:23:57ZThe digital future may rely on ultrafast optical electronics and computers<figure><img src="https://images.theconversation.com/files/532461/original/file-20230616-23761-r0m0kq.jpeg?ixlib=rb-1.1.0&rect=38%2C15%2C1683%2C1239&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The author's lab's ultrafast optical switch in action.</span> <span class="attribution"><span class="source">Mohammed Hassan, University of Arizona</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>If you’ve ever wished you had a faster phone, computer or internet connection, you’ve encountered the personal experience of hitting a limit of technology. But there might be help on the way.</p>
<p>Over the past several decades, scientists and engineers <a href="https://scholar.google.com/citations?user=JA0qsY0AAAAJ&hl=en&oi=ao">like me</a> have worked to develop faster transistors, the electronic components underlying modern electronic and digital communications technologies. These efforts have been based on a category of materials called semiconductors that have special electrical properties. <a href="https://doi.org/10.1038/483S43a">Silicon</a> is perhaps the best known example of this type of material. </p>
<p>But about a decade ago, scientific efforts hit the speed limit of semiconductor-based transistors. Researchers simply can’t make electrons move faster through these materials. One way engineers are trying to address the speed limits inherent in moving a current through silicon is to design shorter physical circuits – essentially giving electrons less distance to travel. Increasing the computing power of a chip comes down to increasing the number of transistors. However, even if researchers are able to get transistors to be very small, they won’t be fast enough for the faster processing and data transfer speeds people and businesses will need.</p>
<p>My <a href="https://hassan.lab.arizona.edu">research group’s work</a> aims to develop faster ways to move data, using ultrafast laser pulses in free space and optical fiber. The laser light travels through optical fiber with almost no loss and with a very low level of noise.</p>
<p>In our most recent study, published in February 2023 in Science Advances, we took a step toward that, demonstrating that it’s possible to use <a href="https://doi.org/10.1126/sciadv.adf1015">laser-based systems</a> equipped with optical transistors, which depend on photons rather than voltage to move electrons, and to transfer information much more quickly than current systems – and do so more effectively than <a href="https://doi.org/10.1038/s41586-021-03866-9">previously reported optical switches</a>.</p>
<h2>Ultrafast optical transistors</h2>
<p>At their most fundamental level, digital transmissions involve a signal switching on and off to represent ones and zeros. Electronic transistors use voltage to send this signal: When the voltage induces the electrons to flow through the system, they signal a 1; when there are no electrons flowing, that signals a 0. This requires a source to emit the electrons and a receiver to detect them. </p>
<p>Our system of ultrafast optical data transmission is based on light rather than voltage. Our research group is one of many working with optical communication at the transistor level – the building blocks of modern processors – to get around the current limitations with silicon. </p>
<p>Our system controls reflected light to transmit information. When light shines on a piece of glass, most of it passes through, though a little bit might reflect. That is what you experience as glare when driving toward sunlight or looking through a window.</p>
<p>We use two laser beams transmitted from two sources passing through the same piece of glass. One beam is constant, but its transmission through the glass is controlled by the second beam. By using the second beam to shift the properties of the glass from transparent to reflective, we can start and stop the transmission of the constant beam, switching the optical signal from on to off and back again very quickly. </p>
<p>With this method, we can switch the glass properties much more quickly than current systems can send electrons. So we can send many more on and off signals – zeros and ones – in less time.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/534180/original/file-20230626-1803-19w9pt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="a hand holds a bundle of optical fibers between thumb and first finger" src="https://images.theconversation.com/files/534180/original/file-20230626-1803-19w9pt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/534180/original/file-20230626-1803-19w9pt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=441&fit=crop&dpr=1 600w, https://images.theconversation.com/files/534180/original/file-20230626-1803-19w9pt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=441&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/534180/original/file-20230626-1803-19w9pt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=441&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/534180/original/file-20230626-1803-19w9pt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=554&fit=crop&dpr=1 754w, https://images.theconversation.com/files/534180/original/file-20230626-1803-19w9pt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=554&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/534180/original/file-20230626-1803-19w9pt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=554&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The author’s research group has developed a way to switch light beams on and off, like those passing through these optical fibers, 1 million billion times a second.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/bundle-of-light-wave-cables-fibre-optic-news-photo/976186008">Mediacolors/Construction Photography/Avalon via Getty Images</a></span>
</figcaption>
</figure>
<h2>How fast are we talking?</h2>
<p>Our study took the first step to transmitting data 1 million times faster than if we had used the typical electronics. With electrons, the maximum speed for transmitting data is a <a href="https://www.wolframalpha.com/input?i=nanosecond">nanosecond</a>, one-billionth of a second, which is very fast. But the optical switch we constructed was able to transmit data a million times faster, which took just a few hundred <a href="https://www.wolframalpha.com/input?i=attosecond">attoseconds</a>.</p>
<p>We were also able to transmit those signals securely so that an attacker who tried to intercept or modify the messages would fail or be detected. </p>
<p>Using a laser beam to carry a signal, and adjusting its signal intensity with glass controlled by another laser beam, means the information can travel not only more quickly but also much greater distances. </p>
<p>For instance, the James Webb Space Telescope recently transmitted <a href="https://theconversation.com/james-webb-space-telescope-an-astronomer-explains-the-stunning-newly-released-first-images-186800">stunning images from far out in space</a>. These pictures were transferred as data from the telescope to the base station on Earth at a rate of one “on” or “off” <a href="https://webbtelescope.org/quick-facts">every 35 nanosconds</a> using optical communications.</p>
<p>A laser system like the one we’re developing could speed up the transfer rate a billionfold, allowing faster and clearer exploration of deep space, more quickly revealing the universe’s secrets. And someday computers themselves might run on light.</p><img src="https://counter.theconversation.com/content/205820/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mohammed Hassan receives funding from the Gordon and Betty Moore Foundation and the Air Force Office of Scientific Research.</span></em></p>A researcher explains developments in using light rather than electrons to transmit information securely and quickly, even over long distances.Mohammed Hassan, Associate Professor of Physics and Optical Sciences, University of ArizonaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2063352023-06-09T15:53:31Z2023-06-09T15:53:31ZThe microchip industry would implode if China invaded Taiwan, and it would affect everyone<figure><img src="https://images.theconversation.com/files/530810/original/file-20230608-27-1qwpg.jpg?ixlib=rb-1.1.0&rect=17%2C8%2C5734%2C3224&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Taiwan holds a dominant position in the microchip industry and also makes the most advanced types.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/ultra-modern-electronic-manufacturing-factory-design-684989755">Gorodenkoff / Shutterstock</a></span></figcaption></figure><p>A conflict between the US and China over computer chips – or semiconductors – has been <a href="https://www.eastasiaforum.org/2022/12/24/beijing-washington-and-the-art-of-chip-war/">escalating in recent months</a>. In particular, the US has taken steps to limit China’s access to advanced chip technology amid heightened international competition in the area.</p>
<p>The US recently <a href="https://www.eastasiaforum.org/2023/04/25/us-deals-signal-heightened-semiconductor-equipment-competition/">tightened export controls</a> to undercut China’s access to high-end chip manufacturing equipment and has <a href="https://www.bloomberg.com/news/articles/2022-10-17/ban-on-us-persons-at-china-chip-firms-thwarts-xi-s-key-ambition#xj4y7vzkg">banned top talent</a> from working for Chinese semiconductor firms. <a href="https://www.scmp.com/economy/article/3222936/global-impact-washingtons-chip-restrictions-grow-longer-day-why-china-adding-list">Beijing retaliated</a> by banning US chip maker Micron from operating in China.</p>
<p>Taiwan plays a critical role in this struggle. It has a huge share of the global semiconductor industry, but is also the focus of tensions between Beijing and Washington over its political status. </p>
<p>For all practical purposes, Taiwan has been independent since 1949, but Beijing believes it should be reunited with the rest of China – possibly <a href="https://www.theguardian.com/world/2019/jan/02/all-necessary-means-xi-jinping-reserves-right-to-use-force-against-taiwan">by force</a>. In April 2023, China conducted <a href="https://apnews.com/article/china-taiwan-us-mccarthy-military-exercises-992440661295869bc2b02455093cf4d2">extensive military drills</a> near Taiwan, simulating <a href="https://www.bbc.co.uk/news/world-asia-65219219">an encirclement</a> of the island.</p>
<p>So, what might happen to the chip industry were China to invade? </p>
<p><a href="https://en.wikipedia.org/wiki/Taiwan_Relations_Act#:%7E:text=The%20TRA%20requires%20the%20United,of%20the%20people%20on%20Taiwan.%22">A US act passed in 1979</a> requires Washington to help defend Taiwan. Providing for the island’s security also fits with wider US objectives <a href="https://www.congress.gov/bill/116th-congress/senate-bill/1459?s=1&r=7">on technology</a> and <a href="https://home.treasury.gov/news/press-releases/jy1425">economic security</a>. US politicians have not minced their words in affirming that a Chinese invasion would be met with a swift military response. </p>
<p>A Democratic congressman from Massachusetts, Seth Moulton, recently quipped that if China invades, “<a href="https://asia.nikkei.com/Opinion/TSMC-s-fate-will-indeed-be-at-stake-if-China-attacks-Taiwan">We’re going to blow up TSMC</a>” – this being the acronym for Taiwan Semiconductor Manufacturing Company, the world’s most valuable semiconductor company. Congressman Moulton later clarified that he had been discussing several options for conveying the enormous costs of invading Taiwan to Beijing.</p>
<p>Because of Taiwan’s dominant position in the chip industry, its economy has been described as the <a href="https://www.ft.com/products?location=https%3A%2F%2F%2Ftaiwan-economy%2F">the “most indispensable”</a> in the world. And TSMC is the cornerstone of what’s been described as <a href="https://www.scmp.com/comment/opinion/article/3222471/how-us-china-chip-war-dismantling-taiwans-silicon-shield">Taiwan’s “silicon shield”</a> – the idea that an outsize global reliance on its microchips protects it from invasion by China.</p>
<figure class="align-center ">
<img alt="Morris Chang" src="https://images.theconversation.com/files/530882/original/file-20230608-20-zhwk32.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/530882/original/file-20230608-20-zhwk32.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/530882/original/file-20230608-20-zhwk32.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/530882/original/file-20230608-20-zhwk32.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/530882/original/file-20230608-20-zhwk32.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/530882/original/file-20230608-20-zhwk32.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/530882/original/file-20230608-20-zhwk32.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">TSMC founder Morris Chang is sometimes described as a ‘godfather’ of Taiwan’s industry.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/hsinchu-taiwan-jun-5-2017-tsmc-653813449">glen photo / Shutterstock</a></span>
</figcaption>
</figure>
<h2>Critical technology</h2>
<p>The author Chris Miller tells the story of how Taiwan reached this dominant position <a href="https://www.christophermiller.net/semiconductors-1">in his book Chip War</a>. It turns out to have been largely the result of strategic geopolitics and the <a href="https://asiatimes.com/2022/09/asia-tech-godfathers-to-decide-us-chips-fate/">individual leadership of several chip industry “godfathers”</a>, including Morris Chang, the founder of TSMC.</p>
<p>Semiconductors are produced by a remarkably global supply chain, with design often stemming from US, Japanese or European firms, and manufacturing taking place in Taiwan and South Korea. However, Taiwan alone <a href="https://www.economist.com/special-report/2023/03/06/taiwans-dominance-of-the-chip-industry-makes-it-more-important">manufactures more than 60% of the world’s semiconductors</a> -— and crucially, 90% of the most advanced ones.</p>
<p>There are fears the silicon shield might not hold forever, and an invasion by China would threaten the global economy with implosion. However, if TSMC were to build new manufacturing facilities elsewhere it would reduce the world’s reliance on Taiwan for chip production. <a href="https://www.eastasiaforum.org/2022/09/28/washington-shores-up-friends-in-the-semiconductor-industry/">A practice called “friendshoring”</a> could concentrate manufacturing and the sourcing of materials outside Taiwan in countries friendly to the US. This would reduce risks to the US and its partners from an invasion.</p>
<figure class="align-center ">
<img alt="Aerial view of Taipei financial district." src="https://images.theconversation.com/files/531081/original/file-20230609-19-ohn2oi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/531081/original/file-20230609-19-ohn2oi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=449&fit=crop&dpr=1 600w, https://images.theconversation.com/files/531081/original/file-20230609-19-ohn2oi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=449&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/531081/original/file-20230609-19-ohn2oi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=449&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/531081/original/file-20230609-19-ohn2oi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/531081/original/file-20230609-19-ohn2oi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/531081/original/file-20230609-19-ohn2oi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Silicon Shield was intended to deter an invasion of Taiwan.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/aerial-view-cars-trains-intersection-junction-1457094053">Tavarius / Shutterstock</a></span>
</figcaption>
</figure>
<p>However, such a shift would take years to complete and would be challenging to implement. In 2021, TSMC announced its plan to build a multi-billion-dollar facility in Arizona. But the plant will only be ready from 2025 at the earliest, and will probably not be capable of producing chips at what will by then be the technological frontier in terms of scale.</p>
<p>Generally speaking, the smaller the chip, the more transistors can fit on it. This enables the development of faster, more powerful electronic devices.</p>
<p>The Arizona facility is expected to produce chips at the <a href="https://www.eastasiaforum.org/2021/05/19/geopolitics-and-the-push-for-made-in-the-usa-semiconductors/">5 nanometre (nm) scale</a>, and, at some stage, <a href="https://www.ft.com/products?location=https%3A%2F%2F%2Ftaiwan-economy%2F">3nm</a>. This wouldn’t undermine Taiwan’s leadership, however, because TSMC is already working at 3nm in Taiwan and is likely to be further advanced by 2025.</p>
<p>TSMC may also face <a href="https://fortune.com/2023/06/03/tsmc-arizona-plant-jobs-salary-culture-hiring">a challenge</a> in attracting enough skilled employees to run its US operation. </p>
<h2>The chip shortage</h2>
<p>There is already a shortage of microchips, which began with the onset of COVID-19 in 2020 and has affected many industries and products. In 2021, <a href="https://www.jpmorgan.com/insights/research/supply-chain-chip-shortage">global car production slumped 26%</a> and consumer electronic product launches have been delayed largely as a result.</p>
<p>In a bid to boost chip supplies, the Biden administration and the EU have tried to improve supply chain resilience by incentivising production closer to home. The 2022 <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/">CHIPS and Science Act</a>, for instance, offers more than US$50 billion (£40 billion) for semiconductor research and development, manufacturing and workforce development in the US. </p>
<p>Yet, these policies run counter to trade war tactics. Export controls and other downward pressures on global “friends” working with Chinese firms have meant that even when TSMC is at capacity, <a href="https://www.reuters.com/technology/smic-reports-35-rise-q3-revenue-lifts-capital-expenditure-plan-2022-11-10/">additional supply cannot come from Chinese manufacturers</a>. Under current chip war conditions, low supply is likely to continue, which means <a href="https://www.forbes.com/sites/forbestechcouncil/2022/05/19/impacts-of-the-global-chip-shortage-and-how-to-prepare-as-the-backlog-stabilizes/">price increases and product delays</a>.</p>
<p>The military response to an invasion of Taiwan could see manufacturing of semiconductors on the island halted overnight. This would place marked pressure on the price of the chips manufactured outside Taiwan. The increase in chip prices would unleash massive inflation on a range of products and services, including cars, phones and healthcare equipment such as ultrasounds and vital sign monitors.</p>
<p>The reduction in semiconductor supply would also affect the very national security context that is shaping the contours of its production. A Taiwanese invasion would mean a halt to the availability of the advanced chips used in <a href="https://www.csis.org/analysis/semiconductors-and-national-defense-what-are-stakes">satellites, stealth jets, and supercomputers</a>. China’s ambition of having a <a href="https://www.scmp.com/news/china/politics/article/3107686/policy-meeting-ends-defiant-note-chinese-leadership-insists">“fully modern” military by 2027</a>, and its <a href="https://en.wikipedia.org/wiki/Made_in_China_2025">Made in China 2025 plan</a>, to boost manufacturing, both hold semiconductor capabilities at the core.</p>
<p>Having access to TSMC know-how and supplies would be pivotal for delivering on these goals. But the US commitment to defending Taiwan – if it holds – would mean the destruction of TSMC facilities on the island. The world’s cutting-edge facilities for advanced chips would be decimated.</p>
<p>We should all care about a Chinese invasion of Taiwan. The global semiconductor industry would freeze. Inflation would spiral further upwards and the post-COVID recovery would be reversed. So many of the tools we rely on would disappear from our shops for years. It would wreak enormous damage on us all —- with the Taiwanese people bearing the greatest cost.</p><img src="https://counter.theconversation.com/content/206335/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robyn Klingler-Vidra receives funding from the Chiang Ching-kuo Foundation. </span></em></p>The disruption of Taiwan’s chip industry would affect everyone.Robyn Klingler-Vidra, Associate Dean, Global Engagement | Associate Professor in Entrepreneurship and Sustainability, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2056672023-05-18T13:46:18Z2023-05-18T13:46:18ZUS laws to promote home-grown industries will hurt African economies<figure><img src="https://images.theconversation.com/files/526775/original/file-20230517-30-xpofqd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The Biden administration has ratcheted up protectionism and industrial policy amid surging <a href="https://www.bloomberg.com/news/articles/2023-05-11/top-biden-aide-meets-chinese-counterpart-in-bid-to-ease-tensions">economic tensions</a> with China. Legislation passed in 2022 unlocked hundreds of billions of dollars in subsidies to spur <a href="https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook/">domestic production</a> of renewable energy and electric vehicles, and to support other decarbonisation goals. </p>
<p>The legislation is also designed to support homegrown strategic industries such as high-end semiconductors while constraining China’s access to such technologies.</p>
<p>Having watched global trade patterns since the second world war, I’m concerned that we are now entering a new and more dangerous period. Washington’s protectionist industrial policy started with the US-China <a href="https://www.bloomberg.com/news/articles/2020-01-15/the-u-s-china-war-over-trade-and-tariffs-explained-quicktake">trade war</a> under the Trump administration. It is exacerbating economic fragmentation of the global economy fuelled by the war in Ukraine and economic sanctions imposed on Russia. It is doing so by fracturing trade and investment flows based on geopolitical considerations. As a result, global economic integration is being reversed. Over the past <a href="https://www.imf.org/en/Blogs/Articles/2022/05/22/blog-why-we-must-resist-geoeconomic-fragmentation">three decades</a>, global economic integration raised productivity growth, lifted living standards and reduced extreme poverty. </p>
<p>We can see this happening as US allies respond with inward looking protection measures of their own and align with the US to create a global supply chain less reliant on China. Cases in point are the EU, Japan and Korea.</p>
<p>This could have far-reaching negative consequences for countries in Africa. Some will be hit harder than others. For example the <a href="https://www.imf.org/-/media/Files/Publications/REO/AFR/2023/April/English/text.ashx">19 African countries</a> facing debt distress have scarcer fiscal resources to manage costs of the fallout. But nearly all will feel the impact of higher inflation due to reduced global output in a less productive world. Many will also feel the impact of a brake on regional integration efforts as importers lose ready access to competitively priced inputs needed for value addition. And fragmentation of investment flows could restrict <a href="https://www.imf.org/en/Blogs/Articles/2023/04/05/fragmenting-foreign-direct-investment-hits-emerging-economies-hardest">access to investment</a>.</p>
<p>This would have adverse impacts on growth and plans to boost green investments on the continent.</p>
<h2>US moves on protection and industrial policy</h2>
<p>Last year, the US Congress approved the <a href="https://www.commerce.gov/news/press-releases/2022/09/biden-administration-releases-implementation-strategy-50-billion-chips">Chips and Science Act</a> and the <a href="https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook/">Inflation Reduction Act</a> . They offer hundreds of billions of dollars in funding to encourage domestic production of chips and clean energy technologies. They are also aimed at barring exports of high-end semiconductors and equipment to China, and pushing allies to do the same.</p>
<p>These acts, together with the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/06/fact-sheet-the-bipartisan-infrastructure-deal/">infrastructure bill</a> Biden signed in 2021 to boost iron and steel made in the US with more federal spending, have combined to shape America’s current protectionist industrial strategy.</p>
<p>This has unsettled policy makers in Europe and Asia, where the laws are seen as unfairly benefiting American companies and moving away from free trade. They have also sparked worries that companies and investment from their regions will be lured to the US. Those worries foreshadowed German-based Volkswagen AG’s move in March <a href="https://www.bloomberg.com/news/articles/2023-03-20/vw-sees-biden-backed-support-for-ev-manufacturing-as-gold-rush#xj4y7vzkg">to build a $2 billion car factory</a> for a new electric brand in South Carolina. </p>
<p>Also, Swedish battery maker Northvolt AB has <a href="https://www.cnbc.com/2023/02/21/northvolt-earmarks-next-quarter-for-us-factory-announcement.html">stated</a> that expansion into the US market is now among its top priorities. For its part, Samsung <a href="https://www.npr.org/2021/11/24/1058770506/samsung-says-it-will-build-17b-chip-factory-in-texas">intends</a> to use chip subsidies for an advanced plant it’s building in Texas.</p>
<p>Unnerved by these moves, the EU has responded with its own massive subsidy plans to support businesses paving the way to a low-carbon economy. It also passed a <a href="https://www.bloomberg.com/news/articles/2023-04-18/eu-negotiators-strike-political-deal-on-43-billion-chips-act#xj4y7vzkg">Chips Act</a> in April to support semiconductor manufacturing within the region with billions of dollars in subsidies.</p>
<p>Other US allies are following suit. Japan’s government has negotiated a deal with Washington that allows <a href="https://www.bloomberg.com/news/articles/2023-04-27/biden-s-made-in-america-push-unnerves-us-economic-allies">critical minerals</a> shipped from its companies to qualify for US subsidies. </p>
<p>The EU is also interested in securing a similar <a href="https://www.bloomberg.com/news/articles/2023-04-27/biden-s-made-in-america-push-unnerves-us-economic-allies">deal</a>. South Korea plans to spend hundreds of billions of dollars for <a href="https://www.bloomberg.com/news/articles/2023-04-27/biden-s-made-in-america-push-unnerves-us-economic-allies">investments</a> in chips, batteries, electric vehicles and other green technologies.</p>
<p>The US-led subsidy push and export controls are fragmenting the global economy by redirecting supply chains from China. They are also alienating non-EU and Asian allies that can’t support their companies with similar subsidies.</p>
<h2>African countries will be hit hard</h2>
<p>These shifts will ultimately reduce gains that have been made in increasing integration of international goods and investment markets. These have included higher <a href="https://www.imf.org/en/Blogs/Articles/2022/05/22/blog-why-we-must-resist-geoeconomic-fragmentation">global output</a> growth, the opportunity to take advantage of new <a href="https://www.imf.org/en/Blogs/Articles/2022/05/22/blog-why-we-must-resist-geoeconomic-fragmentation">technologies and lower costs</a> for businesses and consumers. </p>
<p>This means that countries with larger economies like Nigeria, South Africa, Ethiopia and Kenya which demand more imports are likely to be hit harder by rising domestic costs and higher international prices of imported goods. These will both feed into higher inflation, to the detriment of businesses and households.</p>
<p>In another blow, regional trade integration efforts including expansion of the digital economy, infrastructure improvements, enhanced regional trade logistics and delivery of financial services will be affected by the higher cost of intermediate inputs and lack of access to new technologies. Both are critical for building regional value chains and diversifying production. </p>
<p>Also, companies in most African countries will lose out because they don’t have the backing of deep-pocketed governments able to provide huge subsidies and other incentives to exploit green investment opportunities on a scale that comes close to that of the US and its rich allies.</p>
<p>The International Monetary Fund has <a href="https://www.imf.org/en/Publications/REO/SSA/Issues/2023/04/14/regional-economic-outlook-for-sub-saharan-africa-april-2023#Geoeconomic-Fragmentation:-Sub-Saharan-Africa-Caught-between-the-Fault-Lines">flagged</a> that the continent stands to lose the most from global economic fragmentation. In a recent assessment it said that the cost to the median African country could be as high as 4% of GDP. </p>
<h2>Mitigating measures</h2>
<p>The US <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/08/fact-sheet-u-s-strategy-toward-sub-saharan-africa/">Strategy Towards Sub-Saharan Africa</a> unveiled by the Biden administration last year seems to be the ideal platform to address concerns about America’s protectionist industrial policy. That’s because its key objectives include helping Africa navigate the energy transition and enhancing US trade and investment with the continent.</p>
<p>On the basis of this strategy, Washington and African policy makers should prioritise the following:</p>
<ol>
<li><p>Forge public-private partnerships for the production and domestic processing of minerals that are key ingredients for the green energy transition. These include nickel in Tanzania, palladium and manganese in South Africa, copper in Zambia, cobalt in Congo and lithium in Zimbabwe.</p></li>
<li><p>Promote investments to build strong regional supply chains. This should include enabling Africa to take advantage of technologies like digitalisation, which can boost trade through e-commerce. </p></li>
<li><p>Capitalise on any positive effects to drive growth and diversification of trade with Africa under the <a href="https://ustr.gov/issue-areas/trade-development/preference-programs/african-growth-and-opportunity-act-agoa">African Growth and Opportunity Act</a>.</p></li>
</ol><img src="https://counter.theconversation.com/content/205667/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Munemo does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Washington’s protectionist industrial policy is fracturing trade and investment flows based on geopolitical considerations.Jonathan Munemo, Professor of Economics, Salisbury UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2046182023-04-27T05:14:11Z2023-04-27T05:14:11ZNew nanoparticle source generates high-frequency light<figure><img src="https://images.theconversation.com/files/523123/original/file-20230427-26-fls8hc.jpeg?ixlib=rb-1.1.0&rect=8%2C0%2C5982%2C3997&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>High-frequency light is useful. The higher the frequency of light, the shorter its wavelength – and the shorter the wavelength, the smaller the objects and details the light can be used to see.</p>
<p>So violet light can show you smaller details than red light, for example, because it has a shorter wavelength. But to see really, really small things – down to the scale of billionths of a metre, thousands of times less than the width of a human hair – to see those things, you need <em>extreme ultraviolet light</em> (and a good microscope).</p>
<p>Extreme ultraviolet light, with wavelengths between 10 and 120 nanometres, has many applications in medical imaging, studying biological objects, and deciphering the fine details of computer chips during their manufacture. However, producing small and affordable sources of this light has been very challenging.</p>
<p>We have found a way to make nanoparticles of a common semiconductor material emit light with a frequency up to seven times higher than the frequency of light sent to it. We generated blue-violet light from infrared light, and it will be possible to generate extreme ultraviolet light from red light with the same principles. Our research, carried out with colleagues from the University of Brescia, the University of Arizona and Korea University, is <a href="https://www.science.org/doi/10.1126/sciadv.adg2655">published in Science Advances</a>.</p>
<h2>The power of harmonics</h2>
<p>Our system starts out with an ordinary laser that produces long-wavelength infrared light. This is called the pump laser, and there’s nothing special about it – such lasers are commercially available, and they can be compact and affordable.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/523143/original/file-20230427-18-xja1n3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A diagram illustrating the setup of the light-emitting system" src="https://images.theconversation.com/files/523143/original/file-20230427-18-xja1n3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/523143/original/file-20230427-18-xja1n3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=507&fit=crop&dpr=1 600w, https://images.theconversation.com/files/523143/original/file-20230427-18-xja1n3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=507&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/523143/original/file-20230427-18-xja1n3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=507&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/523143/original/file-20230427-18-xja1n3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=637&fit=crop&dpr=1 754w, https://images.theconversation.com/files/523143/original/file-20230427-18-xja1n3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=637&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/523143/original/file-20230427-18-xja1n3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=637&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Incoming laser light hitting a nanoparticle which then emits higher frequency light.</span>
<span class="attribution"><span class="source">Zalogina et al. / Science Advances</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>But next we fire short pulses of light from this laser at a specially engineered nanoparticle of a material called aluminium gallium arsenide, and that’s where things get interesting.</p>
<p>The nanoparticle absorbs energy from the laser pulses, and then emits its own burst of light. By carefully engineering the size and shape of the nanoparticle, we can create powerful resonances to amplify certain harmonics of the emitted light.</p>
<p>What does that mean, exactly? Well, we can make a useful analogy with sound.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/523144/original/file-20230427-28-fgl3ea.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A diagram showing the first seven harmonics of a guitar string." src="https://images.theconversation.com/files/523144/original/file-20230427-28-fgl3ea.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/523144/original/file-20230427-28-fgl3ea.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=666&fit=crop&dpr=1 600w, https://images.theconversation.com/files/523144/original/file-20230427-28-fgl3ea.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=666&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/523144/original/file-20230427-28-fgl3ea.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=666&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/523144/original/file-20230427-28-fgl3ea.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=837&fit=crop&dpr=1 754w, https://images.theconversation.com/files/523144/original/file-20230427-28-fgl3ea.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=837&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/523144/original/file-20230427-28-fgl3ea.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=837&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Harmonics in a guitar string: in the fundamental frequency, the wavelength is the length of the whole string, but in the higher harmonics multiple shorter wavelengths fit within the length of the string.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Harmonic">Wikimedia / Y Landman</a></span>
</figcaption>
</figure>
<p>When you pluck a string on a guitar, it vibrates with what’s called its <em>fundamental frequency</em> – which makes the main note you hear – plus small amounts of higher frequencies called harmonics, which are multiples of the fundamental frequency. The body of the guitar is designed to produce resonances that amplify some of these harmonics and dampen others, creating the overall sound you hear.</p>
<p>Both light and sound share similarities in their physics – these are both propagating waves (acoustic waves in the case of sound, and electromagnetic waves in the case of light).</p>
<figure class="align-center ">
<img alt="A close up of a hand strumming an acoustic guitar" src="https://images.theconversation.com/files/523126/original/file-20230427-18-a14ek3.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/523126/original/file-20230427-18-a14ek3.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/523126/original/file-20230427-18-a14ek3.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/523126/original/file-20230427-18-a14ek3.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/523126/original/file-20230427-18-a14ek3.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/523126/original/file-20230427-18-a14ek3.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/523126/original/file-20230427-18-a14ek3.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Just as the body of a guitar dampens some frequencies and amplifies others, carefully designed nanoparticles can boost high-frequency harmonics of laser light.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>In our light source, the pump laser is like the main note of the string, and the nanoparticles are like the guitar body. Except what’s special about the nanoparticles is that they massively amplify those higher harmonics of the pump laser, producing light with a higher frequency (up to seven times higher in our case, and a wavelength correspondingly seven times shorter).</p>
<h2>What it’s good for</h2>
<p>This technology allows us to create new sources of light in parts of the electromagnetic spectrum such as the extreme ultraviolet, where there are no natural sources of light and where current engineered sources are too large or too expensive.</p>
<p>Conventional microscopes using visible light can only study objects down to a size of about a ten-millionth of a metre. The resolution is limited by the wavelength of light: violet light has the wavelength of about 400 nanometres (one nanometre is one billionth of a metre). </p>
<p>But there are plenty of applications, such as biological imaging and electronics manufacturing, where being able to see down to a billionth of a metre or so would be a huge help.</p>
<p>At present, to see at those scales you need “super-resolution” microscopy, which lets you see details smaller than the wavelength of the light you are using, or electron microscopes, which do not use light at all and create image using a flux of electrons. However, such methods are quite slow and expensive.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-quantum-hack-for-microscopes-can-reveal-the-undiscovered-details-of-life-161182">A quantum hack for microscopes can reveal the undiscovered details of life</a>
</strong>
</em>
</p>
<hr>
<p>To understand the advantages of a light source like ours, consider computer chips: they are made of very tiny components with feature sizes almost as small as a billionth of a metre. During the production process, it would be useful for manufacturers to use extreme ultraviolet light to monitor the process in real time.</p>
<p>This would save resources and time on bad batches of chips. The scale of the industry is such that even a 1% increase in chip yields could save billions of dollars each year. </p>
<p>In future, nanoparticles like ours could be used to produce tiny, inexpensive sources of extreme ultraviolet light, illuminating the world of extremely small things.</p><img src="https://counter.theconversation.com/content/204618/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sergey Kruk receives funding from the Australian Research Council (DE210100679). </span></em></p><p class="fine-print"><em><span>Anastasiia Zalogina does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A new way to make high-frequency light could make it easier to look at things 10 times smaller than conventional microscopes can see.Anastasiia Zalogina, Postdoctoral researcher, Australian National UniversitySergey Kruk, ARC DECRA Fellow, Research School of Physics, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2031732023-04-05T17:25:45Z2023-04-05T17:25:45ZCarmakers are mistaken if they think chip shortages are over – they need to reinvent themselves while there’s time<figure><img src="https://images.theconversation.com/files/519045/original/file-20230403-24-d3ec2v.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The chips are down. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/blurry-highway-background-hand-man-holding-1956308611">Ju Jae-Young</a></span></figcaption></figure><p>Finally, carmakers got a break. Those in the UK boosted their output <a href="https://www.imeche.org/news/news-article/uk-car-production-up-13-as-semiconductor-shortage-eases">by over 13%</a> in February as supply-chain pressures subsided, especially the persistent global shortage in microchips, also known as semiconductors. This “signals an industry on the road to recovery”, declared <a href="http://imeche.org/news/news-article/uk-car-production-up-13-as-semiconductor-shortage-eases">UK motoring trade association</a> the SMMT. Well, up to a point. </p>
<p>Early in the pandemic, carmakers slashed sales forecasts as <a href="https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/how-the-automotive-industry-is-accelerating-out-of-the-turn">demand for cars evaporated</a>, falling 47% in US and 80% in Europe in the first couple of months of lockdowns. Carmakers couldn’t see how sales could rebound quickly, which was a reasonable assumption at the time. In an industry where everyone has their own version of <a href="https://www.techtarget.com/searcherp/definition/lean-production#:%7E:text=Lean%20manufacturing%20is%20a%20methodology,not%20willing%20to%20pay%20for.">lean</a> or <a href="https://www.planview.com/resources/guide/what-is-lean-manufacturing/just-in-time-manufacturing/">just-in-time</a> manufacturing, where unsold inventories are seen as tantamount to incompetence, they quickly scaled back orders from their supply chain. </p>
<p>Car parts suppliers such as Bosch and Continental reacted by scaling back their production – and naturally, their own suppliers, such as NXP and Infineon, also reduced their forecasts. These second-order effects went deep into the supply chain, eventually converging on the great and mighty semiconductor manufacturer in Taiwan, TSMC (Taiwan Semiconductor Manufacturing Company).</p>
<p>A modern car can easily contain more than <a href="https://www.nytimes.com/2021/04/23/business/auto-semiconductors-general-motors-mercedes.html">3,000 microchips</a>. These control brakes, doors, airbags and windscreen wipers; they even support advanced functions like driver assistance and navigation control. <a href="https://en.wikipedia.org/wiki/Chipset">Chipsets</a> are like golden screws.</p>
<p>Yet obviously, many other industries depend on chips too. At the same time as carmakers were reducing their orders, manufacturers of gadgets such as games consoles, TVs and home appliances were seeing orders surging as consumers were forced to stay at home. They increased their chip requirements, and TSMC was more than happy to oblige.</p>
<p>It then became apparent to carmakers later in 2020 that they had overreacted. But by the time they woke up to this and ramped up orders, it was too late. TSMC was running all of its factories at maximum capacity to meet the surge in gadget demand, and there were no more chips available for carmakers.</p>
<p>As a result of this global semiconductor scarcity, worldwide vehicle production was <a href="https://www.statista.com/statistics/1288308/automotive-production-reduction-semiconductor-shortage/">approximately 11 million</a> units, or about 12%, lower in 2021 than it would otherwise have been.</p>
<h2>What carmakers got wrong</h2>
<p>No one could have predicted the outbreak of COVID. Nor could anyone have foreseen the ramifications on the supply chain as the virus receded. Still, every executive in the car industry knows the importance of computing power in a modern car. A car is a supercomputer on wheels, they’ll say. And yet they didn’t treat chipsets as a critical area. In other words, they were happy to let their suppliers worry about chip requirements and not have any direct involvement with chipmakers. </p>
<p>Why? Because chips don’t involve mechanical engineering. From the boardroom to the shop floor, carmakers generally focus on final assembly. Chipset design and fabrication is one of many things that gets outsourced. </p>
<p>So during the pandemic, most carmakers had little choice but to perfect the art of triaging their chips: for example, <a href="https://www.nytimes.com/2021/04/23/business/auto-semiconductors-general-motors-mercedes.html">General Motors</a> hoarded them for expensive models, temporarily shutting down factories that produce lower-priced sedans. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/519047/original/file-20230403-20-ukkjhk.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="BMW on a snowy road" src="https://images.theconversation.com/files/519047/original/file-20230403-20-ukkjhk.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519047/original/file-20230403-20-ukkjhk.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519047/original/file-20230403-20-ukkjhk.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519047/original/file-20230403-20-ukkjhk.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519047/original/file-20230403-20-ukkjhk.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519047/original/file-20230403-20-ukkjhk.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519047/original/file-20230403-20-ukkjhk.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The flagship BMW X3: now with reduced capabilities.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/moscow-russia-february-05-2022-bmw-2233469243">Rising Star</a></span>
</figcaption>
</figure>
<p>Others instead removed features from vehicles that rely on microprocessors. <a href="https://www.automoblog.net/will-chip-shortage-end-in-2023/">BMW did away</a> with parking assistance and even touchscreen capabilities in various models. It also withdrew semi-autonomous driving functionality from the X3, its top-selling model. <a href="https://www.nytimes.com/2021/04/23/business/auto-semiconductors-general-motors-mercedes.html">Mercedes-Benz</a> eliminated features such as high-end audio and wireless phone-charging from a number of vehicles. </p>
<h2>The future threat</h2>
<p>Car production is now increasing as the high pandemic demand for chips for household gadgets has <a href="https://www.globaltimes.cn/page/202302/1285931.shtml">fallen away</a>. Still, it would be unwise to conclude that things are back to normal. Demand for chips is likely to look so different in future as we see the rollout of technologies like AI, the internet of things, and 5G/6G. </p>
<p>Major chipmakers are <a href="https://www.reuters.com/technology/tsmc-q4-profit-up-78-beats-market-expectations-2023-01-12/">boosting capacity</a> to meet this extra demand, with big new US facilities in the offing, for example. Yet it will take time for this to come on stream, and it’s still difficult to predict whether it will meet demand.</p>
<p>New product categories can appear unexpectedly, in a similar way to how bitcoin mining suddenly led to unforeseen chip demand. As <a href="https://fortune.com/2023/03/11/chips-and-science-act-semiconductor-shortage-rakesh-kumar/">Professor Rakesh Kumar</a> in the Electrical and Computer Engineering department at the University of Illinois observes: “The exact nature, speed and magnitude of the increase in demand is still unknown.” </p>
<p>As we saw during the pandemic, chip factories also typically run close to maximum capacity, leaving production extremely susceptible to disruptions. Natural disasters like earthquakes and floods can cause problems, as can accidents such as fires and power outages. In March 2021, for instance, <a href="https://www.reuters.com/article/us-usa-semiconductors-idUSKBN2BO4TV">a fire</a> at a Renesas Electronics chip factory in Japan caused a significant disruption to supplies over and above the pandemic-related problems. Geopolitical or military tensions, including those between the US and China, could also affect production in future.<br>
The implication is clear: carmakers must cultivate in-house expertise in this area. Rather than relying on suppliers or their sub-suppliers for semiconductors, they need to directly engage with chipmakers and do the relevant designs in-house. For example, <a href="https://www.cnbc.com/2021/11/18/ford-partners-with-globalfoundries-to-increase-chip-supplies.html#:%7E:text=Ford%20plans%20to%20increase%20its,chips%20to%20Ford%20from%20GlobalFoundries.">Ford announced</a> a collaboration with US chipmaker GlobalFoundries in 2021 to create chips for its vehicles while exploring the prospect of expanding domestic chip production. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/519048/original/file-20230403-18-xfyd9m.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Engineer working on a Ford car in a factory" src="https://images.theconversation.com/files/519048/original/file-20230403-18-xfyd9m.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519048/original/file-20230403-18-xfyd9m.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519048/original/file-20230403-18-xfyd9m.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519048/original/file-20230403-18-xfyd9m.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519048/original/file-20230403-18-xfyd9m.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519048/original/file-20230403-18-xfyd9m.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519048/original/file-20230403-18-xfyd9m.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Ford is trying to get ahead of the curve.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/turkey-december-172014-ford-car-factory-502840735">OVKNHR</a></span>
</figcaption>
</figure>
<p>This approach is already common practice among newer, more self-sufficient carmakers such as Tesla and China’s BYD and NIO, who all have extensive operations dedicated to designing or even producing their own chipsets. </p>
<p>These changes will not be easy. Yet the cost of clinging to the status quo will far outweigh the difficulties in the transition. For any company dependent on semiconductors, their resilience and future success hinge on getting this right. The correct response to the end of the pandemic is not to say “back to normal” but “never again”.</p><img src="https://counter.theconversation.com/content/203173/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Howard Yu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The car industry is celebrating an increase in production as the chip shortage subsides, but it could be short-lived.Howard Yu, Professor of Management and Innovation, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2023082023-03-24T12:36:27Z2023-03-24T12:36:27ZHow do superconductors work? A physicist explains what it means to have resistance-free electricity<figure><img src="https://images.theconversation.com/files/517284/original/file-20230323-14-cz0c5g.jpg?ixlib=rb-1.1.0&rect=62%2C98%2C5928%2C3574&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Magnetic levitation is just one of the interesting attributes that make superconductors so interesting.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/illustration/magnet-floating-above-a-superconductor-royalty-free-illustration/1301762762?phrase=superconductor&adppopup=true">Mark Garlick/Science Photo Library vie Getty Images</a></span></figcaption></figure><p>The modern world runs on electricity, and wires are what carry that electricity to every light, television, heating system, cellphone and computer on the planet. Unfortunately, on average, about <a href="https://www.nrdc.org/bio/jennifer-chen/lost-transmission-worlds-biggest-machine-needs-update">5%</a> of the power generated at a coal or solar power plant is lost as the electricity is transmitted from the plant to its final destination. This amounts to a <a href="https://www.nrdc.org/bio/jennifer-chen/lost-transmission-worlds-biggest-machine-needs-update">US$6 billion loss annually</a> in the U.S. alone. </p>
<p>For decades, scientists have been <a href="https://www.energy.gov/science/doe-explainssuperconductivity">developing materials called superconductors</a> that transmit electricity with nearly 100% efficiency. <a href="https://scholar.google.com/citations?user=5gCcMuMAAAAJ&hl=en&oi=sra">I am a physicist</a> who investigates how superconductors work at the atomic level, how current flows at very low temperatures, and how applications such as levitation can be realized. Recently, researchers have made significant progress toward developing superconductors that can function at <a href="https://doi.org/10.1088/1361-648X/ac2864">relatively normal temperatures and pressures</a>.</p>
<p>To see why these recent advances are so exciting and what impact they may have on the world, it’s important to understand how superconducting materials work.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/517258/original/file-20230323-1492-h3oux6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two lightbulbs next to each other with one showing a glowing filament." src="https://images.theconversation.com/files/517258/original/file-20230323-1492-h3oux6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517258/original/file-20230323-1492-h3oux6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=517&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517258/original/file-20230323-1492-h3oux6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=517&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517258/original/file-20230323-1492-h3oux6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=517&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517258/original/file-20230323-1492-h3oux6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=650&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517258/original/file-20230323-1492-h3oux6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=650&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517258/original/file-20230323-1492-h3oux6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=650&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Most materials offer resistance when electricity runs through them and heat up. Resistance is how filaments in an incandescent lightbulb produce light.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Carbonfilament.jpg#/media/File:Carbonfilament.jpg">Ulfbastel/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<h2>A resistance-free material</h2>
<p>A superconductor is any material that conducts electricity without offering any resistance to the flow of the electric current. </p>
<p>This resistance-free attribute of superconductors contrasts dramatically with <a href="https://sciencenotes.org/examples-of-conductors-and-insulators/">standard conductors</a> of electricity – like copper or aluminum – which heat up when current passes through them. This is similar to quickly sliding your hand across a smooth, slick surface compared to sliding your hand over a rough rug. The rug generates more friction and, therefore, more heat, too. Electric toasters and older-style incandescent lightbulbs use resistance to produce heat and light, but resistance can pose <a href="https://resources.pcb.cadence.com/blog/2022-the-influence-of-the-joule-heating-effect-on-pcbs-and-ics">problems for electronics</a>. Semiconductors have resistance below that of conductors, but still higher than that of superconductors. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/sJLSL61sLZ0?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Superconductive materials repel magnetic fields, making it possible to levitate a magnet above a superconductor.</span></figcaption>
</figure>
<p>Another characteristic of superconductors is that they repel magnetic fields. You may have seen videos of the fascinating result of this effect: It is possible to levitate magnets above a superconductor. </p>
<h2>How do superconductors work?</h2>
<p>All superconductors are made of materials that are electrically neutral – that is, their atoms contain negatively charged electrons that surround a nucleus with an equal number of positively charged protons. </p>
<p>If you attach one end of a wire to something that is positively charged, and the other end to something that is negatively charged, the system will want to reach equilibrium by moving electrons around. This causes the electrons in the wire to try to move through the material. </p>
<p>At normal temperatures, electrons move in somewhat erratic paths. They can generally succeed in moving through a wire freely, but every once in a while they collide with the nuclei of the material. These collisions are what obstruct the flow of electrons, cause resistance and heat up the material.</p>
<p>The nuclei of all atoms are constantly vibrating. In a superconducting material, instead of flitting around randomly, the moving electrons get passed along from atom to atom in such a way that they keep <a href="https://www.energy.gov/science/bes/articles/electrons-line-dance-superconductor#:%7E:text=Superconductors%20are%20materials%20that%20can,called%20a%20pair%20density%20wave.">in sync</a> with the vibrating nuclei. This coordinated movement produces no collisions and, therefore, no resistance and no heat.</p>
<p>The colder a material gets, the more organized the movement of electrons and nuclei becomes. This is why existing superconductors only work at extremely <a href="https://journals.aps.org/pr/abstract/10.1103/PhysRev.108.1175">low temperatures</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/517262/original/file-20230323-14-bajdav.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A close-up view of a computer chip." src="https://images.theconversation.com/files/517262/original/file-20230323-14-bajdav.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517262/original/file-20230323-14-bajdav.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=419&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517262/original/file-20230323-14-bajdav.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=419&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517262/original/file-20230323-14-bajdav.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=419&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517262/original/file-20230323-14-bajdav.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=527&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517262/original/file-20230323-14-bajdav.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=527&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517262/original/file-20230323-14-bajdav.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=527&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Superconducting materials would allow engineers to fit many more circuits onto a single computer chip.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Siliconchip_by_shapeshifter.png#/media/File:Siliconchip_by_shapeshifter.png">David Carron/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<h2>Benefits to electronics</h2>
<p>If scientists can develop a room-temperature superconducting material, wires and circuitry in electronics would be <a href="https://www.psfc.mit.edu/events/2017/high-temperature-superconductors-advantages-and-key-challenges-in-their-deployment-for">much more efficient</a> and produce far less heat. The benefits of this would be widespread.</p>
<p>If the wires used to transmit electricity were replaced with superconducting materials, these new lines would be able to carry up to <a href="https://phys.org/news/2014-05-longest-superconducting-cable-worldwide.html">five times as much electricity</a> more efficiently than current cables. </p>
<p>The speed of computers is mostly limited by how many wires can be packed into a single electric circuit on a chip. The density of wires is often <a href="https://link.springer.com/referenceworkentry/10.1007/978-0-387-09766-4_499">limited by waste heat</a>. If engineers could use superconducting wires, they could fit many more wires in a circuit, leading to faster and cheaper electronics.</p>
<p>Finally, with room-temperature superconductors, magnetic levitation could be used for <a href="https://www.intechopen.com/chapters/16183">all sorts of applications</a>, from trains to energy-storage devices.</p>
<p>With <a href="https://www.nytimes.com/2023/03/08/science/room-temperature-superconductor-ranga-dias.html">recent advances providing exciting news</a>, both researchers looking at the fundamental physics of high-temperature superconductivity as well as technologists waiting for new applications are paying attention.</p><img src="https://counter.theconversation.com/content/202308/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mishkat Bhattacharya receives funding from the Office of Naval Research. </span></em></p>Superconductors are materials that can transmit electricity without any resistance. Researchers are getting closer to creating superconducting materials that can function in everyday life.Mishkat Bhattacharya, Professor of Physics and Astronomy, Rochester Institute of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1927382022-10-24T19:03:11Z2022-10-24T19:03:11ZClampdown on chip exports is the most consequential US move against China yet<p>When Nancy Pelosi travelled to Taiwan in August, it made front page news around the world and raised the spectre of <a href="https://www.abc.net.au/radio/programs/abc-news-daily/when-nancy-pelosi-risked-war-with-china/101297202">all-out war between the US and China</a>. </p>
<p>Early in October, the Biden administration made a far more decisive move against China – but it barely made the news in Australia. </p>
<p>Biden decided to unequivocally <a href="https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file">sever</a> China’s access to high-end computer chips (aka semiconductors). </p>
<p>Don’t be deceived by the technical-sounding subject. More than any other policy decision by an American president since the end of the Cold War, this measure is intended to tilt the global balance of power in favour of the United States. </p>
<h2>Why are semiconductors so important?</h2>
<p>Semiconductors are small, ubiquitous, and underappreciated. They are the brains of every modern device.</p>
<p>Without semiconductors your phone, TV, and microwave would be transformed into bricks. Your car wouldn’t drive and planes wouldn’t fly. Weapons systems, the stock exchange, and telecommunications all depend upon semiconductors. </p>
<p>According to <a href="https://www.semiconductors.org/resources/factbook/">the US Semiconductor Industry Association</a>, in 2021, China had 7% of the world’s market share in semiconductors. For comparison, the US had 46%, Korea 21%, Japan 9%, the EU 9% and Taiwan 8%. </p>
<p>China’s global market share is <a href="https://www.semiconductors.org/chinas-share-of-global-chip-sales-now-surpasses-taiwan-closing-in-on-europe-and-japan/">growing rapidly</a>. </p>
<p>However, not all semiconductors are equal. </p>
<h2>Advanced chips need US companies and tech</h2>
<p>The new US controls are finely calibrated: they apply only to these most leading-edge chips, which China cannot manufacture itself. </p>
<p>Research from the <a href="https://cset.georgetown.edu/publication/preserving-the-chokepoints/">US Centre for Security and Emerging Technology</a> shows China “depends on companies headquartered in the United States and US allies for the leading-edge computer chips that power smartphones, supercomputers, and artificial intelligence systems”.</p>
<p>Further, every advanced semiconductor manufacturing facility in the world is <a href="https://www.csis.org/analysis/choking-chinas-access-future-ai">“critically dependent on US technology”</a>. This makes the new controls devastatingly comprehensive, especially when viewed in their multifaceted entirety. </p>
<p>First, they prohibit the export of the leading-edge chips to China. </p>
<p>Second, they limit the export of the software, equipment, and components China would need to establish a sovereign advanced semiconductor manufacturing capability. </p>
<p>Third, they restrict Americans with specialist skills from working with Chinese entities, limiting knowledge transfer. </p>
<p>Fourth, the US controls <a href="https://public-inspection.federalregister.gov/2022-21714.pdf">extend</a> extraterritoriality to all advanced chip manufacturers outside the US. These manufacturers are all US allies, and if they do not comply with the controls they will lose access to essential US equipment. </p>
<h2>The bigger picture: eroding China’s research base</h2>
<p>In August, the US passed the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/25/fact-sheet-president-biden-signs-executive-order-to-implement-the-chips-and-science-act-of-2022/">CHIPS and Science Act</a> which included a US$50 billion investment in America’s domestic semiconductor industry. Combined with the new controls, this amounts to what has <a href="https://www.csis.org/analysis/choking-chinas-access-future-ai">been described as</a> “a new US policy of actively strangling large segments of the Chinese technology industry – strangling with an intent to kill”.
The implications of this are far reaching. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/chinas-innovation-machine-how-it-works-how-its-changing-and-why-it-matters-180615">China’s 'innovation machine': how it works, how it’s changing and why it matters</a>
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<hr>
<p>The <a href="https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file">stated objective</a> of the new US controls is to limit China’s ability “to both purchase and manufacture certain high-end chips used in military applications”. </p>
<p>However, high-end chips are used for both military and civilian purposes. These controls will also curtail all Chinese research that depends on advanced computing. </p>
<p>As American international affairs scholar <a href="https://foreignpolicy.com/2022/10/12/biden-china-semiconductor-chips-exports-decouple/">Jon Bateman writes</a>:</p>
<blockquote>
<p>this will hamstring the development and deployment of artificial intelligence (AI) throughout the country – hindering Chinese progress in e-commerce, autonomous vehicles, cybersecurity, medical imaging, drug discovery, climate modelling, and much else. </p>
</blockquote>
<p>This policy is not just about maintaining US tech supremacy. It has the potential to degrade Chinese research across every discipline. </p>
<h2>Can China innovate its way out?</h2>
<p>It is unclear how immediate an impact the new controls will have. There has long been speculation that <a href="https://asia.nikkei.com/Politics/International-relations/US-China-tensions/China-s-SMIC-stockpiles-chip-equipment-to-counter-US-restrictions">China has been stockpiling chips and equipment</a>, and China will no doubt try to work around the controls. </p>
<p>The new US measures will inject fresh momentum into existing Chinese efforts to achieve semiconductor self-sufficiency, but this is no easy task. </p>
<p>Manufacturing semiconductors is incomprehensibly complex. It requires facilities so clean they <a href="https://www.bbc.com/future/bespoke/made-on-earth/how-the-chip-changed-everything/">make an operating theatre look dirty</a> and equipment so precise its calibration is <a href="https://podcasts.apple.com/au/podcast/the-case-for-an-australian-semiconductor-industry/id1266535694?i=1000582617602">impacted by the rotation of the Earth</a>. The more high-end the chip, the more intricate the manufacturing process. </p>
<p>Some <a href="https://asia.nikkei.com/Business/China-tech/China-chip-designers-say-Beijing-goals-impossible-without-US-tech">chip manufacturers</a> argue China will not be able to produce advanced semiconductors without US equipment and expertise. I’ll leave that debate to the technical experts, but China’s ability to innovate should not be underestimated.</p>
<h2>A response is yet to come</h2>
<p>To date, the direct official response from China has been muted: comparatively mild rebukes from the <a href="https://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/2511_665403/202210/t20221008_10779756.html">official Chinese Foreign Ministry spokesperson</a> that the US seeks only to “maintain its sci-tech hegemony” and “wantonly block and hobble Chinese enterprises”. </p>
<p>More importantly, and aside from steps to address supply, the question of China’s broader response demands close consideration. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-the-world-ran-out-of-semiconductors-156532">How the world ran out of semiconductors</a>
</strong>
</em>
</p>
<hr>
<p>The world is already experiencing <a href="https://spectrum.ieee.org/global-chip-shortage-charts">a global chip shortage</a>, particularly of the kind of less sophisticated chips produced in China. China also <a href="https://fortune.com/2022/07/22/china-rare-earths-monopoly-lynas-pensana-iluka-us-supply/">dominates 80% of the global supply chain</a> of the rare earth elements that are essential to most high-tech components. </p>
<p>China could seek to interrupt the supply of either or both of these, but that would be an <a href="https://foreignpolicy.com/2022/10/12/biden-china-semiconductor-chips-exports-decouple/">uncharacteristically symmetrical </a> response. It would also likely damage China as much as the US. </p>
<h2>Undermining China’s ambition</h2>
<p>In a speech to the Communist Party Congress a week after the US controls were announced, China’s <a href="https://twitter.com/_KarenHao/status/1581612426360893441">President Xi reaffirmed, twice</a>, his country’s goal to “join the ranks of the world’s most innovative countries, with great self-reliance and strength in science and technology” within five years. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1581612426360893441"}"></div></p>
<p>The controls announced by the Biden administration directly undermine Xi’s ambition for China. They seek to maintain US tech supremacy, while simultaneously eroding China’s ability to conduct fundamental research. Given this, a significant escalatory response from China should not be unexpected. </p>
<h2>The ‘decoupling’ of the US and China</h2>
<p>In an age when militaries, economies and our daily lives depend on technology it is astounding how many people continue to tune out when technology - and the policies that shape it - are discussed. If there ever was a time to tune in, it is now. </p>
<p>For several years, leaders and commentators the world over have speculated about the possibility of the US “<a href="https://foreignpolicy.com/2022/01/11/us-china-economic-decoupling-trump-biden/">decoupling</a>” from China: reducing economic and technological entanglement with the rising Asian power. </p>
<p>Debates on the feasibility of economic decoupling will continue. However, historians will pinpoint Biden’s decision on 7 October 2022 as the moment at which US and Chinese technology decoupling became inevitable. </p>
<p>The US has now played its hand. The most consequential question remains: what will China do next? </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/china-us-tensions-how-global-trade-began-splitting-into-two-blocs-188380">China-US tensions: how global trade began splitting into two blocs</a>
</strong>
</em>
</p>
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<img src="https://counter.theconversation.com/content/192738/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Johanna Weaver does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Historians will pinpoint Biden’s decision on 7 October 2022 as the moment at which US and Chinese technology decoupling became inevitable.Johanna Weaver, Director, Tech Policy Design Centre, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1886042022-08-15T09:12:35Z2022-08-15T09:12:35ZComputer chips: while US and EU invest to challenge Asia, the UK industry is in mortal danger<figure><img src="https://images.theconversation.com/files/478920/original/file-20220812-20-1m993t.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The chip wars are hotting up. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/young-scientist-develops-microchip-checking-electronic-281745773">andriano.cz</a></span></figcaption></figure><p>US semiconductor giant Micron <a href="https://www.cnbc.com/2022/08/09/micron-to-invest-40-billion-in-us-chip-manufacturing.html">is to invest</a> US$40 billion (£33 billion) during the 2020s in chip manufacturing in America, creating 40,000 jobs. This is on the back of incentives in the recent US <a href="https://www.semiconductors.org/chips/">Chips Act</a>, which has also unlocked major investments from fellow US players <a href="https://www.fastcompany.com/90734580/why-intel-wants-congress-to-move-chip-production-back-to-the-u-s#:%7E:text=The%20chip%20industry%20was%20invented,of%20which%20comes%20from%20Intel.">Intel</a> and <a href="https://timesofsandiego.com/business/2022/08/08/qualcomm-globalfoundries-sign-pact-to-expand-u-s-chip-manufacturing/">Qualcomm</a>.</p>
<p>The EU is also making moves to boost computer-chip manufacturing at home, having similarly decided to try and take share from Asia following the severe <a href="https://www.jpmorgan.com/insights/research/supply-chain-chip-shortage">global semiconductor shortages</a> over the past couple of years. <a href="https://techwireasia.com/2021/03/is-the-world-too-dependent-on-asias-semiconductor-industry/">Over 70%</a> of chips are currently made in Asia, with precarious Taiwan particularly important, making around 90% of the world’s most advanced chips. </p>
<p>In the UK, however, successive governments <a href="https://policyexchange.org.uk/publication/semiconductors-in-the-uk/">have overlooked</a> the importance of having a home-grown industry for this vital component, which underpins not only computers and smartphones, but also things like cars, planes, satellites and smart devices. There is a <a href="https://thestack.technology/what-uk-semiconductors-strategy-govt-mauled/">clear absence</a> of any strategic plan, and no way of riding on the coattails of the EU following Brexit. So what needs to be done?</p>
<h2>The new race for chips</h2>
<p>Micron’s decision to announce such a large investment in the US is directly related to the <a href="https://www.msn.com/en-us/money/news/heres-whats-in-the-bipartisan-semiconductor-chip-manufacturing-package/ar-AA10t8hQ">Chips Act</a>. The act provides US$200 billion to build and modernise American manufacturing facilities, as well as promoting research and development in semiconductor technologies, and promoting education in <a href="https://www.topuniversities.com/courses/engineering/what-stem">STEM subjects</a> to develop the next generation of chip designers. </p>
<p>The US continues to control the majority of IP in semiconductors, but Asia’s dominant manufacturing capacity is <a href="https://www.semiconductors.org/wp-content/uploads/2021/05/BCG-x-SIA-Strengthening-the-Global-Semiconductor-Value-Chain-April-2021_1.pdf">rapidly growing</a> on the back of investments from the likes of Taiwan’s TSMC and Foxconn, and South Korea-based Samsung. There is also a need to compete with China, which <a href="https://www.nytimes.com/2022/07/28/us/politics/us-china-semiconductors.html">recently surprised</a> the industry by demonstrating world-beating technology. </p>
<p><strong>Semiconductor manufacturing and ownership by country (%)</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/478909/original/file-20220812-18-3738cd.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/478909/original/file-20220812-18-3738cd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/478909/original/file-20220812-18-3738cd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=212&fit=crop&dpr=1 600w, https://images.theconversation.com/files/478909/original/file-20220812-18-3738cd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=212&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/478909/original/file-20220812-18-3738cd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=212&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/478909/original/file-20220812-18-3738cd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=266&fit=crop&dpr=1 754w, https://images.theconversation.com/files/478909/original/file-20220812-18-3738cd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=266&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/478909/original/file-20220812-18-3738cd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=266&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Data is from 2019.</span>
<span class="attribution"><a class="source" href="https://www.semiconductors.org/wp-content/uploads/2021/05/BCG-x-SIA-Strengthening-the-Global-Semiconductor-Value-Chain-April-2021_1.pdf">Semiconductor Industry Association</a></span>
</figcaption>
</figure>
<p>Earlier this year, the EU set out the scope of <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729">its own legislation</a> to boost its share of production from 10% to 20% of the world total by 2030. It aims to promote “digital sovereignty” by supporting the development of new production facilities, supporting start-ups, developing skills and building partnerships. In total, the upcoming act should result in between <a href="https://www.theverge.com/2022/2/9/22925010/eu-chips-act-plan-43-billion-funding-shortage-supply-chain">€15 billion (£13 billion) and €43 billion (£36 billion)</a> being invested in the sector.</p>
<h2>The UK perspective</h2>
<p>The UK once led the world in semiconductor manufacturing, with highly internationally innovative companies such as Plessey, Inmos, Acorn, Imagination Technologies and Cambridge Silicon Radio. There remain pockets of excellence and world-leading innovation, particularly in the <a href="https://www.lightreading.com/iot/uk-should-focus-on-chip-design-says-top-chipmaker/d/d-id/771960">design of semiconductors</a>. Clusters in south Wales, the south west of England and east of England, for example, have a critical mass of activity. But they have lacked the necessary finance to upscale, and all the major investments elsewhere are putting the industry in an increasingly vulnerable position.</p>
<p>It’s not only the UK’s position in semiconductors that is under threat. A lack of capacity creates risks for the whole electronics supply chain, which could weaken the economy overall. For example <a href="https://www.thisismoney.co.uk/money/cars/article-10550853/UK-car-production-hits-13-YEAR-low-outputs-slumped-fifth-January.html">UK car production</a> has been severely curtailed by the recent chip shortages. </p>
<p>To avoid such problems, the UK needs to pass a Chips Act of its own. This would aim to kick-start the industry by incentivising investment in manufacturing facilities, called “fabs”. Some commentators have <a href="https://www.eetimes.eu/onshoring-semiconductor-manufacturing-is-not-the-solution-for-u-k/">argued against</a> this move, mainly due to the huge costs involved. But it would be money well spent to achieve digital sovereignty. </p>
<p>A UK act should incentivise investment both directly and indirectly. Direct funding would ensure increased manufacturing capacity by building new fabs or expanding and upgrading existing facilities, especially for chips related to sensors, power, consumer electronics and communication devices. The government could then also support the industry indirectly through policies such as tax credits for investing firms, land provision and support infrastructure. </p>
<p>Another priority should be to strengthen existing national competitive advantages around designing smaller chips with more efficient circuits and greater computing power. This would involve both improving the current generation of chips and developing new approaches such as “<a href="https://irds.ieee.org/home/what-is-beyond-cmos">beyond CMOS</a>” technologies, which promise faster and more dense chips but crucially with a lower energy requirement. Providing R&D grants or guaranteeing loans to explore, test and consolidate new designs would help to return the UK to the forefront of developments in the sector.</p>
<h2>University funding</h2>
<p>Finally, the UK needs to harness the knowledge and research expertise around design and manufacturing within its universities. This is spread around various institutions, including the universities of <a href="https://www.cardiff.ac.uk/institute-compound-semiconductors">Cardiff</a> and <a href="https://www.swansea.ac.uk/campus-development/developing-bay/key-projects-bay/cism/">Swansea</a> in Wales; <a href="https://ssd.phys.strath.ac.uk/">Strathclyde</a> and <a href="https://www.smc.eng.ed.ac.uk/">Edinburgh</a> in Scotland; <a href="https://www.qub.ac.uk/research-centres/QAMEC/Services/Foundry/">Queen’s University Belfast</a> in Northern Ireland, which has its own foundry; and the <a href="https://www.sheffield.ac.uk/news/major-research-facility-will-help-uk-become-world-leader-semiconductor-rd">University of Sheffield</a> in England.</p>
<p>The UK government has funded <a href="https://committees.parliament.uk/writtenevidence/109179/pdf/">over £1 billion</a> of university research into semiconductors since 2006, but the US and EU chips acts highlight just how much more is required. There is also a need to focus university funding on commercial outcomes that will translate into sales and increase the UK’s market share. Brexit has <a href="https://www.science.org/content/article/u-k-outlines-plan-b-research-funding-skirt-eu-impasse">limited funding opportunities</a> by raising uncertainties about the UK’s future involvement in the European “Horizon” scheme, which is the EU’s main R&D funding programme. It may therefore require a national replacement. </p>
<p>Clearly, the national outlay to deal with COVID and the current cost of living crisis will constrain potential government investments in the coming years. But the recent semiconductor shortages have also made clear that a degree of self-sufficiency in this key enabling technology will be vital to ensuring economic resiliency in a highly volatile and unpredictable world.</p><img src="https://counter.theconversation.com/content/188604/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Huggins receives funding from UKRI. </span></em></p><p class="fine-print"><em><span>Andrew Johnston does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The UK has some clusters of excellence in semiconductors, but it was badly exposed by recent shortages.Andrew Johnston, Professor of Innovation and Entrepreneurship, Coventry UniversityRobert Huggins, Professor of Economic Geography, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1883372022-08-10T12:18:00Z2022-08-10T12:18:00ZWhat is a semiconductor? An electrical engineer explains how these critical electronic components work and how they are made<figure><img src="https://images.theconversation.com/files/478126/original/file-20220808-4922-kdvkjb.jpg?ixlib=rb-1.1.0&rect=100%2C38%2C5026%2C3474&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A silicon disc, or 'wafer,' yields dozens of semiconductor chips.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:A_Wafer_of_the_Latest_D-Wave_Quantum_Computers_(39188583425).jpg#/media/File:A_Wafer_of_the_Latest_D-Wave_Quantum_Computers_(39188583425).jpg">Steve Jurvetson/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p><em>Semiconductors are a critical part of almost every modern electronic device, and the vast majority of semiconductors are made in Tawain. Increasing concerns over the reliance on Taiwan for semiconductors – especially given the tenuous relationship between Taiwan and China – led the U.S. Congress to pass the CHIPS and Science act in late July 2022. The act provides more than US$50 billion in subsidies to boost U.S. semiconductor production and has been widely covered in the news. <a href="https://scholar.google.com/citations?user=kZEP5kcAAAAJ&hl=en&oi=ao">Trevor Thornton</a>, an electrical engineer who studies semiconductors, explains what these devices are and how they are made.</em></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/478129/original/file-20220808-17-lmrac1.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two shiny black discs." src="https://images.theconversation.com/files/478129/original/file-20220808-17-lmrac1.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/478129/original/file-20220808-17-lmrac1.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=333&fit=crop&dpr=1 600w, https://images.theconversation.com/files/478129/original/file-20220808-17-lmrac1.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=333&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/478129/original/file-20220808-17-lmrac1.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=333&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/478129/original/file-20220808-17-lmrac1.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=419&fit=crop&dpr=1 754w, https://images.theconversation.com/files/478129/original/file-20220808-17-lmrac1.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=419&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/478129/original/file-20220808-17-lmrac1.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=419&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Thin, round slices of silicon crystals, called wafers, are the starting point for most semiconductor chips.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Siliziumwafer.JPG#/media/File:Siliziumwafer.JPG">Hebbe/Wikimedia Commons</a></span>
</figcaption>
</figure>
<h2>1. What is a semiconductor?</h2>
<p>Generally speaking, the term semiconductor refers to a material – like silicon – that can conduct electricity much better than an insulator such as glass, but not as well as metals like copper or aluminum. But when people are <a href="https://www.nytimes.com/2022/07/14/briefing/semiconductor-bill-congress-biden.html">talking about semiconductors today</a>, they are usually referring to semiconductor chips.</p>
<p>These chips are typically made from thin slices of silicon with complex components laid out on them in specific patterns. These patterns control the flow of current using electrical switches – called transistors – in much the same way you control the electrical current in your home by flipping a switch to turn on a light. </p>
<p>The difference between your house and a semiconductor chip is that semiconductor switches are entirely electrical – no mechanical components to flip – and the chips contain <a href="https://futurism.com/ibm-created-a-chip-the-size-of-a-fingernail-that-holds-30-billion-transistors">tens of billions of switches</a> in an area not much larger than the size of a fingernail.</p>
<h2>2. What do semiconductors do?</h2>
<p>Semiconductors are how electronic devices process, store and receive information. For instance, memory chips store data and software as binary code, digital chips manipulate the data based on the software instructions, and wireless chips receive data from high-frequency radio transmitters and convert them into electrical signals. These different chips work together under the control of software. Different software applications perform very different tasks, but they all work by switching the transistors that control the current.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/478130/original/file-20220808-18-gedffp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A diagram showing more than a dozen layers of material." src="https://images.theconversation.com/files/478130/original/file-20220808-18-gedffp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/478130/original/file-20220808-18-gedffp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=884&fit=crop&dpr=1 600w, https://images.theconversation.com/files/478130/original/file-20220808-18-gedffp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=884&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/478130/original/file-20220808-18-gedffp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=884&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/478130/original/file-20220808-18-gedffp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1110&fit=crop&dpr=1 754w, https://images.theconversation.com/files/478130/original/file-20220808-18-gedffp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1110&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/478130/original/file-20220808-18-gedffp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1110&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">This schematic of a semiconductor chip shows many different materials in different colors and the complicated layering involved in producing a modern chip.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Cmos-chip_structure_in_2000s_(en).svg#/media/File:Cmos-chip_structure_in_2000s_(en).svg">Cepheiden/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>3. How do you build a semiconductor chip?</h2>
<p>The starting point for the vast majority of semiconductors is a thin slice of silicon called a wafer. Today’s wafers are the size of dinner plates and are cut from <a href="https://www.sciencedirect.com/topics/materials-science/silicon-wafer">single silicon crystals</a>. Manufacturers <a href="https://semiengineering.com/knowledge_centers/manufacturing/process/ion-implants/">add elements like phosphorus and boron</a> in a thin layer at the surface of the silicon to increase the chip’s conductivity. It is in this surface layer where the transistor switches are made. </p>
<p>The transistors are built by adding thin layers of conductive metals, insulators and more silicon to the entire wafer, sketching out patterns on these layers using a complicated process <a href="https://semiengineering.com/knowledge_centers/manufacturing/lithography/">called lithography</a> and then selectively removing these layers using computer-controlled plasmas of highly reactive gases to leave specific patterns and structures. Because the transistors are so small, it is much easier to add materials in layers and then carefully remove unwanted material than it is to place microscopically thin lines of metal or insulators directly onto the chip. By depositing, patterning and etching layers of different materials dozens of times, semiconductor manufacturers can create chips with tens of billions of transistors per square inch.</p>
<h2>4. How are chips today different from the early chips?</h2>
<p>There are many differences, but the most important is probably the increase in the number of transistors per chip.</p>
<p>Among the earliest commercial applications for semiconductor chips were <a href="https://americanhistory.si.edu/collections/object-groups/handheld-electronic-calculators">pocket calculators</a>, which became widely available in the 1970s. These early chips contained a few thousand transistors. In 1989 Intel introduced the <a href="https://spectrum.ieee.org/25-microchips-that-shook-the-world">the first semiconductors to exceed a million transistors on a single chip</a>. Today, the largest chips contain more than 50 billion transistors. This trend is described by what is known as <a href="https://theconversation.com/with-silicon-pushed-to-its-limits-what-will-power-the-next-electronics-revolution-46287">Moore’s law</a>, which says that the number of transistors on a chip will double approximately every 18 months.</p>
<p><iframe id="Gk2KX" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Gk2KX/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Moore’s law has held up for five decades. But in recent years, the semiconductor industry has <a href="https://theconversation.com/with-silicon-pushed-to-its-limits-what-will-power-the-next-electronics-revolution-46287">had to overcome major challenges</a> – mainly, how to continue shrinking the size of transistors – to continue this pace of advancement.</p>
<p>One solution was to switch from flat, two-dimensional layers to three-dimensional layering with <a href="https://www.hindawi.com/journals/aelc/2014/365689/">fin-shaped ridges of silicon</a> projecting up above the surface. These 3D chips significantly increased the number of transistors on a chip and are now in <a href="https://www.globenewswire.com/news-release/2021/03/18/2195023/0/en/FinFet-Technology-Market-is-Anticipated-to-Touch-USD-268-66-Million-by-2025-Growing-at-40-3-CAGR-Market-Research-Future-MRFR.html">widespread use</a>, but they’re also much more difficult to manfacture.</p>
<h2>5. Do more complicated chips require more sophisticated factories?</h2>
<p>Simply put, yes, the more complicated the chip, the more complicated – and more costly – the factory. </p>
<p>There was a time when almost every U.S. semiconductor company built and maintained its own factories. But today, a new foundry can <a href="https://www.azcentral.com/story/news/local/phoenix/2022/06/03/see-taiwan-semiconductors-north-phoenix-office/7498673001/">cost more than $10 billion to build</a>. Only the largest companies can afford that kind of investment. Instead, the majority of semiconductor companies send their designs to independent foundries for manufacturing. Taiwan Semiconductor Manufacturing Co. and GlobalFoundries, headquartered in New York, are two examples of multinational foundries that build chips for other companies. They have the expertise and economies of scale to invest in the hugely expensive technology required to produce next-generation semiconductors. </p>
<p>Ironically, while the transistor and semiconductor chip were invented in the U.S., no state-of-the-art semiconductor foundries are currently on American soil. The U.S. has been here before in the 1980s when there were concerns that <a href="https://www.nytimes.com/1982/02/28/business/japan-s-big-lead-in-memory-chips.html">Japan would dominate the global memory business</a>. But with the newly passed CHIPS act, Congress has provided the incentives and opportunities for next-generation semiconductors to be manufactured in the U.S. </p>
<p>Perhaps the chips in your next iPhone will be “designed by Apple in California, built in the USA.”</p><img src="https://counter.theconversation.com/content/188337/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Trevor Thornton does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Semiconductor chips are electronic devices that store and process information. Today they can contain billions of microscopic switches on a chip smaller than a fingernail.Trevor Thornton, Professor of Electrical Engineering, Arizona State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1882422022-08-04T15:00:00Z2022-08-04T15:00:00ZTaiwan dominates the world’s supply of computer chips – no wonder the US is worried<p>One aspect of Nancy Pelosi’s trip to Taiwan that has been largely overlooked is <a href="https://fortune.com/2022/08/03/nancy-pelosi-taiwan-tsmc-mark-liu-china-market/">her meeting</a> with Mark Lui, chairman of the Taiwan Semiconductor Manufacturing Corporation (TSMC). Pelosi’s trip coincided with US efforts to convince TSMC – the world’s largest chip manufacturer, on which the US is heavily dependent – to establish a manufacturing base in the US and to stop making advanced chips for Chinese companies.</p>
<p>US support for Taiwan has historically been based on Washington’s opposition to communist rule in Beijing, and Taiwan’s resistance to absorption by China. But in recent years, Taiwan’s autonomy has become a vital geopolitical interest for the US because of the <a href="https://www.theregister.com/2022/04/26/trendforce_foundry_capacity/#:%7E:text=Taiwan%20dominates%20the%20world's%20semiconductor,to%20market%20intelligence%20firm%20TrendForce.">island’s dominance</a> of the semiconductor manufacturing market.</p>
<p>Semiconductors – also known as computer chips or just chips – are integral to all the networked devices that have become embedded into our lives. They also have advanced military applications. </p>
<p>Transformational, super-fast 5G internet is enabling a world of connected devices of every kind (the “<a href="https://theconversation.com/uk/topics/internet-of-things-1724">Internet of Things</a>”) and a new generation of networked weapons. With this in mind, US officials began to realise during the Trump administration that US semiconductor design companies, such as Intel, were heavily dependent on Asian-based supply chains for the manufacturing of their products.</p>
<p>In particular, Taiwan’s position in the world of semiconductor manufacturing is a bit like Saudi Arabia’s status in OPEC. TSMC has <a href="https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf">a 53% market share</a> of the global foundry market (factories contracted to make chips designed in other countries). Other Taiwan-based manufacturers claim a further 10% of the market. </p>
<p>As a result, the Biden administration’s <a href="https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf">100-Day Supply Chain Review Report</a> says, “The United States is heavily dependent on a single company – TSMC – for producing its leading-edge chips.” The fact that only TSMC and Samsung (South Korea) can make the most advanced semiconductors (five nanometres in size) “puts at risk the ability to supply current and future [US] national security and critical infrastructure needs” .</p>
<p>This means that China’s long-term goal of reunifying with Taiwan is now more threatening to US interests. In the 1971 Shanghai Communique and the 1979 Taiwan Relations Act, the US recognised that people in both mainland China and Taiwan believed that there was “One China” and that they both belonged to it. But for the US it is unthinkable that TSMC could one day be in territory controlled by Beijing.</p>
<h2>‘Tech war’</h2>
<p>For this reason, the US has been trying to attract TSMC to the US to increase domestic chip production capacity. In 2021, with the support of the Biden administration, the company bought a site in Arizona on which to build a US foundry. This is scheduled to be completed in 2024.</p>
<p>The US Congress has just passed the <a href="https://www.bloomberg.com/opinion/articles/2022-08-01/chips-and-science-act-could-become-a-280-billion-boondoggle">Chips and Science Act</a>, which provides US$52 billion (£43 billion) in subsidies to support semiconductor manufacturing in the US. But companies will only receive Chips Act funding if they agree not to manufacture advanced semiconductors for Chinese companies. </p>
<p>This means that TSMC and others may well have to choose between doing business in China and in the US because the cost of manufacturing in the US is deemed to be too high without government subsidies.</p>
<p>This is all part of a broader “tech war” between the US and China, in which the US is aiming to constrain China’s technological development and prevent it from exercising a global tech leadership role. </p>
<p>In 2020, the Trump administration imposed <a href="https://www.dw.com/en/us-boosts-sanctions-for-china-tech-giant-huawei/a-54599763">crushing sanctions</a> on the Chinese tech giant Huawei that were designed to cut the company off from TSMC, on which it was reliant for the production of high-end semiconductors needed for its 5G infrastructure business. </p>
<p>Huawei was the world’s leading supplier of 5G network equipment but the <a href="https://2017-2021.state.gov/huawei-and-its-siblings-the-chinese-tech-giants-national-security-and-foreign-policy-implications/index.html">US feared</a> its Chinese origins posed a security risk (though this claim has been <a href="https://www.cnas.org/publications/reports/myths-and-realities-of-chinas-military-civil-fusion-strategy">questioned</a>). The sanctions are still in place because both Republicans and Democrats want to stop other countries from using Huawei’s 5G equipment. </p>
<p>The British government had initially decided to use Huawei equipment in certain parts of the UK’s 5G network. The Trump administration’s sanctions forced London to <a href="https://www.reuters.com/article/us-britain-huawei-idUSKCN24E30P">reverse that decision</a>.</p>
<p>A key US goal appears to be ending its dependency on supply chains in China or Taiwan for “emerging and foundational technologies”, which includes advanced semiconductors needed for 5G systems, but may include other advanced tech in future.</p>
<p>Pelosi’s trip to Taiwan was about more than just Taiwan’s critical place in the “tech war”. But the dominance of its most important company has given the island a new and critical geopolitical importance that is likely to heighten existing tensions between the US and China over the status of the island. It has also intensified US efforts to “reshore” its semiconductor supply chain.</p><img src="https://counter.theconversation.com/content/188242/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Maria Ryan receives funding from the British Academy.</span></em></p>Taiwan dominates the global market for microchips – something that Washington is well aware of.Maria Ryan, Associate Professor in US History, University of NottinghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1806152022-05-05T02:12:42Z2022-05-05T02:12:42ZChina’s ‘innovation machine’: how it works, how it’s changing and why it matters<p>China has had the world’s fastest growing economy since the 1980s. A key driver of this extraordinary growth has been the country’s pragmatic system of innovation, which balances government steering and market-oriented entrepreneurs. </p>
<p>Right now, this system is undergoing changes which may have profound implications for the global economic and political order. </p>
<p>The Chinese government is pushing for better research and development, “smart manufacturing” facilities, and a more sophisticated digital economy. At the same time, tensions between China and the west are straining international cooperation in industries such as semiconductor and biopharmaceutical manufacturing.</p>
<p>Taken together with the shocks of the Covid pandemic, and particularly China’s rapid and large-scale lockdowns, these developments could lead to a decoupling of China’s innovation system from the rest of the world. </p>
<h2>Balancing government and market</h2>
<p>China’s current “<a href="https://global.oup.com/academic/product/demystifying-chinas-innovation-machine-9780198861171?cc=fr&lang=en&">innovation machine</a>” began developing during the economic reforms of the late 1970s, which lessened the role of state ownership and central planning. Instead, room was made for the market to try new ideas through trial and error. </p>
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Read more:
<a href="https://theconversation.com/to-get-rich-is-glorious-how-deng-xiaoping-set-china-on-a-path-to-rule-the-world-156836">'To get rich is glorious': how Deng Xiaoping set China on a path to rule the world</a>
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<p>The government sets regulations aligned to the state’s objectives, and may send signals to investors and entrepreneurs via its own investments or policy settings. But within this setting, private businesses pursue opportunities in their own interests. </p>
<p>However, freedom for businesses may be declining. Last year, the government cracked down on the <a href="https://www.bloomberg.com/news/articles/2021-10-07/china-s-central-bank-governor-vows-to-continue-fintech-crackdown">fintech</a> and <a href="https://www.abc.net.au/news/2021-08-20/china-crackdown-private-tutoring/100392352">private tutoring</a> sectors, which were seen to be misaligned with government goals. </p>
<h2>Building quality alongside quantity</h2>
<p>China performs well on many measures of innovation performance, such as R&D expenditure, number of scientific and technological publications, numbers of STEM graduates and patents, and top university rankings. </p>
<p>Most of these indices, however, measure quantity rather than quality. So, for example, China has:</p>
<ul>
<li><p>produced <a href="https://www.natureindex.com/country-territory-research-output?type=share&list=China%3BUnited+States+of+America+%28USA%29">a huge number of scientific and technological publications</a>, but lags far behind the US in highly cited publications, which indicates the influence and originality of research </p></li>
<li><p>substantially <a href="https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS?locations=CN&start=2000&view=chart">increased R&D expenditure</a>. However, the proportion of its R&D expenditure on basic research, especially by enterprises, is still far lower than in many industrialised countries </p></li>
<li><p>educated many <a href="https://www.aip.org/fyi/2018/rapid-rise-chinas-stem-workforce-charted-national-science-board-report">more STEM graduates than any other country</a> in recent decades, but still lacks top-tier talent in many areas such as AI and semiconductors </p></li>
<li><p>has applied for the <a href="https://www.wipo.int/pressroom/en/articles/2020/article_0005.html">most international patents of any country</a>, but the quality of these patents measured by scientific influence and potential commercial value still lags international competitors. </p></li>
</ul>
<p>Adding “quality” alongside “quantity” will be crucial to <a href="https://global.chinadaily.com.cn/a/202103/17/WS60513ac4a31024ad0baaf959.html">China’s innovation ambitions</a>. </p>
<p>In the past, policies have aimed to “catch up” with known technologies used elsewhere, but China will need to shift focus to develop unknown and emerging technologies. This will require greater investment in longer-term basic research and reform of research culture to tolerate failure.</p>
<h2>Developing smart manufacturing</h2>
<p>Chinese firms can already translate complex designs into mass production with high precision and unmatched speed and cost. As a result, Chinese manufacturing is appealing to high-tech companies such as <a href="https://www.scmp.com/tech/big-tech/article/3163117/worlds-largest-iphone-factory-maintains-production-schedule-amid">Apple</a> and <a href="https://www.aljazeera.com/economy/2022/4/18/tesla-and-other-firms-look-to-reopen-shanghai-factories-sources">Tesla</a>. </p>
<p>The next step is upgrading towards “industry 4.0” smart manufacturing, aligned with the core industries listed in the government’s <a href="https://thediplomat.com/2019/02/made-in-china-2025-explained/">Made in China 2025 blueprint</a>. </p>
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<a href="https://theconversation.com/a-fourth-industrial-revolution-is-powering-the-rise-of-smart-manufacturing-57753">A fourth industrial revolution is powering the rise of smart manufacturing</a>
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<p>By 2020, China had built eleven “lighthouse factories” – benchmark smart manufacturers – the most of any country in the World Economic Forum’s “<a href="https://www.weforum.org/projects/global_lighthouse_network">global lighthouse network</a>”.</p>
<h2>Building an advanced digital economy</h2>
<p>China’s giant tech companies such as Alibaba, Tencent and Huawei are also using machine learning and big data analytics to innovate in other fields, including pharmaceutical research and <a href="https://techcrunch.com/2022/02/10/china-autonomous-driving-2021">autonomous driving</a>. </p>
<p>In China the regulations for biotechnology, bioengineering and biopharmaceuticals are relatively relaxed. This has <a href="https://www.mckinsey.com/industries/life-sciences/our-insights/the-dawn-of-china-biopharma-innovation">attracted researchers and investors</a> to several leading biotechnology “<a href="https://en.wikipedia.org/wiki/Clusters_of_Innovation">clusters</a>”.</p>
<p>China’s population of more than 1.4 billion people also means that, even for rare diseases, it has a large number of patients. Using large patient databases, companies are making advances in <a href="https://www.nature.com/articles/529009a">precision medicine</a> (treatments tailored to an individual’s genes, environment, and lifestyle).</p>
<p>The rising power of China’s big tech firms has seen the government step in to maintain fair market competition. <a href="https://www.bruegel.org/2021/09/opening-up-digital-platforms-and-reducing-anticompetitive-risks">Regulations force digital firms</a> to share user data and consolidate critical “platform goods”, such as mobile payments, across their ecosystems.</p>
<h2>International collaboration is key</h2>
<p>As we have seen in the <a href="https://www.nature.com/articles/d41586-020-03626-1">recent triumph of COVID-19 vaccines</a>, global collaboration in R&D is hugely valuable. </p>
<p>However, there are signs that such collaboration between China and the West may be under threat. </p>
<p>The semiconductor manufacturing industry – making the chips and circuits which drive modern electronics – is currently global, but at risk of fragmentation. </p>
<p>Making chips requires huge amounts of knowledge and capital investment, and while China is the world’s largest consumer of semiconductors it relies heavily on imports. However, US sanctions mean many global semiconductor companies <a href="https://www.bcg.com/publications/2020/restricting-trade-with-china-could-end-united-states-semiconductor-leadership">cannot sell in China</a>. </p>
<p>China is now investing <a href="https://www.scmp.com/tech/policy/article/3085362/china-has-new-us14-trillion-plan-seize-worlds-tech-crown-us">vast sums</a> in an attempt to be able to make all the semiconductors it needs. </p>
<p>If China succeeds in this, one consequence is that Chinese-made semiconductors will likely use different technical standards from the current ones.</p>
<h2>Different standards</h2>
<p>Diverging technical standards may seem like a minor issue, but it will make it more difficult for Chinese and Western technologies and products to work together. This in turn may reduce global trade and investment, with bad results for consumers.</p>
<p>Decoupling standards will increase the fracture between Chinese and Western digital innovation. This in turn will likely lead to further decoupling in finance, trade, and data.</p>
<p>At a time of heightened international tensions both China and the West need to be clear on the value of international collaboration in innovation.</p><img src="https://counter.theconversation.com/content/180615/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>From 2010–2014, while Vice President at Imperial College London, I collaborated with Huawei in forming the Data Science Institute, Imperial College London.</span></em></p><p class="fine-print"><em><span>Marina Yue Zhang and Mark Dodgson do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>China’s innovation plans and international trade tensions may risk an economic ‘decoupling’ with the West.Marina Yue Zhang, Associate Professor of Innovation and Entrepreneurship, Swinburne University of TechnologyDavid Gann, Pro-Vice-Chancellor, Development and External Affairs, and Professor of Innovation and Entrepreneurship, Saïd Business School, University of OxfordMark Dodgson, Visiting Professor, Imperial College Business School, and Emeritus Professor, School of Business, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1805172022-04-01T12:59:24Z2022-04-01T12:59:24ZWill Intel save Europe’s struggling semiconductor industry?<figure><img src="https://images.theconversation.com/files/455802/original/file-20220401-19520-dszx31.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Vorsprung durch technik has been in short supply. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/hannover-germany-march-14-2016-booth-393455278">drserg</a></span></figcaption></figure><p>Intel’s proposed <a href="https://www.intel.com/content/www/us/en/newsroom/news/eu-news-2022-release.html">US$30 billion</a> (£23 billion) investment in semiconductor manufacturing capacity across Europe has the potential to significantly boost the continent’s struggling chip industry. </p>
<p>The US giant is poised to invest an initial US$17 billion to build a cutting-edge semiconductor factory (known as a fab) in Germany, along with associated R&D facilities to develop new generations of chips in France, Ireland and Poland. It is also in negotiations with the Italian government to develop a manufacturing facility in that country. </p>
<p>If such proposals come to fruition, the overall investment could top US$80 billion and create over 3,000 high-tech jobs and many more across the digital supply chain. Intel, the relevant national governments and the European Commission argue that these investments will transform Europe’s semiconductor supply chain and make it more competitive. The role of national governments and the European Commission is important to note as Intel’s investment is likely to be underpinned by billions of euros worth of public subsidies.</p>
<p>Chip production has been high on Europe’s agenda as many high-technology companies have been struggling to source chips because the COVID-19 pandemic has disrupted worldwide supplies. Europe’s <a href="https://www.acea.auto/message-dg/chip-shortage-auto-industry-calls-for-more-eu-made-semiconductors/">automotive industry</a> has been particularly hindered as a result. Russia’s invasion of Ukraine has accentuated the problem because the industry <a href="https://www.euractiv.com/section/digital/news/ukraine-war-could-further-upset-the-production-of-semi-conductors/">relies on both nations</a> for neon, which is vital for the lasers used to cut state-of-the-art chips. </p>
<p>Intel’s investment in new capacity is not going to address these current issues, given that production is not expected to begin <a href="https://www.cnbc.com/2022/03/15/intel-commits-36-billion-to-making-chips-in-europe.html#:%7E:text=The%20factories%20will%20use%20the,no%20regulatory%20issues%2C%20Intel%20said.">until 2027</a>. But it could eventually ease Europe’s dependency on sourcing chips from afar and revitalise the continent’s increasingly uncompetitive operations. </p>
<h2>The world market</h2>
<p>The semiconductor industry is global in scope, with <a href="https://techwireasia.com/2021/03/is-the-world-too-dependent-on-asias-semiconductor-industry/">nearly two-thirds</a> of chips manufactured in Asia – particularly South Korea, Taiwan, Japan and China. This dominance has come at the expense of European producers, which now account for only around 8% of the world market, compared to 44% in 1990. This is largely the result of under-investment. </p>
<p>Principally as a result of heightened geopolitical instability, the EU has recently become concerned about “digital sovereignty”. Its recent <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729">European Chips Act</a> set out a range of measures to boost European production by pooling different countries’ resources to complement their individual research strengths. It also supports developing new production facilities with a view to increase Europe’s share of the global market to 20% by 2030.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/455796/original/file-20220401-14-zzvbn8.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Chart showing semiconductor production by country over time" src="https://images.theconversation.com/files/455796/original/file-20220401-14-zzvbn8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/455796/original/file-20220401-14-zzvbn8.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=306&fit=crop&dpr=1 600w, https://images.theconversation.com/files/455796/original/file-20220401-14-zzvbn8.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=306&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/455796/original/file-20220401-14-zzvbn8.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=306&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/455796/original/file-20220401-14-zzvbn8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=384&fit=crop&dpr=1 754w, https://images.theconversation.com/files/455796/original/file-20220401-14-zzvbn8.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=384&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/455796/original/file-20220401-14-zzvbn8.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=384&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.statista.com/chart/25552/semiconductor-manufacturing-by-location/">Boston Consulting/Semiconductor Industry Association</a></span>
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<p>Intel’s announced investment is the most tangible outcome to date and is certainly welcome, though it is unlikely to fully rekindle the European industry alone. The industry tends to be populated by SMEs (smaller businesses) and clustered in a small number of locations, including Leuven (Belgium), Dresden (Germany), Eindhoven (Netherlands), Grenoble (France) and Cardiff (UK). </p>
<p>Our <a href="https://csconnected.com/wp-content/uploads/2022/02/Huggins-Johnston-Munday-Xu-The-Future-of-Europes-Semiconductor-Industry.pdf">recent research</a> into these clusters suggests that many companies have been starved of investment from either private or public sources to expand and innovate. This is compounded by a lack of demand from European technology companies. </p>
<p>For example, with the demise of Nokia, Europe no longer has a giant company such as Apple or Samsung that demands the most sophisticated chips. For many of Europe’s semiconductor companies, which are engaged in chip design rather than production, these issues are stifling the growth of the industry more than a lack of manufacturing capacity.</p>
<h2>What needs to happen</h2>
<p>To address this, the Intel intervention needs to form part of a coherent and integrated strategy to boost the competitiveness and innovation capacity of the European sector as a whole. Like other deep tech sectors, the chip industry is increasingly an entrepreneurial one. New and innovative ideas are sparked by start-up companies that are able to commercialise these ideas and create value. </p>
<p>There is a very real need to provide business and infrastructure support, as well as skills development and commercialisation routes to allow start-ups to enter the industry and current incumbents to upgrade and scale up.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/455798/original/file-20220401-19-fwjbc2.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Illustration of EU flag with a microchip on top" src="https://images.theconversation.com/files/455798/original/file-20220401-19-fwjbc2.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/455798/original/file-20220401-19-fwjbc2.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=395&fit=crop&dpr=1 600w, https://images.theconversation.com/files/455798/original/file-20220401-19-fwjbc2.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=395&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/455798/original/file-20220401-19-fwjbc2.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=395&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/455798/original/file-20220401-19-fwjbc2.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=497&fit=crop&dpr=1 754w, https://images.theconversation.com/files/455798/original/file-20220401-19-fwjbc2.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=497&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/455798/original/file-20220401-19-fwjbc2.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=497&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Chips off the old bloc.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/european-flag-board-front-dramatic-sky-1343083016">gopixa</a></span>
</figcaption>
</figure>
<p>Innovation is clearly the name of the game when it comes to competitiveness in chip-making. To give the European Commission its due, it has provided significant funding for semiconductor research over a number of years through the Framework and Horizon programmes. However, successful commercialisable innovations stemming from this research have been <a href="https://csconnected.com/wp-content/uploads/2022/02/Huggins-Johnston-Munday-Xu-The-Future-of-Europes-Semiconductor-Industry.pdf">relatively sparse</a>. </p>
<p>Therefore, alongside supporting large, foreign direct investment projects there must be an enhanced focus on improving the entrepreneurial and innovative capabilities and capacity across Europe’s semiconductor industry. Without this, there is a real danger that due to a lack of significant viable demand in future, we will be reading news of the mothballing of the proposed new manufacturing facilities.</p><img src="https://counter.theconversation.com/content/180517/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Europe’s share of the global microchip market has dropped from 44% to 8% in three decades.Andrew Johnston, Professor of Innovation and Entrepreneurship, Coventry UniversityRobert Huggins, Professor of Economic Geography, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1784862022-03-11T13:21:46Z2022-03-11T13:21:46ZUkraine war and anti-Russia sanctions on top of COVID-19 mean even worse trouble lies ahead for global supply chains<figure><img src="https://images.theconversation.com/files/451425/original/file-20220310-23-1tvu4vo.jpg?ixlib=rb-1.1.0&rect=28%2C45%2C3805%2C2506&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Supply chains were already in disarray thanks to overcongested ports, as in Los Angeles.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/CaliforniaOverloadedPorts/d30c08f37b2b4de5979e4ca5a7723a41/photo?Query=cargo%20ships&mediaType=photo&sortBy=creationdatetime:desc&dateRange=Anytime&totalCount=3190&currentItemNo=29">AP Photo/Damian Dovarganes</a></span></figcaption></figure><p>Francis Fukuyama, the American political scientist who once described the collapse of the Soviet Union as the “end of history,” <a href="https://www.ft.com/content/d0331b51-5d0e-4132-9f97-c3f41c7d75b3">suggested that Russia’s invasion of Ukraine</a> might be called “the end of the end of history.” He meant that Vladimir Putin’s aggression signals a rollback of the ideals of a free Europe that emerged after 1991. Some observers suggest it <a href="https://www.nytimes.com/2022/03/01/opinion/russia-ukraine-cold-war.html">may kick off a new Cold War</a>, with an <a href="https://www.washingtonpost.com/national-security/2022/03/09/ukraine-russia-iron-curtain/">Iron Curtain separating the West from Russia</a>.</p>
<p>As an <a href="https://tinglongdai.com/research/#covid-related">expert in global supply chains</a>, I think the war portends the end of something else: global supply chains that <a href="https://www.abc.net.au/news/2022-03-06/why-global-supply-chains-will-be-rewritten-in-coming-years/100875330">Western companies built</a> after the Berlin Wall fell over three decades ago.</p>
<p><a href="https://hub.jhu.edu/2021/11/01/supply-chain-issues-dai/">Supply chains</a> – often vast networks of resources, money, information and people that companies rely on to get goods or services to consumers – <a href="https://hub.jhu.edu/2021/11/01/supply-chain-issues-dai">were already in disarray</a> because of the COVID-19 pandemic, resulting in massive shortages, disruptions and price inflation. The war and <a href="https://correctiv.org/en/latest-stories/2022/03/01/sanctions-tracker-live-monitoring-of-all-sanctions-against-russia/">resulting sanctions against Russia</a> have immediately put further strains on them, <a href="https://www.cnbc.com/2022/03/08/americans-are-paying-the-most-at-the-pump-on-record-amid-a-surge-in-energy-prices.html">prompting skyrocketing energy prices</a> and <a href="https://inews.co.uk/news/putin-war-russia-ukraine-risks-global-catastrophe-wheat-prices-middle-east-africa-famine-1504866">even fears of famine</a>. </p>
<p>But beyond these short-term effects, I believe the war in Ukraine could drastically reshape global supply chains in a way the pandemic never did.</p>
<figure class="align-center ">
<img alt="A person pumps gasoline into the fuel tank of a car" src="https://images.theconversation.com/files/451158/original/file-20220309-22-17bm353.jpg?ixlib=rb-1.1.0&rect=40%2C109%2C3713%2C2443&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/451158/original/file-20220309-22-17bm353.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451158/original/file-20220309-22-17bm353.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451158/original/file-20220309-22-17bm353.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451158/original/file-20220309-22-17bm353.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451158/original/file-20220309-22-17bm353.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451158/original/file-20220309-22-17bm353.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The cost of filling up a car with gas soared after the U.S. banned imports of Russian oil.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/CaliforniaRussiaUkraineWarEnergyPrices/8e2c932606284c2c93d38246fa05c834/photo?Query=gas%20prices&mediaType=photo&sortBy=creationdatetime:desc&dateRange=Anytime&totalCount=4756&currentItemNo=33">AP Photo/Damian Dovarganes</a></span>
</figcaption>
</figure>
<h2>Immediate effects: Fuel and famine</h2>
<p>Russia accounts for less than <a href="https://www.worldometers.info/gdp/gdp-by-country/">2% of global gross domestic product</a>, while Ukraine accounts for only 0.14%. As a result, they have little direct impact on global supply chains – except in a few very important areas. </p>
<p>Let’s start with the most obvious one: energy. Russia supplies nearly 40% of Europe’s <a href="https://www.npr.org/2022/02/09/1079338002/russia-ukraine-europe-gas-nordstream2-energy">natural gas supply</a> and 65% of Germany’s. It is the third-largest oil exporter in the world, <a href="https://www.wsj.com/articles/why-does-the-u-s-still-buy-russian-oil-11646151935">accounting for 7% of all crude oil</a> and petroleum product imports into the United States. After the Biden administration signaled it would stop importing Russian oil, the <a href="https://www.bloomberg.com/quote/CL1:COM?sref=Hjm5biAW">price of crude topped US$130</a> per barrel for the first time in 13 years, and consumers in some parts of the U.S. have seen average gasoline prices <a href="https://ktla.com/news/local-news/l-a-gas-prices-surge-past-5-average-for-1st-time/">rise above $5</a> per gallon. </p>
<p>Less obviously, Russia and Ukraine account for nearly <a href="https://www.ft.com/content/457ba29e-f29b-4677-b69e-a6e5b973cad6">one-third</a> of all global wheat exports. Several countries, including Kazakhstan and Tanzania, import more than 90% of their wheat from Russia. The war has the potential to disrupt the still-recovering <a href="https://www.worldbank.org/en/topic/agriculture/brief/food-security-and-covid-19">global food supply chain</a> and endanger the livelihoods of millions of people.</p>
<p>Even less obviously, <a href="https://www.reuters.com/breakingviews/ukraine-war-flashes-neon-warning-lights-chips-2022-02-24/">Ukraine produces 90%</a> of the semiconductor-grade neon used in the United States. Russia, on the other hand, provides the United States <a href="https://www.reuters.com/technology/white-house-tells-chip-industry-brace-russian-supply-disruptions-2022-02-11/">more than a third</a> of its palladium, a rare metal also required to make semiconductors. Although companies have <a href="https://www.reuters.com/technology/limited-impact-chips-yet-russia-invades-ukraine-future-uncertain-2022-02-24/">enough inventory</a> to fulfill immediate needs and may find alternative suppliers, some disruptions are inevitable. And this comes at a time when the world is <a href="https://www.barrons.com/articles/ford-stock-price-car-production-chip-shortage-51646399837">still suffering from a severe chip shortage</a>, which has slowed auto production and sent <a href="https://www.cnn.com/2022/01/20/business/car-prices-easing-2022/index.html">new and used car prices soaring</a>.</p>
<p>It is also worth noting that <a href="https://www-forbes-com.cdn.ampproject.org/c/s/www.forbes.com/sites/willyshih/2022/03/06/the-titanium-supply-chain-for-the-aerospace-industry-goes-through-russia/amp/">Russia is a dominant</a> exporter of titanium and titanium forgings, which are popular in the aerospace industry because of their light weight. This war <a href="https://www.reuters.com/business/aerospace-defense/boeing-says-us-russia-relations-weighing-business-2022-01-31/">will further stress</a> the aerospace supply chain.</p>
<h2>Snarling trade</h2>
<p>While the direct effects of the war on supply chains are relatively limited, the impact on the global movement of goods and services has been significant – I believe even greater than from COVID-19. </p>
<p>After <a href="https://www.businessinsider.com/map-shows-countries-that-closed-airspace-russia-over-ukraine-war-2022-3">36 countries</a>, including EU members, the U.S. and Canada, closed their airspace to Russian aircraft, <a href="https://www.marketwatch.com/story/russias-attack-on-ukraine-has-closed-airspace-and-disrupted-airline-routes-but-its-also-impacted-the-transportation-of-air-cargo-11646416225">Russia retaliated with the same restrictions</a>. As a result, goods transported by air freight from China to Europe or the Eastern U.S. may need to be rerouted or use slower or more expensive modes of transportation. The China-Europe rail freight route that goes through Russia, which <a href="https://qz.com/2102636/supply-chain-chaos-spurs-china-europe-rail-freight-revival/">was experiencing a boom</a> in 2021 because of congestion in major ports, <a href="https://www.scmp.com/economy/global-economy/article/3169239/what-china-europe-railway-express-and-how-much-pressure-it">now faces mounting cancellations</a> from European clients. </p>
<p>The war has also had a devastating impact on global trade movements, with <a href="https://apnews.com/article/russia-ukraine-business-europe-middle-east-global-trade-12ba42660a05c0b3ff533aec4e73bbac">hundreds of tankers and bulk carriers</a> stranded at ports as a result of sanctions imposed on Russian-connected ships. It has also resulted in severe travel and transport restrictions imposed on Russia and Belarus in an <a href="https://apnews.com/article/russia-ukraine-business-europe-middle-east-global-trade-12ba42660a05c0b3ff533aec4e73bbac">unprecedentedly rapid and broad</a> manner that has been coordinated among multiple nations.</p>
<p>In addition, the disruption of the route from China to Europe and the U.S. could do severe damage to China’s “<a href="https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative">Belts and Roads</a>” initiative. That’s the ambitious trillion-dollar project aimed at reshaping global trade and affirming the dominance of a China-centric global supply chain, especially in Europe and Asia. Because both Russia and Ukraine are critical links in the initiative, it will almost certainly need to scale back in size and scope.</p>
<figure class="align-center ">
<img alt="An elderly white Russian woman with a pink and white hat eats a hamburger with McDonalds bags and a drink on a table in front of her" src="https://images.theconversation.com/files/451427/original/file-20220310-19-1u3hnw5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/451427/original/file-20220310-19-1u3hnw5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=419&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451427/original/file-20220310-19-1u3hnw5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=419&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451427/original/file-20220310-19-1u3hnw5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=419&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451427/original/file-20220310-19-1u3hnw5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=527&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451427/original/file-20220310-19-1u3hnw5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=527&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451427/original/file-20220310-19-1u3hnw5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=527&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Russia went to war against Ukraine – even though both countries had McDonald’s.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/USSRMOSCOWMCDONALDS/a17efc70aae4da11af9f0014c2589dfb/photo?Query=McDonald%27s%20moscow&mediaType=photo&sortBy=creationdatetime:desc&dateRange=Anytime&totalCount=36&currentItemNo=32">AP Photo/Rudi Blaha</a></span>
</figcaption>
</figure>
<h2>A supply chain Iron Curtain</h2>
<p>The New York Times columnist Thomas Friedman, a true believer in globalization, in 1996 <a href="https://www.nytimes.com/1996/12/08/opinion/foreign-affairs-big-mac-i.html">famously theorized</a> that no two countries that both have a McDonald’s would ever fight a war against each other. McDonald’s has about 850 restaurants in Russia and 100 in Ukraine, all of which <a href="https://www.pbs.org/newshour/world/mcdonalds-to-temporarily-close-all-russian-locations-in-response-to-ukrainian-war">have now been temporarily closed</a>.</p>
<p>His point was that countries with economies and middle classes big enough to support a McDonald’s “don’t like to fight wars; they like to wait in line for burgers.” It was also based on the belief that rational economic calculations will always triumph over geopolitical conflicts – that is, leaders in such countries wouldn’t let their differences get in the way of trade and making money.</p>
<p>And the supply chains that <a href="https://www.abc.net.au/news/2022-03-06/why-global-supply-chains-will-be-rewritten-in-coming-years/100875330">companies erected</a> in the decades since then have crisscrossed the globe, ignoring old enemy lines for the sake of efficiency and higher profits. </p>
<p><a href="https://www.nytimes.com/2022/02/25/opinion/putin-russia-ukraine.html">Friedman now concedes</a> Russia’s action has shattered that theory. I agree, and in fact the world may now be on the cusp of a new type of supply chain Iron Curtain with Russia and its allies on one side and the West on the other. Companies will no longer be able to separate business from geopolitics.</p>
<p>And those allies include China, which <a href="https://www.nytimes.com/2022/01/05/business/economy/supply-chain-reshoring-us-manufacturing.html">remains pivotal to most Western companies’ supply chains</a>. Despite China’s <a href="https://www.nytimes.com/2022/03/08/briefing/china-russia-xi-jinping-vladimir-putin.html">ambiguous</a> stance on the invasion, the war will likely serve as a catalyst to reduce that dependence, at least for <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/24/the-biden-harris-plan-to-revitalize-american-manufacturing-and-secure-critical-supply-chains-in-2022">critical products</a> such as materials used for semiconductor manufacturing, medical supplies and electric batteries. </p>
<p>Moreover, the growing emphasis of shareholders and regulators on <a href="https://theconversation.com/esg-investing-has-a-blind-spot-that-puts-the-35-trillion-industrys-sustainability-promises-in-doubt-supply-chains-170199">environmental, social and governance</a> issues means how a company does in each category can affect its <a href="https://www.mckinsey.com/%7E/media/mckinsey/dotcom/client_service/high%20tech/pdfs/shaping_the_future1.ashx">daily operations</a> and <a href="https://www.msci.com/www/blog-posts/esg-and-the-cost-of-capital/01726513589">cost of capital</a>. On the issue of Ukraine, the <a href="https://www.cnbc.com/2022/03/08/after-russia-exit-moves-corporations-face-a-much-trickier-end-game.html">push to be more socially responsible</a> is one reason companies have <a href="https://apnews.com/article/russia-ukraine-business-europe-middle-east-global-trade-12ba42660a05c0b3ff533aec4e73bbac">overcomplied with sanctions</a>. It’s also prompting them to <a href="https://www.cnbc.com/2022/03/08/after-russia-exit-moves-corporations-face-a-much-trickier-end-game.html">proactively avoid geopolitical risks</a>, which can involve <a href="https://www.cnbc.com/2022/03/08/after-russia-exit-moves-corporations-face-a-much-trickier-end-game.html">retreating from an entire economy</a>.</p>
<p>Russia’s war against Ukraine is still ongoing, and there’s no way to know for certain how long the sanctions will remain in place or whether <a href="https://theconversation.com/why-apple-disney-ikea-and-hundreds-of-other-western-companies-are-abandoning-russia-with-barely-a-shrug-178516">companies that have chosen to leave Russia</a> will return. But I believe one thing is certain: Global supply chains, like the rest of the world, will never be the same again as a result of this war.</p>
<p>[<em>More than 150,000 readers get one of The Conversation’s informative newsletters.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-150K">Join the list today</a>.]</p><img src="https://counter.theconversation.com/content/178486/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tinglong Dai does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In the short term, the war is causing energy prices to soar and prompting fears of famine in some countries. In the long term, it could remake the modern global supply chain.Tinglong Dai, Professor of Operations Management & Business Analytics, Carey Business School, Johns Hopkins UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1758772022-01-28T16:35:54Z2022-01-28T16:35:54ZIntel can’t even grow profits during a global chip shortage – where did it all go wrong?<figure><img src="https://images.theconversation.com/files/443166/original/file-20220128-23-1d29d2t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Intel Inside no longer means what it once did. </span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/0uXzoEzYZ4I">Slejven Djurakovic</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>American chip-making giant Intel is a shadow of its former self. Despite the <a href="https://www.zdnet.com/article/heres-what-analysts-expect-from-chip-shortages-in-2022/">global semiconductor shortage</a>, which has <a href="https://finance.yahoo.com/news/3-chip-stocks-watch-semiconductor-220000966.html">boosted rival</a> chipmakers, Intel is making less money than a year ago with net income down 21% year over year to <a href="https://www.wsj.com/articles/intel-wins-eu-antitrust-appeal-as-court-annuls-1-2-billion-fine-11643193031">US$4.6 billion</a> (£3.4 billion). Unfortunately, this is an ongoing trend. </p>
<p>Intel was the world’s largest chipmaker until 2021, when it was <a href="https://asia.nikkei.com/Business/Tech/Semiconductors/Samsung-overtook-Intel-as-top-chip-seller-in-2021">dethroned by Samsung</a>. Though Samsung’s main business is memory chips, which is a different segment of the market to Intel’s microprocessors, it is sign of Intel’s decline. We’ve been tracking global companies’ future-readiness at the International Institute for Management Development (IMD), and Intel now <a href="https://www.imd.org/future-readiness-indicator/home/technology/">comes out 16th</a> in the technology sector. </p>
<p>There are two fundamental issues, <a href="https://www.barrons.com/articles/intel-bitcoin-mining-chips-51642617554">according to</a> Matt Bryson, an analyst at Wedbush Securities: “[Intel] fell behind AMD in chip design and Taiwan Semiconductor (TSMC) in manufacturing.” During the most recent earnings call with analysts, CEO Pat Gelsinger had to <a href="https://seekingalpha.com/article/4481909-intel-corporation-intc-ceo-pat-gelsinger-on-q4-2021-results-earnings-call-transcript">concede that</a> the technology in Intel’s data-centre processors hadn’t been improved in five years. In his words, it was “an embarrassing thing to say”. </p>
<p>How did this happen to a company that for many years was well ahead of its competition, and what are the chances of a turnaround?</p>
<h2>Intel’s in-house model</h2>
<p>Intel used to be the undisputed king of microprocessors. PCs were made by many companies, but these were effectively just brand names. The prowess of the machines depended on whether they had an <a href="https://theconversation.com/happy-50th-birthday-intel-you-look-a-lot-like-the-next-kodak-100065">“Intel inside”</a>. </p>
<p>Here is how you compete as a chipset manufacturer: you etch more transistors on a slice of silicon wafer. To achieve this, Intel outspent its rivals on R&D and attracted the best scientists. But most importantly, it kept full control of both product design and manufacturing. </p>
<p>Intel’s engineers – from research to design to manufacturing – have always worked as a <a href="https://www.extremetech.com/computing/127987-deliberate-excellence-why-intel-leads-the-world-in-semiconductor-manufacturing">close in-house team</a>. In contrast, fellow US rivals like Qualcomm, Nvidia and AMD, have either shed their manufacturing capacity or never had it in the first place. They outsource to suppliers such as TSMC and other third-party foundries for the same reason that most of the stuff sold in Walmart is made in China: it’s cheaper.</p>
<p><strong>Share performances of leading chipmakers, 2019-22</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/443162/original/file-20220128-25-1dqrpxv.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Chart showing share performance of global chipmakers since 2019" src="https://images.theconversation.com/files/443162/original/file-20220128-25-1dqrpxv.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/443162/original/file-20220128-25-1dqrpxv.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=341&fit=crop&dpr=1 600w, https://images.theconversation.com/files/443162/original/file-20220128-25-1dqrpxv.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=341&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/443162/original/file-20220128-25-1dqrpxv.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=341&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/443162/original/file-20220128-25-1dqrpxv.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=429&fit=crop&dpr=1 754w, https://images.theconversation.com/files/443162/original/file-20220128-25-1dqrpxv.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=429&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/443162/original/file-20220128-25-1dqrpxv.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=429&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Orange = Nvidia, yellow = TSMC, turquoise = Qualcomm, purple = Samsung, blue = Intel.</span>
<span class="attribution"><span class="source">Trading View</span></span>
</figcaption>
</figure>
<p>The challenge with outsourcing manufacturing is that your suppliers are probably not in the same building as you. Meetings won’t happen at the watercoolers or in the staff cafeteria. It takes scheduling and coordination. There’s bureaucracy. It’s hard to be on the same page.</p>
<p>The problems that this can cause can be all too evident – for a long while, TSMC and Nvidia would be <a href="https://www.extremetech.comcomputing/123529-nvidia-deeply-unhappy-with-tsmc-claims-22nm-essentially-worthless">blaming each other</a> for manufacturing issues, for instance. For years, Intel’s one-team approach enabled it to pull further and further away from the competition, with processors that were the most powerful. Yet what happened next was the classic disruption. </p>
<h2>The great library of Taiwan</h2>
<p>When mobile <a href="https://theconversation.com/happy-50th-birthday-intel-you-look-a-lot-like-the-next-kodak-100065">took off</a>, the chipset didn’t require as much computing power as those in a laptop or PC, since the priority was energy-saving to extend battery life on a single charge. As Intel was in the business of selling top-quality chips for high margins, it left its rivals to supply chipsets for this new market. As a result, Intel got locked into selling ever more expensive and power-guzzling CPUs for PCs. </p>
<p>With Qualcomm and Apple increasing orders to TSMC to supply Androids and iPhones, the Taiwanese supplier had to master remote work many years before the rest of us. It built up a formidable intellectual property (IP) library online, containing not only its own IP but also that of other suppliers in the value chain. </p>
<p>TSMC could now quickly tell its customers what was possible from a manufacturing perspective and encode such knowledge into design rules. Transparency was total. Its customers could take what was available from the menu and stretch their product design to the limit.</p>
<p>TSMC’s library has gradually become the industry’s largest. The best part is that workflow coordination is done online in a “virtual foundry” system that involves performance simulation, computer modelling and instant feedback. With virtual workflow that improves month after month, year after year, TSMC has steadily neutralised Intel’s advantages. </p>
<h2>Risk and demand</h2>
<p>TSMC doesn’t have to shoulder the risks of launching a new product. It just needs to excel in manufacturing, because if a Qualcomm product fails, AMD’s may take off. TSMC can switch capacity from one client to another. Risk is mitigated when demand is pooled.</p>
<p>For chip designers, outsourcing to TSMC has gradually meant they can afford to be fast-moving and bold in product design. If a new chip doesn’t sell, they can pull the plug without having to worry about the factory: that’s TSMC’s problem. </p>
<p>That’s how Nvidia has evolved beyond deploying graphic processors only in the gaming sector; it’s now leading in designing chipsets for AI applications. And AMD, an underdog close to bankruptcy in 2014, now makes some of the most powerful processors. </p>
<p>Intel, meanwhile, still needs to ensure that every product wins with enough volume to feed its network of factories, each costing billions of dollars. This has made the company more and more conservative. And having stuck to supplying chips to PCs, servers and data centres, it is struggling to innovate. Tellingly, the company’s gross margin – total revenue minus the cost of production – <a href="https://www.macrotrends.net/stocks/charts/INTC/intel/gross-margin">has been sliding</a> for nearly a decade. The biggest danger for a technology company is that it’s not developing leading-edge products fast enough, backsliding into selling commodities. </p>
<p>The big issue for Pat Gelsinger is, how can a company built on self-reliance transform its culture quickly? He is <a href="https://www.cnbc.com/2021/03/23/intel-makes-foundry-strategy-shift-under-new-ceo-pat-gelsinger-.html">talking about</a> building a foundry service to regain scale in manufacturing. But the question is, how can Intel become a collaborative organisation not in a decade, but in a year? </p>
<p>Andy Grove, the legendary late chairman of Intel got it right. He said: “Only the paranoid survive.”</p><img src="https://counter.theconversation.com/content/175877/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Howard Yu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The story of how America’s great chipmaker’s main strength became an albatross around its neck.Howard Yu, Professor of Management and Innovation, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.