China Being Squeezed Out Of Semiconductor Game

in LeoFinance2 months ago

Semiconductors are a vital part of any economic environment these days. As we are all learning, life without them gets very difficult. Since the pandemic hit, there has been a shortage of semiconductors globally as demand skyrocketed. Now, eighteen months later, chip manufacturers are still trying to work through the backlog.

How long this will last is anyone's guess. Estimates are all over the place and depend upon what type of chip there is. Most put the shortage into 2022 with some believing 2023 is a better target.

Either way, semiconductor manufacturers are trying to kick things into high gear. We are seeing a number of plants being proposed, which will eventually increase the global chip production.

One country that is being excluded is China.


Japan Getting A New Plant?

Taiwan Semiconductor Manufacturing Co. and Sony are looking at building a new plant in Japan. This will cost around $7 billion. The Japanese government is expected to be in the deal, putting up half the money.

Sony may also take a minority stake in a new company that will manage the factory, which will be located in Kumamoto Prefecture, on land owned by Sony and in an area adjacent to the latter's image sensor factory, according to multiple people familiar with the matter. The factory will make semiconductors used in camera image sensors, as well as chips for automobiles and other products, and is slated to go into operation by 2024, the people said.

It is a situation that favors Japan since, like most countries, they now view semiconductors as part of their national security initiatives. TMSC is one of the largest chip makers in the world and this would be their first venture into Japan. According to reports, they are not opposed to working with Japanese companies and are reviewing the plans for the project.

Of course, this is not an isolated situation.

The planned investment comes as major economies like the U.S. and Europe are also racing to bring semiconductor production onshore for national security reasons. Washington earlier this year passed a $52 billion bipartisan bill to support the research and development as well as manufacturing of semiconductors.

That is a figure that shows how serious countries are viewing the situation. For the Japanese, the idea of putting up money is to gain an assurance that Japanese companies get services first. In short, nations are realizing they do not want to be caught without semiconductors.

As we forge deeper into the digital age, this only makes sense.

The challenge is compounded by the fact nobody trusts the Chinese. This includes Japan, which is not entirely surprising considering their history.

As tensions between China and the U.S. mount, semiconductors are increasingly important to economic security as they form the foundation of various industries. Tokyo in June initiated measures to attract foreign companies amid China's escalating military pressure on Taiwan, a key supplier of semiconductors to Japan.


ASML Taking Chips To Another Level

We all heard the discussion about the end to Moore's Law. There is on company that is aiming to end that rhetoric.

ASML is about to unleash the most powerful manufacturing product of semiconductors. It will also be able to get chips down to 2 nm. This is smaller than anything on the market right now. The precision of ultraviolet lithography machines means that Moore's Law will likely remain in place for years to come.

The machines, priced at $150 million, will likely keep the industry on its present pace for a number of years. This will not only keep the advancement of computing going but the overall economy.

Also, to be cutting edge, it appears that every company needs one of these machines.

“You can’t make leading-edge chips without ASML’s machines,” says Will Hunt, a research analyst at Georgetown University studying the geopolitics of chipmaking. “A lot of it comes down to years and years of tinkering with things and experimenting, and it’s very difficult to get access to that.”

As you can imagine, this is not an easy industry to break into and few can instantly get started while achieving success. ASML started this process many years ago. It is also consider the expert in this arena.

Therefore, those who get these machines are going to have a distinct advantage. This not only applies to chip manufacturers but nations as well. We can clearly see how this is now becoming a national race. Those countries that are involved will see their manufacturing explode. The reverse is also likely to happen.


Without control over your chip system or if you are behind in the technology, it is going to be very difficult to operate on a competitive scale. Also, as Japan showed, the leading technology producing countries are going to ensure their companies have what they need.

Amid the recent chip shortage, triggered by the pandemic’s economic shock waves, ASML’s products have become central to a geopolitical struggle between the US and China, with Washington making it a high priority to block China's access to the machines. The US government has successfully pressured the Dutch not to grant the export licenses needed to send the machines to China, and ASML says it has shipped none to the country. (Bold Mine)


It seems the Chinese are going to be left out in the cold on this one.

By the way, the first chips using this equipment will be minted by Intel, most likely in 2023.

If you found this article informative, please give an upvote and rehive.

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Well there is still a way for them to re-enter the game and that is probably Taiwan but I hope it never comes to that.

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Now thats a thought to send shudders up my spine.

Let us pray that it never comes to pass.

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Bang, I did it again... I just rehived your post!


Thanks to industrial spying and reverse engineering, they will be adopted in other countries as soon as they are available to buy.

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Hi @heruvim

Ha HA... nice quip, with a big splash of truth.

Technologic secrets are the most fleeting secrets of all.

[Source] Leonard Nimoy as Spock in Star Trek circa 1970. I wonder who the writers borrowed it from?

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In fact, I am amazed at the genius solutions that Japan finds
They are honest when they say Japanese brains are different

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Ha Ha Ha... loved it.

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Very interesting. At least the battle is based on technological supremacy instead of biochemical, or any military based supremacy for that matter.

That’s definitely progress.

True, a blessing for sure. May all such conflicts be resolved in such a fashion.

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Thank you @taskmaster4450

This is an important issue that we should write our Congressman about as my dad use to say...

China is an amazing country, full of many wonderful and smart people, but all countries are stuck with the government leadership they vote for, or in some cases their parents or grandparents voted for....

The world is an amazing, dynamic organism, constantly see sawing towards the brink of war, and constantly discovering amazing and wonderful technology, which can be used for ill will or good will, the choice is and the path to that choice is what humans must work on...

If we teach ourselves to think rationally, act rationally and be less self centered, we may yet survive. nvirnments of abundance tend to raise such people, but envirnments of scarcity and hardship tend to develop people with the opposite qualities.

We are really our brothers keeper for a reason, no man is an island.
Said some one years ago....


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Really good news and have no concerns about China being left out in the cold as they deserve what is coming to them. $150 million doesn't sound expensive knowing the backlog that is holding everyone up. I am hoping this is the first of many changes moving away from China as countries need to take back control.

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well pandemic has changes lot of industries