The indispensability of semiconductors
The potential control of the technology industry will be in the hands of the nation that overcomes the obstacles of global chains and can produce chips autonomously.
- Análisis
![semicondurtores.jpg semicondurtores.jpg](https://www.alainet.org/sites/default/files/styles/imagen-principal-articulo/public/semicondurtores.jpg?itok=QMEFQ8-_)
The technological development of the last decades has transformed global value chains, in which some inputs have become indispensable and strategic. This text will provide a general introduction to the semiconductor industry, explaining some of the general characteristics of this industry, why it is so important nowadays, and its role in the technology war between China and the United States.
Electrical conductivity is a physical property of materials that refers to the ability of the material to allow electrical current to pass through it. The word semiconductors define materials that can behave as both conductors and insulators, depending on modified factors applied to them, such as temperature, pressure, radiation, or changing their electric or magnetic field.
Silicon is the most widely used semiconductor element in the semiconductor industry and the second most abundant on earth, after oxygen. These are components in the manufacture of integrated circuits, popularly known as chips or microchips. Commonly, when people talk about the technology and electronics industry and mention semiconductors, they are referring to chips.
The semiconductor supply chain is somewhat unique. Due to the increasing technological complexity and the need for mass production, it is composed of actors specialised in each phase of creation and production. There are four main types of companies in this chain: embedded device manufacturers (IDMs), which are in charge of several phases of the value chain; fabless companies are exclusively in charge of creating the design of new chips, but contract others for their production; foundries focus solely on the production of the chips, which cover production needs; and outsourced assembly and test (OSATs), which focus on providing assembly, packaging and test services under contract for both IDMs and fabless. The diagram below shows several of the larger companies representing the four types.
The offshoring of production is one of the main characteristics of the supply chain in this industry. So much so that no country carries out the entire value chain. Over the last decades, most of the physical production of chips has shifted from the West to Asia, particularly Taiwan. It is an essential factor when analysing the geopolitical importance of chips in the last decade.
Source: Strengthening the global semiconductor supply chain in an uncertain era. Semiconductor Industry Association (SIA). 2021.
The geographic distribution of the supply chain has translated into a geopolitical risk for several countries, mainly China and the US. While US companies are characterised by being fabless and transferring their production to companies in Asia, this region has captured almost all of the production and assembly in this industry. As the graph below shows, East Asia and China account for a significant part of these stages of the chain. It represents a potential danger for countries such as the United States as they depend on foreign production to meet their demand, including for weapons production and national security.
Source: Strengthening the global semiconductor supply chain in an uncertain era. Semiconductor Industry Association (SIA). 2021.
Towards the end of the second Obama administration, the White House began calling for a domestic policy for the development and sovereignty of the semiconductor industry in response to the perceived threat of its development in China. With the political and trade tensions during the Trump administration, and the latter's punitive actions against Huawei, both countries placed this industry as one of their principal axes in technology policy. What is remarkable is that China made it a focus since 2006 with the 10th Five-Year Plan (2006 - 2010) by targeting the development of high-tech manufacturing. The United States seeks to regain production capacity at home to reduce its dependence on foreign production after reacting belatedly to Chinese technological development. The West appears to be lagging in an activity led by Asian countries.
The potential control of the technology industry will be in the hands of the nation that overcomes the obstacles of global chains and can produce chips autonomously. Taiwan and TSMC have become the eye of the hurricane. Washington warned the Taiwanese government of a possible Chinese military entry and offered assistance to safeguard "the social or economic system of the Taiwanese people". China, for its part, seeks to be less dependent on Taiwan for manufacturing, but does not rule it out as part of its territory and will not allow its independence or relationship with the US. The chip market is another dispute, like renewable energies and telecommunications, in the struggle to lead the world economy.
Num.12, Year 2021, April 19th
- Hiromi Iijima Cruz, Faculty of Economics, UNAM, member of obela.org.
- OBELA: Oscar Ugarteche (Coord.), Armando Negrete, Carlos de León, Jorge Zavaleta, Priscila Martínez, Bertín Acosta, Hiromi Iijima.
Del mismo autor
- The search for Latin American lithium 14/06/2021
- Búsqueda por el litio latinoamericano 14/06/2021
- The indispensability of semiconductors 21/04/2021
- La imprescindibilidad de los semiconductores 21/04/2021
- The RCEP: the new trade Asian block facing Latin America and the Caribbean 23/02/2021
- La RCEP: una alternativa para América Latina y el Caribe 23/02/2021
- The integration of Asia and the (dis)integration of the West 11/12/2020
- La integración de Asia y la (des)integración de Occidente 11/12/2020
Clasificado en
Ciencia y tecnología
- Alfredo Moreno 22/12/2021
- William I. Robinson 20/12/2021
- William Robinson 16/12/2021
- Evgeny Morozov 16/08/2021
- Joseline García, OBELA 11/08/2021
![Suscribirse a America Latina en Movimiento - RSS](https://www.alainet.org/misc/feed.png)