October 4, 2022
Semiconductor alliance between the US and Asia could stop China

Analysts told CNBC that leading chipmaking nations, including the US, are forming alliances to secure their semiconductor supply chains and prevent China from reaching the industry’s cutting edge.

Those including the United States, South Korea, Japan and Taiwan, which have strong semiconductor industries, have sought to build partnerships around critical technology.

“The immediate cause of all this is certainly China,” said Pranay Kotasthane, president of the Hi-Tech Geopolitics Program at the Taxila Institution, in reference to the alliance.

The teaming underscores how important the chips are to the economy and national security, as well as highlights the countries’ willingness to halt China’s advances in critical technology.

Guest in the latest episode of Kotasthene CNBC’s Beyond the Valley Podcast Published Tuesday, which looks at the geopolitics behind semiconductors.

Why chips are in the geopolitical spotlight

Semiconductors are important technology as they go into many of the products we use – from smartphones to cars and refrigerators. And they are important for artificial intelligence applications and even weapons.

The importance of chips was brought to the limelight during a The ongoing shortage of these components, which was sparked by the COVID pandemic, comes amid increased demand for consumer electronics and supply chain disruptions.

It alerted governments around the world to the need to secure chip supplies. The United States, under President Joe Biden, has pushed to restart manufacturing.

Forming alliances that exclude China

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tension in the alliance

Nevertheless, some cracks are beginning to appear between some partners, notably South Korea and the United States.

in an interview with financial TimesSouth Korea’s trade minister Ahn Duk-gyun said Seoul and Washington had disagreements over the latter’s export restrictions on semiconductor equipment to China.

“Our semiconductor industry is very concerned about what the US government is doing these days,” Ah told the FT.

US will take a long time to compete with Asia in chip production, says strategist

China, the world’s largest importer of chips, is a major market for chip companies around the world, ranging from US giants such as Qualcomm to Samsung in South Korea. With a mix of politics and business, these high-tech alliances could set the stage for greater tensions between nations.

“Not all US allies are eager to sign up to these alliances, or expand control over technology bound for China, because they have major equity in both manufacturing in China and sales in the Chinese market. Most do not want to run away from Beijing on these issues,” Triolo said.

“A major risk is that attempts to coordinate parts of the global semiconductor supply chain development undermine the market-driven nature of the industry and cause major collateral damage to innovation, drive up costs and hinder the development of new technologies. slows down the pace.”

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