Rivalry in the semiconductor industry between China, USA and Europe

The Japanese restrict Chinese access to tools to etch microscopic circuits on high-tech chips for smartphones, AI and other devices. These restrictions are part of the US and its allies’ actions against China for security reasons. China has invested billions of dollars in building semiconductor foundries but needs Western and Japanese technology to produce their most advanced versions.

TSMC, the world’s largest chip maker, intends to invest $2.9 billion in constructing a technologically advanced factory in Taiwan. TSMC’s chips are the powerhouse of generative artificial intelligence, a type of AI that can create new content, such as text and images, depending on user input.

India has concluded an agreement with the US (called Critical and Emerging Technology, ICET) to strengthen bilateral cooperation in semiconductor supply chains. They also signed a similar memorandum of understanding with Japan. Meanwhile, European Union member states approved a plan to expand semiconductor production to reduce reliance on Asia. €43 billion will help trigger massive investments in new chip production facilities and increase the EU’s share of global semiconductor production to 20% by 2030. The US recently introduced its own Chips Act, with investments worth US$52 billion, and the UK intends to invest in the development of semiconductors with USD 1.2 billion.