Abubakr Janjua
Throughout the 20th century, clashes and wars were overwhelmingly determined by the quest for oil in countries plentiful in normal assets. In later times, a critical shift has happened as the world’s biggest economies, China and the US, participated in a contention revolved around microchip which refers to semiconductor crystal made of silicon, which performs a specific function within an integrated circuit. In the 20th century, the West, spearheaded by the US, pursued control over oil using pretexts such as human rights, freedom, and democracy, often leading to conflicts. In the 21st century, a fierce technological rivalry has emerged between the US and China, also under similar pretexts, shaping global power dynamics. The focus has shifted from geopolitics around oil to technological and economic superiority, notably in the electronic chip industry, where control over design and production influences the course of the 21st century. The end drawn is that the hardship in the semiconductor area fills in as a worldview of the continuous battle for monetary and mechanical matchless quality, bound to shape worldwide governmental issues in the 21st century. The Fourth Industrial Revolution (4IR) has prompted the improvement of new advancements in domains like artificial intelligence, large information, metaverse, cloud computing, robotics, autonomous vehicles, computerized money, and blockchain innovation. in these turns of events, Microchip has acquired the significance of new oil in terms of its essential utilization in cutting edge to acquire an advantage in monetary and military circles. It is, the foundational components of modern electronics and playing a pivotal role in fueling a diverse range of technologies, including artificial intelligence (AI). The U.S. has historically supplied 45% to 50% of the world’s semiconductor demand, establishing its leadership through an innovation-intensive approach that depends on access to global markets. This access is vital for building a substantial customer base, enabling the necessary scale to fund extensive investments in research and development (R&D). These investments, in turn, empower U.S. companies to maintain a technological advantage over global competitors. The tensions between the US and China have presented huge difficulties for U.S. semiconductor companies. Following the inception of the “trade war,” the main 25 U.S. semiconductor companies encountered an exceptional decrease in middle year-on-year income development, dropping from 10% in the four quarters paving the way to the execution of starting levies in July 2018 to roughly 1% in late 2018. Besides, after the U.S. forced limitations on innovation item deals to Huawei in May 2019, these organizations revealed income declines going from 4% to 9% in every one of the ensuing 3/4. Despite the “stage one” trade agreement endorsed in January 2020 tending to specific innovation industry concerns, for example, protected innovation assurance and innovation move rehearses, it doesn’t handle issues like direct state support for China’s homegrown semiconductor industry. On the other hand, China’s semiconductor industry has increased quickly by 12% per annum starting around 2016, representing 60% of worldwide semiconductor utilization and 33% of definite interest. China represents just 5% of worldwide semiconductor deals and assumes a restricted part in the worldwide semiconductor store network. China chose semiconductors as an essential improvement area inside the fourteenth Five-Year Plan for National Economic and Social Development and Long-Range Objectives for 2035 in 2021 and is cultivating the semiconductor business through a national semiconductor fund and different tax support measures. Conversely, Asia leads in chip manufacturing, contributing to 82.5% of global activities. For instance, the Taiwanese company “TSMC” holds a significant position, commanding a 53.1% share in the worldwide market for electronic chips. Securing the second spot is a company holding a 17.1% share, followed by the Taiwanese company “UMC” in third place with 7.3% of the global market. The Chinese manufacturer “SMIC” holds the fourth position, commanding a 5% market share. It’s noteworthy that the production of a single chip can take up to three months and requires a substantial budget along with highly advanced machinery. Consequently, controlling the entire production chain becomes a challenge for any single nation. Electronic chips, designed in the United States, are manufactured in Taiwan, South Korea, and China, utilizing rare Earth metals sourced from Australia and China. The Dutch company “ASML” is responsible for manufacturing the required machinery. Crucially, China boasts the highest deposits of rare Earth minerals, constituting 37% of the world’s reserves. These minerals, including scandium, yttrium, lanthanum, and lanthanides, play a vital role in electronic chips and other high-tech goods due to their unique properties. in the 1990s when US corporations moved to Hong Kong for FDI to deliver semiconductors at lower cost and to become market dominators. This is one justification for the Making Obliging Catalysts to Make Semiconductors for America Act which ‘spreads out adventures and inspirations to help U.S. In 2019, the Trump administration raised duties on $200 billion worth of Chinese imports into the US from 10% to 25%, beginning what was subsequently seen as a trade war. In Retaliation, China forced 25% tariffs on roughly half of American imports. In August 2022, the Chips and Science Act, passed by the U.S. Congress and endorsed by President J. Biden, plans to confine China’s mechanical limit in the creation of cutting-edge electronic chips This regulation gives roughly $280 billion in extra financing to reinforce homegrown semiconductor exploration and creation inside the US, with the essential objective of rivaling China. The United States has encouraged chip manufacturers to establish facilities both domestically and internationally as part of its strategy to effectively restrict China’s access to electronic chips. For instance, in 2021, “TSMC” commenced the construction of a $12 billion factory in Arizona, marking the company’s second manufacturing site in the United States. Additionally, in 2022, “Intel” announced plans to invest over €33 billion (equivalent to $36 billion) to expand chip production in the European Union, aiming to decrease reliance on semiconductor imports. These investments by “Intel” are integral to a broader initiative, with the corporation set to spend up to €80 billion in Europe over the next decade. In response to US sanctions, China, led by Premier Li Keqiang, introduced the “Made in China – 2025” strategy in May 2015. The focus of this strategy was on achieving self-sufficiency in the microchip industry, reducing dependence on the United States, consolidating China’s leadership, and concentrating both chip design and production within Chinese territory. Chinese Ministry of Foreign Affairs spokesperson Zhao Lijian denounced US sanctions as technical terrorism, state power abuse, coercive diplomacy, and technology hegemony abuse. Moreover, at the WTO, China contested broad US export restrictions, although the resolution of WTO disputes could extend over several years. Despite these restrictions, China has made significant progress in the semiconductor sector. Consequently, China not only became a significant assembler but also a noteworthy manufacturer of semiconductors, contributing to 20 percent of global semiconductor exports as it was plan of Made in China 2025 in which domestic economy will be self-sufficient form foreign imports and foreign markets will be dominated by Chinese products. As both nations strive for dominance in this crucial technological realm, the semiconductor market emerges as a pivotal battleground with far-reaching consequences. The outcome of this competition will undoubtedly shape the trajectory of AI development globally, influencing innovation, economic power, and strategic advantages. A critical conclusion is that the winner of this contest stands to wield substantial influence over the evolution of AI, potentially dictating standards, policies, and global AI governance. The implications extend beyond economic and technological realms, delving into geopolitical considerations and the broader impact on international relations. As the United States and China vie for supremacy in semiconductor innovation, the world must closely monitor the developments and carefully navigate the ensuing implications for the future of AI, ensuring that collaboration, ethical considerations, and responsible governance remain integral components of this transformative technological journey.
