The above link is to an interesting mini-documentary made by Bloomberg News about the semiconductor crisis and (above all) its broader context. Bloomberg is a Chinese "asset", and the production is therefore pro-Chinese, although the talking heads pretend hard to be neutral and simply "pro-globalist".
The world economy is dependent on chip technology, including the production of silicon transistors smaller than a virus (!). The chips are pretty much everywhere: in our mobile phones, in electric toasters, in your car, in American fighter planes, you name it. During the COVID pandemic, a shortage of chips created enormous problems for the car industry.
The world´s leading producer of transistors is the Taiwanese company TSMC, while the machines used at the company´s foundries are made in the United States. This is a problem for China, since Taiwan is pro-American and will therefore line up with the US in the new cold war between the great powers. However, it´s also a problem for the United States, since Taiwan (seen by Beijing as a break-away Chinese territory) could be invaded by China, a move that would cut off America´s access to TSMC!
But can´t TSMC simply be replaced, by either China or the US? Not really, at least not without *huge* efforts, since the cost of nano-technology has been steadily rising for the past 20 years or so. Bloomberg claims that it takes a 20 billion dollar investment to build just one transistor production facility, and the plant could be obsolete within five years, making it necessary to operate the plant 24/7 and produce enormous amounts of transistors to make a profit. Very few companies have the ability to invest so much money, making TSMC a near-monopoly at the international level. It *is* a bit scary that one of the most important production sites in the world is situated in a geopolitical hot spot!
Meanwhile, China has launched a long term strategic plan for chip supremacy, with the Communist government investing over a trillion dollars worth of money to meet this end. China´s leading chip maker, SMIC, is part of a joint venture with the Chinese administration (Bloomberg News seems completely uncritical of this state capitalism).
The documentary is clearly worried that the COVID pandemic and the Biden administration´s tougher stance on China (mimicking Trump) will hurt globalization. China is producing less sophisticated chips for many American businesses, and its rapidly expanding market is important for other US firms. Also, there are close economic ties between China and Taiwan (despite the tensions). A "trade war" or cold war between Washington and Beijing may disrupt the supply chains even more than the corona pandemic, and an outright military conflict over Taiwan be downright disastrous. Bloomberg News therefore calls for more international cooperation, and so on.
Despite the inevitable globo-liberal/Beijing alliance slant of this documentary, it´s nevertheless extremely interesting. I was struck by the contradiction between state of the art high tech (the nano-transistors) and the "law of diminishing returns". China is trying to solve the contradiction by its state capitalism, since the fabulous investments in new foundries are only possible if the state de facto commandeers the resources of the private sector (or any resources). On a more philosophical side, let me just note the opposition between humans being a very smart evolutionary cousin to the chimpanzee, and most of human history nevertheless being a geopolitical chimp out...
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