Chip Wars #5: Semiconductor Geoeconomics

For the foreseeable future, the economic prospects for the chip industry look great, writes Pranay Kotasthane in When the Chips are Down. AI, virtual and augmented reality, cloud gaming, EV (electric vehicles), autonomous cars and crypto mining are the new/growing applications in the horizon. These are in addition to the regular phones, tablets and PC/laptop market.

 

When there is a lot of money to be made, there will be new ideas and attempts.

 

Most chips use the x86 instruction set today, which is owned by Intel and Arm. This means huge licensing fees to those companies. Those costs are one reason for the attempt to shift to RISC-V instruction set, an open-source alternative. China pushes for RISC-V for another reason too – Intel is American, Arm is British. Anything non-Western is a safer bet for them.

 

Similar attempts at coming up with alternatives to chip design software are underway. For the same reasons. To save on license fees, and to shift the power from the current dominant players who are all Western. If such attempts for alternatives begin to succeed (though that is far from guaranteed), then the chip manufacturing units (like TSMC) will start to support them as formats that they accept.

 

Which element is used for chips? The well-known answer is silicon (after which Silicon Valley) was named. While that won’t change, for certain specific applications, heat resistance of the chips is critical e.g. the batteries of electric vehicles to reduce the risk of fire. For such niche applications, alternatives like silicon carbide (SiC) are showing promise. And as the world’s largest EV (electric vehicles), China leads the research and IP around this material.

 

The CPU’s in our PC’s and phones are general purpose. The alternative to that are called Application Specific Integrated Circuits (ASIC’s). They have been there for a long time, customized for specific applications wrt power usage or heat emission or performance. It is quite likely that the range of ASIC’s will grow.

 

All this complicates the chip war. The terrain isn’t static; it is evolving fast. Policies that make sense today may not make sense later. A move here will set off a counter-move there. Cut off one piece of the puzzle, and an alternative piece may take its place. Despite all these unknowable’s, the US is determined to proceed with the chip war.

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