China Might Have The Cards
Today in the modern world we rely on computer chips for everything from our toaster to the planes we fly on. and China has the largest reserve of the major raw material for the computer chips, Silicon.
Everything from our Phones to The Fighter planes uses an Integrated circuit (IC) widely known as computer chips. The global semiconductor market is valued at $425.96 billion in 2020 And expected to grow to a staggering $803.15 billion by 2028, yet there are a handful of companies that are capable of manufacturing these chips. There are mainly 3 companies who dominate the market. They are Samsung, tsmc (Taiwan Semiconductor Manufacturing Company), Intel.
Even though Intel is the very known company in the chip business, they lack technological advancement and are far behind tsmc. And Samsung mainly manufacture memory chips and has its fair bit of market share. all in all tsmc is main player in the market with biggest market share and leading technology and expertise. All the major companies around the world buy their chip from tsmc. even companies like Apple and Qualcomm manufacture their chips at tsmc. unlike Intel tsmc don’t design chips they just manufacture the chip with design provided by the clients. Basically they are the shark in the ocean, And there is no alternative to tsmc for now at least.
Here is where the problem starts, tsmc is based in Taiwan, which as you know is claimed to be a province of mainland China. even though the political state between China and Taiwan complicated, we are not going into it now.
The pandemic pushed everyone indoors and because a lot of people was buying laptops and TVs which led to huge demand in consumer electronics and this led to a huge demand in the silicon chips. And most of the companies was depended on tsmc and they couldn't keep-up with the demand, and there was a shortage in silicon chips. This revealed a lot of problems. This event revealed how much the world is dependent on tsmc. To make it more clear, Even Apple tsmc ‘s biggest client, had to push the launch of the Iphone 12 due to the shortage in silicon chip. Huge car companies had to halt their production because of the shortage. this was a waking call for everyone including governments. If tsmc cannot export the chip then the world does’t have a second option. that’s where the problem is.
The Taiwan issue
As a result of Chinese civil war, China was split into People’s Republic of China (PRC; commonly known as China) and the Republic of China (ROC; commonly known as Taiwan). Though, PRC wants to merge ROC and make a single country. Read more about the issue here.
So if china does invade Taiwan, China will have the the power to control the whole semiconductor chip consumption of the world.
Scary right? well! that issue is being sorted by the government from all over the world, by building manufacturing facilities of tsmc in different parts of the world. So that’s almost resolved, but there is something else..
Now you know the importance of the computer chips. well it is made from mainly 3 materials
- Silicon
- Germanium
- Gallium arsenide
In which Silicon is mainly used. and the largest contributor of Silicon is China. In 2020 alone China produced about 5.4 million metric tons (reference). China produces most of the world needs. The demand in silicon is increasing drastically, The fast progressing world will need a lot of silicon. And there China will have an edge in the game from the rest of the world.
Now you might be thinking why am i picturing China as the villain in the story, Well.. that’s because unlike most of the countries, China is a dictatorship with a powerful Army. So if tomorrow China is the decision maker, then we might not have the power or the rights to speak against the decisions. Giving that kind of power to a bunch of people who cannot be corrected is not going to be good for the world
