Only a technological edge can win the chip war
Published: 29 Oct. 2024, 20:05
Updated: 05 Nov. 2024, 17:15
Audio report: written by reporters, read by AI
Morris Chang, the founder of the consigned chipmaking behemoth TSMC, declared the global free trade in semiconductors “has died” as a result of a gush of barriers led by U.S. sanctions on China that can seriously undermine growth in the industry.
TSMC, a winner together with Nvidia in the AI-driven age, has turned into a “battleground” and “truly a turf all major powers want to secure.” The pure-play foundry reported an impressive 58 percent on year gain in its third quarter operating income, helping elevate the chipmaker to the exclusive club of enterprises with a market cap of $1 trillion or above, following Nvidia.
The iconic founder of the microchip empire warned against complacency in the face of strong challenges to its growth model from the breakup in the global chip supply chain. The United States is pivoting to “friendshoring” to contain China’s rise, causing fissures in the long-held chip order in which it was primarily liable for design, Europe equipment, Korea and Taiwan production and China consumption.
Chip rivalry has intensified as governments regard advanced chips as a “strategic asset” crucial to their national security. The United States wants advanced chip facilities based in its territory to reinforce its chip manufacturing capabilities. Japan is investing heavily in the chip industry to relive its past glory. China is localizing chip technologies and is harnessing its vast economy to become self-sufficient.
Chang was not exaggerating when he declared the death of the global free trade in chips. China’s share in TSMC’s revenue halved from 20 percent. In the latest third quarter earnings conference call, the Dutch advanced chip equipment maker ASML expected China’s share, which made up 49 percent of its revenue in the previous quarter, to plunge to 20 percent next year. The loss of the colossal Chinese market is sinking deeply in the industry. Korea is no exception.
According to the Korea International Trade Association, China’s share in Korea’s memory chip exports between January and September fell under 40 percent for the first time in 12 years to 37.9 percent. The dismal GDP report in the third quarter due to slack exports owe largely to reduced chip shipments to China.
Also, Donald Trump, running for his second presidency, is unhappy with the U.S. provision of handsome subsidies to foreign chipmakers. An unrivaled technological edge is the only weapon to weather the changing environment. Companies must reinforce research and development (R&D) investments to defend their technological supremacy, and the government must provide all-around support in basic infrastructure and policy incentives. The government and companies must have the valor to survive and win the ruthless battle for chip supremacy.
TSMC, a winner together with Nvidia in the AI-driven age, has turned into a “battleground” and “truly a turf all major powers want to secure.” The pure-play foundry reported an impressive 58 percent on year gain in its third quarter operating income, helping elevate the chipmaker to the exclusive club of enterprises with a market cap of $1 trillion or above, following Nvidia.
The iconic founder of the microchip empire warned against complacency in the face of strong challenges to its growth model from the breakup in the global chip supply chain. The United States is pivoting to “friendshoring” to contain China’s rise, causing fissures in the long-held chip order in which it was primarily liable for design, Europe equipment, Korea and Taiwan production and China consumption.
Chip rivalry has intensified as governments regard advanced chips as a “strategic asset” crucial to their national security. The United States wants advanced chip facilities based in its territory to reinforce its chip manufacturing capabilities. Japan is investing heavily in the chip industry to relive its past glory. China is localizing chip technologies and is harnessing its vast economy to become self-sufficient.
Chang was not exaggerating when he declared the death of the global free trade in chips. China’s share in TSMC’s revenue halved from 20 percent. In the latest third quarter earnings conference call, the Dutch advanced chip equipment maker ASML expected China’s share, which made up 49 percent of its revenue in the previous quarter, to plunge to 20 percent next year. The loss of the colossal Chinese market is sinking deeply in the industry. Korea is no exception.
According to the Korea International Trade Association, China’s share in Korea’s memory chip exports between January and September fell under 40 percent for the first time in 12 years to 37.9 percent. The dismal GDP report in the third quarter due to slack exports owe largely to reduced chip shipments to China.
Also, Donald Trump, running for his second presidency, is unhappy with the U.S. provision of handsome subsidies to foreign chipmakers. An unrivaled technological edge is the only weapon to weather the changing environment. Companies must reinforce research and development (R&D) investments to defend their technological supremacy, and the government must provide all-around support in basic infrastructure and policy incentives. The government and companies must have the valor to survive and win the ruthless battle for chip supremacy.
with the Korea JoongAng Daily
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