Silicon nationalism: Semiconductor chips are on the political table

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Silicon nationalism: Semiconductor chips are on the political table


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Silicon nationalism: Semiconductor chips are on the political table

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Silicon nationalism is powering up a global chip tussle, sparking a high-stakes semiconductor showdown.
    • Author:
    • Author name
      Quantumrun Foresight
    • April 2, 2024

    Insight summary

    As nations strive to boost their semiconductor industries, they aim to secure their technological futures and economic independence. This movement, driven by the need to mitigate vulnerabilities in global supply chains and assert technological leadership, has led countries to commit billions to semiconductor production and innovation. The overarching goal is to enhance national security, spur job creation, and navigate the complexities of international relations and market competitiveness in the face of escalating geopolitical tensions.

    Silicon nationalism context

    Silicon nationalism marks a strategic pivot by nations to fortify their semiconductor industries, recognizing the pivotal role these components play in modern technology, national security, and economic competitiveness. For example, the EU and the US aim to increase their semiconductor production capacities and technological leadership, while Japan seeks to revitalize its once-dominant semiconductor manufacturing industry. The EU's commitment, through its European Chips Act, involves mobilizing over USD $46.5 billion to double its global market share to 20 percent by 2030, addressing the recent shortages that revealed the fragility of global supply chains.

    In the US, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act represents a significant financial commitment of $52.7 billion to bolster domestic chip production, aiming to reverse the decline from a 37 percent global manufacturing share in the 1990s to just 12 percent in 2023. Meanwhile, Japan's approach through the Economic Security Promotion Act involves an ambitious public-private financing framework, with a target investment of USD $66.5 trillion over a decade. This initiative is part of Japan's broader strategy to reclaim its semiconductor industry leadership. It is underscored by welcoming Taiwan-based TSMC's investment in the country, signaling a significant effort to diversify the global semiconductor manufacturing landscape.

    These concerted efforts reflect a broader recognition of the strategic importance of semiconductors, driven by the escalating U.S.-China rivalry over semiconductor intellectual property and manufacturing capabilities. The geopolitical tension has led to sanctions and countermeasures, highlighting the semiconductor industry's role as a battleground for technological and economic supremacy. Each country's strategy, whether through direct investment, legislative action, or international partnerships, illustrates the shift towards semiconductor self-sufficiency as a cornerstone of national security and economic policy. 

    Disruptive impact

    The shift towards national self-sufficiency in semiconductor production will likely significantly stimulate local economies and job markets. Countries investing heavily in domestic semiconductor manufacturing will create many employment opportunities, from high-tech engineering positions to roles in regional supply chains and service industries. However, focusing on domestic production may lead to higher costs due to the initial investment required and potentially higher operating costs than established manufacturing hubs, which could be passed on to consumers as more expensive electronic goods.

    Organizations may benefit from more stable supply chains and reduced risk of disruptions, which have been a significant concern in recent years. This stability can lead to more predictable planning and investment in innovation, allowing companies to focus on developing new products and services. On the downside, businesses may face increased manufacturing costs and the need to navigate a complex web of national regulations and incentives, which could complicate global operations and impact profitability.

    Governments will play a crucial role in shaping the future landscape of the semiconductor industry through their policies and international agreements. By fostering an environment conducive to semiconductor manufacturing, they can not only secure their technological infrastructure but also position themselves as key players in the global economy. However, the push for semiconductor independence may increase tensions and trade barriers as countries compete for dominance in this critical sector. 

    Implications of silicon nationalism

    Wider implications of silicon nationalism may include: 

    • Enhanced global competitiveness of domestic companies through reliable semiconductor supply chains, leading to increased market shares and revenues.
    • Governments adopting policies to secure semiconductor materials, potentially leading to geopolitical tensions over access to critical resources.
    • A shift towards energy-efficient semiconductor technologies, contributing to reductions in carbon emissions and progress towards environmental sustainability goals.
    • Expansion of semiconductor production facilities leading to demographic shifts, with populations moving towards areas with growing tech industries.
    • Increased focus on semiconductor R&D accelerating technological advancements in healthcare, transportation, and communication.
    • International collaborations on semiconductor research and development becoming more common, fostering cross-border knowledge exchange and innovation.
    • Potential environmental concerns related to semiconductor manufacturing, such as water usage and chemical waste, prompting stricter environmental regulations.

    Questions to consider

    • How will increased semiconductor production in your country influence the availability and cost of everyday technology products like smartphones and computers?
    • How could your local community prepare for the job opportunities created by the expanding semiconductor industry?

    Insight references

    The following popular and institutional links were referenced for this insight: