Semiconductors85 As a core element to many everyday technologies, including AI, computers, automobiles, and more, semiconductors are an essential general-purpose driver in the U.S.-China tech competition. The U.S. retains its dominance of the semiconductor industry that it has had for almost half a century, but this position has been gradually eroded by domestic underinvestment and rising overseas competition. Although the U.S. still leads in chip design and semiconductor manufacturing inputs, its share of semiconductor fabrication has fallen from 37% in 1990 to 12% today.86 Meanwhile, China’s decades-long campaign to become a semiconductor powerhouse has yielded significant results in recent years. Although “the Mainland is not yet a competitor,” as assessed by Taiwan Semiconductor Manufacturing Company (TSMC) founder Morris Chang, China has narrowed its gap in semiconductor production and design to just one to two generations behind lead players.87 Over the next decade, China will become the world’s largest semiconductor producer in mature technology nodes, while ASML CEO Peter Wennink estimates that “in 15 years’ time they’ll be able to do it all by themselves [and achieve technological sovereignty in semiconductors].”88 With a three-fold increase in its share of global semiconductor consumption (from less than 20% in 2000 to 60% in 2019), China’s growing domestic demand has provided both market and national security incentives to expand its push into the semiconductor industry, culminating in 85
Key sources consulted in the development of this section include: (i) Dr. Morris Chang, founder and former Chairman/CEO of Taiwan Semiconductor Manufacturing Company (TSMC). (ii) The Semiconductor Industry Association (SIA), a trade association that represents the U.S. semiconductor industry. (iii) The National Security Commission on Artificial Intelligence.
86
Saif Khan, Alexander Mann, and Dahlia Peterson, “The Semiconductor Supply Chain: Assessing National Competitiveness,” CSET, January 2021, https://cset.georgetown.edu/publication/the-semiconductor-supply-chain/; “Winning the Future: A Blueprint for Sustained U.S. Leadership in Semiconductor Technology,” SIA, April 2019, https://www.semiconductors.org/wp-content/uploads/2019/04/SIA_Winning-the-Future_Refresh_FINAL1.pdf.
87
Josh Ye, “TSMC Founder Morris Chang Says China’s Semiconductor Industry Still Five Years Behind Despite Decades of Subsidies,” South China Morning Post, April 22, 2021, https://www.scmp.com/tech/big-tech/ article/3130628/tsmc-founder-morris-chang-says-chinas-semiconductor-industry-still.
88
Mature technology nodes are those 28nm and above. They are widely used in everyday electronics, such as smart TVs, wireless connectivity chips, navigation systems, and edge computing. Mature technology nodes represented 61% of all semiconductors produced in 2019. Laurens Cerulus, “Chipmaker CEO Says Washington’s Anti-China Tech Blockade Is a Bad Idea,” Politico, April 23, 2021, https://www.politico.eu/article/europe-tech-sovereigntychina-peter-wennink-asml/; Antonio Varas, Raj Varadarajan, Jimmy Goodrich, and Falan Yinug, “Strengthening the Global Semiconductor Supply Chain in an Uncertain Era,” SIA/Boston Consulting Group (BCG), April 2021, https:// www.semiconductors.org/wp-content/uploads/2021/05/BCG-x-SIA-Strengthening-the-Global-SemiconductorValue-Chain-April-2021_1.pdf.
Belfer Center for Science and International Affairs | Harvard Kennedy School
21
