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Chipping at the semiconductor monopoly

THE GLOBAL DIGITAL ECONOMY IS ON TRACK TO SMASH A TRILLION US DOLLARS BY 2035 AND TAIWAN IS INCREASINGLY BECOMING A CRITICAL ENABLER OF THIS.

It takes an integrated semiconductor supply chain involving thousands of companies and millions of people to form the backbone of today’s digital economy. Such complexity drives 5G, Artificial Intelligence, Internet of Things (IoT), automotive, smart factories, quantum computing and data processing. All was going well, too, until Covid-19 came to town. A shortage of integrated circuits has disrupted the productivity of automakers and commercial vehicle manufacturers worldwide. This key component, which is used across a range of sectors from transportation to communications to IT, is essential for managing the control and flow of modern electronic devices and equipment. These tiny transistors made from silicon are what enable our smartphones and computers to function. Following advances with in-cab technology and telematics talking to trailers and feeding information back and forth to fleet controllers, semiconductors continue to surge in demand. The impact of Covid-19 in terms of government enforced restrictions and protective measures carried out by private industry has slowed the rollout of semiconductors and the supply chain itself has caused further delays with delivery meaning that the average build times for various commercial vehicles has inflated by weeks, even months. The situation will improve in due course but this hiccup in the grander scheme is worth exploring. After all, Taiwan, according to a report from Boston Consulting, is accountable for 92 per cent of the world’s most advanced semiconductor manufacturing capacity. An immediate concern, similar to China’s market domination of urea, the key ingredient of diesel exhaust fluid, is the risk of associated with the concentration of semiconductor production in specific geographic regions. Add geopolitical tension to the mix when it comes to import/export tariffs for the provision of essential tech componentry and before you know it a trade war may ensue. Most military complexes around the world rely on semiconductors, too, and there has already been rigorous debate about national security in this regard. The conversation generally turns to cybersecurity – specifically, vulnerabilities. A cyberattack on a vehicle could lead to chip failure, denial of service and breach of sensitive information. Another risk in the semiconductor industry is IoT. Experts in this field agree that hackers can infect a computer system with malware and the connections are generally deeper and not as well managed in a IOT-powered environment. A solution to this involves establishing hardware root of trust as a robust security option. Again, the conversation about geopolitical tensions steers the conversation into the protection of data. IT specialists say the prospect of China, for example, using cyber tactics against Taiwan is real. The nation’s Ministry of Affairs claims it has reported a 40-fold increase in cyberattacks in 2020 compared to 2018, presumably from the Chinese mainland. These semiconductors are no laughing matter. It is estimated that up to 22.5 per cent of the global Gross Domestic Product (GDP) is made up by the global digital economy. In the next 15 years the digital economy is projected to crack a trillion dollars.