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16 August 2022

The future world order will be decided by the war over semiconductors

Taiwan, as the global leader in microchip manufacture, will be its geopolitical battleground.

By Bruno Maçães

To produce the most advanced microchips, you vaporise droplets of molten tin with two successive blasts of a laser. The resulting plasma emits extreme ultraviolet radiation, light with very short wavelengths. Glass lenses absorb too much of the radiation, so mirrors are used instead to guide the light to a silicon wafer and use it to draw transistors with features measuring 5 nanometres or less, the size of just a few atoms.

The surface of those mirrors is smooth to the level of one atom. The extreme ultraviolet lithography machines are roughly the size of a city bus and cost $150m. Each contains 100,000 parts and many of those parts are complex machines in their own right.

After a layer of transistors has been drawn, many other layers are superimposed on top. Semiconductor chips are the skyscrapers of the infinitesimal. The more layers, the more complex and powerful the chip. The most advanced designs have nearly 200 layers, and they all need to align with nanometre precision. Some of these layers are just one atom thin. People sometimes say that building chips is like printing with light, but maybe it is more accurate to say that it is like printing light.

Chips are strange creations. If rockets – and rocket science – represent the human search for the infinitely large, chips show us what Blaise Pascal called the “abyss of nothingness”, the vanishingly small. “Let him see therein an infinity of worlds, each of which has its firmament, its planets, its earth.” And its skyscrapers. 

Chips are close to pure light and close to pure capital. With the best chips you can save energy and create market-beating technologies that no one can compete with. And while silicone is abundantly available, advanced chips are not. For a company to survive at the bleeding edge of the technological frontier, it needs capital and talent in ever-growing amounts. Few companies can keep up with the pace, so it is not surprising that the best chips have become difficult to procure, with only three companies able to corner the market.

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Over the past few months there have been reports that China has started to rival the industry leader, Taiwan Semiconductor Manufacturing Company. Ensuring China was no longer dependent on overseas chip manufacturers became a priority for Beijing after Washington denied Huawei access to American software and hardware components. Much of this remains top secret, but a rare report from Nikkei Asia in 2021 detailed the creation in China of a group of industry insiders and political officials whose mission is to review all components needed to develop native semiconductor capacities, and create a new network of technological doppelgängers.

Shanghai Micro Electronics Equipment, under majority control by the Shanghai municipal government, is seen as a national champion that might one day compete with the lithography machine builders of ASML, the Dutch company responsible for innovations in extreme ultraviolet radiation. One industry insider calls the technology a form of “black magic”. China has struggled to crack its secrets, but in other areas the progress is stupendous: Yangtze Memory Technologies has been producing 128-layer memory chips in Wuhan and is said to be close to announcing a 192-layer chip, the “Himalaya”, to compete with the Burj Khalifa, a 176-layer chip announced by the US manufacturer Micron last year.

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[See also: The UK semiconductor industry is dying – will Liz Truss save it?]

When the war in Ukraine started, one of the goals of Europe and the US was to deprive Russia of access to the kind of chips it needs to build aircraft and missiles, or to modernise its economy. It was vital that Taiwan joined the sanctions, which it did. China quickly became an alternative supplier for Russia, but China is not yet capable of producing the most advanced chips. The message from the West was clear: were China to invade Taiwan, it would be similarly excluded from access to semiconductors, and the consequences might be catastrophic for an economy with such a voracious appetite for chips.

One obvious complication is that advanced chips are predominantly manufactured in Taiwan. President Joe Biden has announced an industrial package aimed at bringing semiconductor plants back to the US, but the money devoted to making that happen seems insufficient. A war in Taiwan might deprive everyone, not just China, of the latest generation of chips, triggering a worldwide industrial depression. You might want to start hoarding smart phones just in case.

Two geopolitical analysts argued last year that the best way to stop a Chinese invasion of Taiwan would be for its government to announce in advance that the Taiwanese semiconductor industry would be destroyed in the initial moments of an invasion. That seemed naive. There is no danger that Chinese forces will take over the industry on the island, which depends on delicate global networks and large inputs of human capital.

From Ukraine to Taiwan, there are now two different levels of conflict. On one end, the war happening on the streets of Ukrainian cities. On the other, the fight to control the skyscrapers hidden within our vanishingly small chips. For all the human tragedy of the former, I cannot shake off the conviction that the future of the world order will be decided by the latter. It is the latter, after all, that will decide what weapons you can bring to the battles happening in the human world.

[See also: In modern day youth culture, conformity rules]

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