Inside the global battle over chip manufacturing

US-China Relations

The intricate dynamics of US-China relations are significantly shaped by chip technology and policies. Chris Miller highlights the strategic coherence in US policy, distinct from previous trade wars, focusing on restricting China's access to advanced chip technologies. This strategy involves multiple countries, including Japan and South Korea, aiming to curb China's advancements in chipmaking, which are crucial for AI development 1. The US's efforts to persuade the Netherlands to limit ASML's exports to China underscore the geopolitical stakes involved 2. Miller explains, "The US strategy will succeed if China can't catch up on its own, and the US is betting that the answer is China can't catch up, or at least can't catch up anytime soon."

The US strategy will succeed if China can't catch up on its own, and the US is betting that the answer is China can't catch up, or at least can't catch up anytime soon.

--- Chris Miller

The Dutch government's role is pivotal, as their decisions on export controls could significantly impact China's chipmaking capabilities 3.

   

Dutch Export Decisions

The Netherlands plays a crucial role in the global chip industry, primarily through ASML, the only company capable of producing EUV lithography tools essential for advanced chip manufacturing. Chris Miller explains that ASML's monopoly on this technology is due to its unique capabilities and the complexity of its machines, which require deep partnerships with chipmakers like TSMC and Samsung 4. The US is pressuring the Dutch to expand export controls beyond the most advanced tools, which could have significant economic implications for ASML and the global market 3. "ASML is the only company that knows how to service them," Miller notes, emphasizing the company's indispensable role.

ASML is the only company that knows how to service them.

--- Chris Miller

These decisions are not just economic but deeply geopolitical, affecting global supply chains and international relations 2.

   

Taiwan and Ukraine Parallels

The geopolitical landscape of chip manufacturing draws parallels between Taiwan's situation and the Russia-Ukraine conflict. Chris Miller discusses how China's potential actions towards Taiwan could mirror Russia's invasion of Ukraine, with significant global repercussions 5. Taiwan's TSMC is a linchpin in the global tech industry, producing a vast majority of the world's advanced processors, making any conflict in the region potentially catastrophic for global manufacturing 6. "The TSMC produces 90% of the world's most advanced processors," Miller states, highlighting the critical nature of Taiwan's chip industry.

The TSMC produces 90% of the world's most advanced processors.

--- Chris Miller

The strategic location of TSMC in Taiwan was a calculated move to ensure US defense support, intertwining geopolitical and technological interests 7.