Contemporary politics,local and international current affairs, science, music and extracts from the Queensland Newspaper "THE WORKER" documenting the proud history of the Labour Movement.
MAHATMA GANDHI ~ Truth never damages a cause that is just.
Tuesday, 22 October 2024
Semiconductor chips at centre of geopolitical and technological race involving Taiwan, China and the US.
For centuries, military observers have referred to it as "blood and treasure".
For most of the rest of us, it could be neatly distilled into "wealth and war".
History
is littered with examples of nations battling for control of everything
from spices to oil, gold and strategic superiority over technology.
The
latest battleground centres around a wafer-thin piece of silicon, the
most sophisticated of which are between 300 and 500 millimetres in
diameter.
Silicon chips are now
fundamental to modern life, incorporated into every facet of
electronics, and vital to power the exponential growth in a world
weaning itself off fossil fuels.
When
it comes to wealth, the incredible rise of Nvidia tells you everything
you need to know about where the future is taking us.
A
company that was barely known just two years ago, it now jockeys with
Apple for the mantle of the most valuable corporation on the planet.
And all because of silicon chips.
Its
phenomenal rise, off the back of a boom in artificial intelligence
development, has driven Wall Street to a series of new records that have
spilled over into developed world stock markets including Australia,
where it has helped pump up superannuation accounts.
And then there is the geopolitics of chips.
For years, Taiwan has been the global powerhouse of advanced semiconductors.
But
its status as an independent nation is disputed by China, which sees it
as a part of its realm, all while Beijing has launched a concerted bid
for domination in silicon chip production.
The
country's future is further clouded by the possibility of Donald Trump
resuming the presidency of the United States, given his recent incorrect
statements that Taiwan had "stolen" America's chip industry.
Almost
everything we own and do is digitally controlled, built using digitally
powered technology, paid via digital transfers and tracked and counted
digitally.
What falls outside, at the very least, uses digital inputs, services and facilities.
And all of that requires silicon chips.
Production
is rapidly expanding — global output has just exceeded 30 million
silicon wafers a month, as a race for control heats up.
While Taiwan ranks second, it produces the kind of high-end chips required to power generative AI and high-grade computing.
China,
in contrast, dominates the production of smaller, low-end chips needed
for everyday applications such as smartphones and cars.
New
plants, known in the trade as "fabs", are being built across the
developed world as governments throw cash around in an effort to shore
up security of supply.
Call it
an insurance policy against a turbulent global political backdrop, but
Taiwan's largest contract chip maker Taiwan Semiconductor Manufacturing
Company — which also happens to be the world's biggest — has recently
taken advantage of the money being thrown about by Western governments.
It
is building three new plants in Arizona in the US, partly funded by a
$US6.6 billion cash injection from the Biden administration, a new $US10
billion plant in Dresden, Germany and two in Japan.
Where are the chips?
The pandemic created a silicon chip crisis.
Protracted
lockdowns in China slowed and, in some cases, stopped production, which
in turn led to global shortages for a vast range of manufactured goods.
It was a major contributing factor to the onset of the inflation surge that took hold as the world came out of hibernation.
An obvious example was automobiles.
All cars, whether combustion engine or electric, are run by computers.
American car manufacturers, in particular, couldn't source the ultra-cheap chips needed to power the Car Access Network.
Even
Japan, the world's fourth biggest silicon chip manufacturer, had
difficulty sourcing the cheap but vital parts that modern cars require
to start and run on.
That resulted in a global shortfall, which led to rationing and huge lead times for delivery of new cars.
The
result was a massive reduction on automobile output. For Australia,
even three years later, imports are only now catching up with demand.
It was a salient lesson for all.
Heightened
tensions between China and the West, particularly over Taiwan,
convinced many Western leaders that the era of globalisation was
unwinding and that they could ill-afford to risk being stranded in an
increasingly digitised world.
For all the allure that a digital world holds, there's an offsetting vulnerability if parts are no longer available.
Treasure Island
Two years ago, Nvidia was a promising company with what appeared to be a serious price tag.
Valued at $US336 billion, it was best known for producing the high-end technology required for gaming.
Partially
a story of being in the right place at the right time, it just so
happens that its advanced chips and computing firepower were ideal for
developing artificial intelligence.
Shortly
after ChatGPT emerged on the scene, investors cast their attention to
companies that could enable the new technology and quickly focused on
Nvidia.
Its market value now
stands at an eye-watering $US3.4 trillion, and while some believe it is
hugely overvalued given the frenzied hype around AI, few would deny that
it is a serious long-term player with a strong future.
It is involved in robotics, futuristic automobile componentry, cloud computing and data centres.
And it just so happens that Nvidia sources its chips from Tawain's TSMC, the custom-order foundry for advanced chips.
The speed at which technology is advancing is best illustrated by the smartphone.
The
first iPhone only hit the market in 2007 and developments since have
required a serious rethink by designers and system integrators.
What
once was the realm of cartoons and sci-fi movies is now becoming
reality — our wristwatch can already monitor your health and
independently call for assistance if you fall ill.
Along
with more sophisticated telecommunications and wi-fi, mixed reality,
virtual reality, self-driving cars and avatars are now well within
reach.
Domination of those
possibilities, or at least self-reliance over the technology that
controls it, is now front of mind for many world leaders.
The
battle for Taiwan, diplomatic or otherwise, will be more than a fight
over democratic rights and cultural history — there's treasure involved.
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