Chip between tariff war, Taiwan and autarky: why the industry is at risk
The China-US trade war creates difficulties for companies. Bringing production to their own areas? The Intel case shows that it is not easy
3' min read
Key points
3' min read
"The US government's 'restrictive actions', '(...) especially in light of the current trade tensions with China (...) may', in part, 'adversely affect our ability to sell products (...)', writes integrated semiconductor manufacturer Broadcom in its latest quarterly report. As a result of the export controls 'the freedom to license our products (...) may be reduced', echoes chip architecture designer Arm in its latest quarterly report.
These are just some of the indications that can be found in the financial reports of western silicon companies. Of course! The law requires that every possible risk be disclosed to the market. And yet, the repeated presence of such statements in multiple groups shows how the topic at hand - the technology trade war between Washington and Beijing - is a crucial issue for the semiconductor world.
A dated war
.The long-running dispute has been a series of bickering and back-and-forth. In 2019, the US put the giant Huawei on the Entity List and then, in 2020, added the Chinese chip giant Smic. Then, again in 2023, Washington launches a series of controls - and restrictions - on the export of the most advanced semiconductor technologies to the former Middle Kingdom. In particular, those for artificial intelligence. Beijing's reaction is not long in coming. On the one hand, it prohibits the use of microchips made by the US company Micron (citing computer security problems); and, on the other, it announces restrictions on the export of Germanium and Gallium, two minerals essential to the production of microprocessors.
Thus, in the most classic of escalations (to which must be added news such as that - last May - of the creation in China, in clear response to the US Chip and Science Act of 2022 - of a $47.5 billion fund for semiconductors), the industrial and commercial environment is tightening.
Commodity prices
.So much so that fears are growing. An example? It is offered by the price dynamics of the very gallium of which Beijing produces 98% of the world's supply. Ft has calculated that, at present, the cost of gallium in China is around $420 per kilogram, while in Europe it is almost $550. In this specific case, it is clear how there is an imbalance - to the disadvantage of Western producers - on the operating costs front. Not only that. The supply of such materials - essential in the semiconductor factory - becomes complex to manage.
