Tech Tent The new space race for computer chip

Tech Tent The New Space Race For Computer Chip

Silicon chips are regarded as the heart of almost all the most critical technology stories. Without chips, car plants from all over the world have stopped. Making chips is viewed as the primary weapon in the trade war between the U.S. and China. Therefore access to the latest and powerful version of silicon chips will determine who wins the artificial intelligence race. Here we will have a look at the semiconductor industry and answer some essential questions regarding chips.  

What is the Reason behind Shortages of Chips?

Different major automotive brands, including Ford, General Motors, Honda, and Nio (electric car maker), had to cut their production. The main reason behind this is the shortage of chips.

The main reason behind the shortage of chips can be this COVID-19 pandemic, and making predictions about the demand for chips looks out-of-date. 

First of all, it has made the demand for gadgets soar because of the digital transformation. The chief executive of the World Semiconductor Association, Jodi Shelton, says that they talked about work from home, 5G, IoT, and cloud for years, but now he says it has become a reality. 

Likewise, the sales of new cars dropped severely, and automotive executives had to cancel the chips’ orders. Soon after, a rebound in the sales caught the automotive executives flat-footed alongside their chip suppliers. 

Jodi Shelton adds that the carmakers using just-in-time supply chains have come up against a semiconductor industry that cannot turn the tap on or off quickly. Jodi adds that the carmakers will understand that this is not how it works because chips are not off-the-shelf products.

Who makes the Best Computer Chips?

The shortage has cleared one point that there isn’t only a single type of chip in the market. With the shift in demand, the power in the semiconductor industry also shifts. For the past many decades, people believed that Intel was the only chip-maker, but this is not the case now. Richard Windsor, an analyst from Radio Free Mobile, reports that the world has moved on.

Richard highlighted two different trends: data storage and the growing importance of graphics chips (GPUs). He adds that these two trends play a crucial role in the applications of artificial intelligence. He has highlighted the new superpowers in the semiconductor industry, which includes TSMC, a Taiwanese company. Richard states that TSMC is the number manufacturer of silicon chips in the world at this point. He further adds that TSMC is quite different from Intel because Intel designs and makes its chips and then sells those, whereas TSMC makes chips for others. 

Establishing computer chip factories or also known as foundries, is an expensive venture. Richard reports that installing a new chip foundry with high-tech equipment will cost around $25 billion.

Why are Chips important in the trade war between the US and China?

China and the U.S. have been battling to take the lead in the field of artificial intelligence. In this war, the equipment which is required for making high-end AI chips is the key weapon. The former advisor to President George W. Bush, Dr. Pippa Malmgren, said that this battle’s stakes were higher like in another technological action: the space race. Dr. Pippa attributes this war as a new space race at the geopolitical level. She explains that this war is for computational power, and that is why China and the U.S. are spending huge sums of money on quantum computers, and all of these computers require chips. On the frontline of this war stands Taiwan, the home of TSMC. Since Taiwan is in a fight against China to be independent of China, so they will do whatever the U.S will want. On the other hand, Dr. Pippa warns things will not be very simple because China has invested huge sums of money in Taiwan. 

Leave a Reply