US will fight for Asia over chips

Listen to this article

For many years, the US has “dropped the ball” on the production of chips, which allowed China and other Asian hubs ahead. So said Gina Raymondo, who at the time was the secretary of the US trade, in an interview with me in 2021.

Four years, the chips remain the battlefield in the US Race for the Utilities of Technology, and US President Donald Trump now wants to overcome a very complicated and delicate production process that has occupied other regions for decades.

He says his tariff policy will release the US economy and will bring jobs home, but it is also so that some of the largest companies have long been fighting the lack of skilled workers and poor quality at its US factories.

So what will Trump do otherwise? And, given that there is a secret sauce on Taiwan and other parts of Asia on the creation of chips with high accurate, or is it possible that the US also produces them on a scale?

Semicators are of the main importance for the power of everything: from washing machines to iPhones and military aircraft to electric vehicles. These tiny silicon plates, known as chips, were invented in the US, but today in Asia the most advanced chips are made on phenomenal scale.

Creating them is expensive and technologically difficult. For example, the iPhone may contain chips that have been developed in the US, made in Taiwan, Japan or South Korea using raw materials as rare land that is mostly extracted in China. Next, they can be sent to Vietnam for packaging, then to China for assembly and tests before sending to the US.

This is a deeply integrated ecosystem that has developed over the decades.

Trump praised Galina chips, but also threatened her with tariffs. He told Galina Taiwanese semiconductor (TSMC) leader, he would have to pay 100%tax if she hadn’t built factories in the US.

With such a complex ecosystem and fierce competition, they should be able to plan higher costs and investment calls in the long run, which is significantly outside the Trump administration. Constant changes in politics do not help. So far, some have shown a willingness to invest in the US.

Significant subsidies that China, Taiwan, Japan and South Korea have given to private chips are a great reason for their success.

This was largely a thinking that is behind the American law on chip and science, which became the law in 2022 under President Joe Biden – efforts to overcome the production of chips and diversification of supply chains – by distributing grants, tax credits and subsidies to stimulate domestic production.

Some companies, such as the world’s largest TSMC chip manufacturer and the world’s largest Samsung smartphone manufacturer, have become the main beneficiaries of the legislation, with TSMC received $ 6.6 billion of grants and plants in Arizona, and Samsung received $ 6 billion per timlor.

TSMC has announced another $ 100 billion in investment in the US with Trump, except for $ 65 billion who promised to three factories. Chip diversification also for TSMC, and China has repeatedly threatened to control the island.

But both TSMC, and Samsung have faced problems with their investments, including cost growth, the complexity of conscripts for qualified work, delay in construction and resistance of local trade unions.

“It’s not just a factory where you make boxes,” says Mark Einstein, Market Intelligence Contropoint Research Director. “The factories that make chips are such high-tech sterile conditions, it will take years and years to build them.”

And despite investing in the US, TSMC said most of its production will remain in Taiwan, especially from the most advanced computer chips.

Today, TSMC plants in Arizona produce quality chips. But Chris Miller, author of Chip War: Fight for the most important technology in the world, claims that “they are the generation at the forefront of Taiwan.”

“The question of scale depends on how much investment in the US is compared to Taiwan,” he says. “Today Taiwan has much more opportunities.”

The reality is that Taiwan took decades to create this ability, and despite the threat of spending on China, to steal Taiwan skills in the field, it continues to thrive.

TSMC was a pioneer of a “foundry model” where the chips were designing our design and made chips for other companies.

Going on the waves of the Silicone Valley startups such as Apple, Qualcomm and Intel, TSMC was able to compete with us and Japanese giants with the best engineers, highly skilled work and discussion of knowledge.

“Can the US do chips and create a job?” Asks Mr. Einstein. “Of course, but they are going to get chips to nanometer? Probably not.”

One of the reasons is Trump’s immigration policy that can potentially limit the arrival of qualified talents from China and India.

“Even Elon Musk had an immigration problem with Tesla engineers,” says Mr. Einstein, citing Musk’s support for the H-1B visa program, which brings to the US qualified workers.

“This is a narrow place, and they can’t do anything unless they completely change their immigration position. You can’t just get a doctorate from science from nowhere.”

However, Trump doubled the tariffs, ordering the National Security Trade Investigation in the semiconductor sector.

“This is a wrench in the car is a big key,” says Mr. Einstein. “Japan, for example, relied on its economic activation on semiconductors, and tariffs were not in business plan.”

According to Mr. Miller, a longer -term influence on the industry is likely to have updated the focus on domestic production in many key economies in the world: China, Europe, the USA.

Some companies could look for new markets. For example, the giant of Chinese technology Huawei has expanded to Europe and new markets, including Thailand, UAE, Saudi Arabia, Malaysia and many countries in Africa, in terms of control over export and tariffs, although profitability in developing countries.

“China will eventually want to defeat-he must innovate and invest in the NDDKR. See what he has done with Deepseek,” says Mr. Einstein, citing China, built by AI Chatbot.

“When they build the best chips, everyone is going to go to them. Economic efficiency is what they can do now, and waiting for ahead, it is an ultra-high product.”

At the same time, new production hubs may appear. According to experts who say, in India, there are many promises that say there is more likely to be built into a chain of chips than in the US – it’s geographically closer, cheap work, and education is good.

India has reported the willingness to be open to produce chips, but it faces a number of problems, including the acquisition of land at factories, as well as for the production of water – the highest quality of the water and a lot of water is needed for the production of chips.

The companies of the chips are not fully at the freedom of tariffs. A great dependence and demand for chips from major US companies such as Microsoft, Apple and Cisco can pressure Trump to change any sector of chips.

Some insiders believe that the intensive lobbying of Apple CEO Tim Cook has provided an exception to smartphone, laptop and electronic tariff, and Trump reportedly rejected the ban on chips that Nvidia can sell to China as a result of labling.

Asked specifically about Apple’s products on Monday, Trump said, “I am a very flexible person,” adding that “there may be everything, I talk to Tim Cook, I recently helped Tim Cook.”

Mr -n Einstein believes that everything comes down to Trump, eventually trying to make a deal – he and his administration know that they can’t just build a larger building when it comes to chips.

“I think what Trump’s administration is trying to do is what she did with the Tiktok owner.

“I think they try to go here something like this – TSMC is going anywhere, let’s just make them make a deal with Intel and take a piece of cake.”

But the basis of Asia ecosystem is a valuable lesson: no country can work on its own with the chip -industry, and if you want to make advanced semiconductors, it will take time effectively and scale.

Trump tries to create a chip -industry through protectionism and isolation if what has allowed the chips across Asia’s industry, all the opposite: cooperation in the globalized economy.

BBC Indepth is a new home on the site and application for better analysis and experience of our leading journalists. According to the new distinctive brand, we will bring you a fresh perspective that disputes, and a deep report on the biggest issues that will help you comprehend the complex world. And we will demonstrate content that causes prudence, from different BBC sounds, and iPlayer too. We start little, but we think and we want to know what you think – you can send us your reviews by clicking the button below.