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Semiconductors - The Precious Jewel of Future

Updated: Dec 20, 2022

In the pre-globalisation era, there were various periods when countries used to attack and engage in wars to gain control over other countries' precious jewels. These precious jewels were the main resource or the wealth generator for the country that was limited in availability throughout the globe. At one point in time, it was gold and at another it was oil.

Post-lockdown era the global powers have figured out that if a country needs to have a secure future then it needs to have a technological base within the country and within this the precious jewel is Semiconductor.

In 2021 the total physical trading of semiconductors surpassed oil in terms of value. The largest and most advanced company in this is Taiwan Semiconductor Manufacturing Company Ltd. (TSMC). Thought the manufacturing plants were only based in Taiwan till Covid hit. Now the company is opening plants in Japan and USA. Though the plants have only started construction, the company already announced that the USA CAPEX will be $40 Bn and the most advanced chip which is 3 nanometers will begin manufacturing in 2026 at the USA plant.

This is a technology war that has already started between USA and China. And the steps taken by the USA show that they are very aggressive in it. Before this, they had already banned technical transfer to China relating to certain chips. And yesterday they announced a deal with the Netherlands that would restrict China from importing tech from them as well. And Netherlands is house to the only company in the world that manufactures semiconductor manufacturing machines that is ASML.

Though these are geopolitical strategies they will surely impact in the long and medium term as the supply chain is reconfigured. But the risk of these strategies paying off as thought is very high for now.


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