Chip is the New Oil

Just like oil in the twentieth century, chips could become the defining asset of the twenty-first.

Silicon: The Essential Element

Automobiles are one of the many products in our daily use which are powered by chips. New cars today often include over a hundred microprocessors. Like most things wrong with the world today, part of the crisis can be credited to the pandemic. But the root of the problem, labelled ‘chipageddon’, goes deeper.

Source: Statista

The US-China Conflict

The US is still the leading chip designer in the world. But when it comes to manufacturing, two Asian nations are responsible for much of the heavy lifting. Economist Rory Green estimates Taiwan and South Korea account for the production of 83% of the world’s processor chips and 70% of memory chips. This contrast is owed to the fact that while the US has a number of design factories like Intel, most of the foundries capable of large-scale production for consumer and military customers are located in east Asia.

Taiwan’s Geopolitical Importance

Amidst the bickering, Taiwan looks destined to become the centre of this war, akin to the Middle-East a few decades ago. Right now, the US enjoys a clear monopoly over chip production and distribution, accounting for 48 percent of the market share in terms of sales. But the lack of manufacturing muscle has alarmed many high-ranking officials.

Credit: Reuters

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