Leading semiconductor manufacturing countries, including the US, are forming alliances to protect their chip supply chains and prevent China from becoming a leader in the industry, according to Western media reports. It is noted that the United States, South Korea, Japan and Taiwan are actively working to organize partnerships around critical technologies.

According to experts, the main reason for such activities is to confront China. The union of the allied countries also shows how important the chips are for the economy and national security of states.

Semiconductors are a critical technology as they are used in many products ranging from smartphones to cars. In the modern world, they are also critical in other industries, including the field of artificial intelligence and the defense industry. The importance of chips was clearly demonstrated during the coronavirus pandemic, when downtime at semiconductor manufacturing facilities led to a shortage of such products around the world.

The global shortage of chips has made it clear to the governments of several countries how important it is to ensure the continuous production of semiconductor products. In the United States, under President Joe Biden, the authorities are pushing for the need to move chip production from abroad to the country.

The semiconductor supply chain is quite complex and includes several stages, from design to packaging and production. For the organization of such production requires sophisticated equipment. For example, ASML, based in the Netherlands, is the only company in the world that creates equipment for the production of state-of-the-art chips. The US, while strong in many market segments, has lost its dominance in the semiconductor industry. Over the past 15 years, Taiwanese TSMC and South Korean Samsung have become leaders in the production of advanced chips. Intel is the largest American player in the market, but the company is far from being an industry leader.

Due to the complexity of the chip supply chain, no country can handle this alone. Therefore, in recent years there has been a trend towards partnerships between countries in the semiconductor industry. In this regard, the American authorities are actively working together with allies from South Korea, Japan and Taiwan. In addition, semiconductors are a key part of US cooperation with India, Japan and Australia. The US has also proposed a “Chip 4” alliance to South Korea, Japan and Taiwan, which are major semiconductor suppliers.

Each of the countries has its own advantages for the development and production of chips. However, the desire for such a partnership has another common feature – the absence of China in the supply chain. In essence, these alliances are created to isolate China from global supply chains. According to some experts, in the short term, China’s development in this segment will be seriously limited.

“The goal of these efforts is to prevent China from developing the ability to produce advanced chips domestically,” said Paul Triolo, head of technology policy at consulting firm Albright Stonebridge, referring to international partnerships in the semiconductor industry.

In recent years, China has invested heavily in developing its own semiconductor industry in an effort to improve self-sufficiency and reduce dependence on foreign companies. Experts believe that this will be extremely difficult to do due to the complexity of supply chains and the concentration of technology in the hands of a small number of countries and companies. China is improving in many areas, including chip design, but it is still heavily dependent on foreign tools and equipment. Even China’s largest chipmaker, SMIC, is far behind TSMC and Samsung in terms of technology.

The source notes that not all US partners are keen to further restrict China’s access to technology and supply chains. This is largely due to the fact that many companies have production sites in the Middle Kingdom, and the country’s market plays an important role in their business. China, the world’s largest importer of chips, is a key market for semiconductor manufacturers from around the world, from US-based Qualcomm to South Korean Samsung.

“Not all US allies are keen to enter into these alliances or expand their control over technology that is supplied to China, as they have large shares in both manufacturing in China and sales in the Chinese market. Most of them do not want to clash with Beijing on these issues,” Triolo said.