Why China is losing the microchip war

Why China is losing the microchip war

And why the US and China are fighting over silicon in the first place.

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In October 2022, the Biden administration placed a large-scale ban on the sale of advanced semiconductor chips to China. They also implemented a series of other rules that prevents China from making these chips on their own. These chips are used in everyday technology, like our mobile phones and computers. They’re also crucial to military and intelligence systems, which is one of the main reasons they’re at the center of a feud between the United States and China.

Microchips were first invented in the US in the 1950s, after which their use rapidly expanded worldwide. Since then, the supply chain for these chips has grown and spread to include countries in Europe and Asia. And while some countries have caught up to the US’s edge in making these advanced chips, China still falls far behind despite multiple attempts to gain an advantage.

Watch the latest episode of Vox Atlas to understand why China is losing a new cold war with the US over microchips.

Sources and further reading:

We found this book written by Chris Miller very helpful for understanding the history of chip development in the US and the foreign policy behind its competition and feud with China:

Chip War: The Fight for the World’s Most Critical Technology

This book gave us great context on China’s efforts to acquire foreign technology:

Chinese Industrial Espionage by Anna Puglisi

Articles like this by Chien-Huei Wu helped us learn more about how much the US replies on east asian countries for successful technology:

Reporting by Bloomberg helped us understand major IP theft cases related to semiconductor chips:

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50 Responses

  1. SideNote says:

    Brilliant video. Thanks.
    While it may seem like the “chip war” is between China and the US allies, it’s actually pretty 2 dimensional. US allies (Japan, South Korea and Taiwan) too are competing among themselves to out-pace each other. No one wants to end up in a situation where it can be casted out easily. While TSMC (of Taiwan) is building new plants in both America and Japan, their foreign investments do not involve most advanced technology, keeping the US’ incentive to defend Taiwan from China intact.
    Both Japan and South Korea has announced their own set of lucrative subsidies to poach companies from each other countries. They are also worried about losing market share in China and China hampering the supply chain of raw materials if it feels cornered.
    This is just the beginning.

    • Termitreter says:

      @ThePirateParrot Totally fair man, appreciat it. We all got those days.
      Hope youre feeling better now^^

    • ThePirateParrot says:

      @Termitreter yeah wasn’t in a great place this afternoon. Sry deleted my. Comment

    • Cat C 🧋 says:

      @Joel Lee Before 1978, the US was defending Taiwan as part of the Cold War, basically supporting opposing governments against communism. It was a doctrinal motivation based also in historical cooperation during WWII.

    • viperabyss says:

      @msytdc LOL! Do you know how much money the Taiwanese government have poured into TSMC (and other semiconductor companies like UMC) since its founding in the 1990s?

      Again, there’s a reason why TSMC is called the silicon shield of Taiwan.

    • vl hc says:

      Going to be very important to not drag Japan and South Korea into a war over Taiwan then, otherwise just takes 5 minutes for PLA missiles to destroy both countries’ chip industry.

  2. rolf ski says:

    I’m always surprised how relatively unknown a company like ASML is to the larger audience. It has a unique key strategic position in the world that no other company has. You don’t often see that and it represents both a strength and a weakness for the free western world.

    • Irmin Schembri says:

      @Bodi Games You might have forgotten that AMSL depends on Jenoptik for the lasers and Carl Zeiss for the laser mirrors, LOL. Both are German companies and both are the ONLY ones worldwide who are capable to produce them. 🙂

    • Bodi Games says:

      The Dutch are therefore the most influential country on earth.
      Without the Dutch the world falls apart.

    • tobias carlsson says:

      its freaky that the company that makes the machines to make chips so we can play wow is unknown yep.

    • tobias carlsson says:

      @Zaydan Alfariz if you build it they will come . (waynes world)

    • Mardy says:

      Well Europe and the US are likely to stay friends through everything, given how culturally intertwined and ideologically aligned we are.

  3. grpl says:

    Some extra info: Zeiss, a german company that produces lenses is also the only company with the most advanced lenses which asml uses for their machines.

    • Philip12 says:

      @tee Fusion bombs aren’t actually fusion bombs. They are fission bombs like any other that utilize some fusion of hydrogen and lithium isotopes to create pockets of neutrons to support more fission.

    • tee says:

      @BlackPrince I mean, I’m reasonably sure the fusion bombs make net energy. Not that I’d exactly call it ‘useful’, or say anyone should ever spend another cent researching that nonsense.

    • BlackPrince says:

      @gary euscher Make fusion work? Nobody yet is making fusion work by actually making net energy. A lot of headlines but no reality.

    • gary euscher says:

      Actually ,the lenses were developed at LLNL in USA.
      if USA can make fusion work,they can make a EUV machine

    • Blake46 says:

      It’s the combined efforts of the west that has made these machines possible.

  4. Pratick says:

    Every now and then Vox just makes me fall in love with this world and its geopolitics, loved it

    • Gushterell says:

      Then you buy the American exceptionalism and and you don;t care about the fact that America is the global bully and the major superpower who commits war crimes.

    • William Robinson says:

      this made you fall in love with “the world and its geopolitics”?

      that seems very sick headed to me lol

    • Bluespirit12345 says:

      @Ivan Timofeev
      Ivan everyone knows what else talking about, it’s not that deep

    • HelloHello says:

      Every now and then Vox copied Johnny Harris video topic and puts out a lesser version of his video 2 weeks later.

    • Termitreter says:

      @Ivan Timofeev Different countries are subject to geopolitics, arent they.

  5. AntMaster says:

    ASML is the most important company in the world most people have never heard of.

  6. William Bradford says:

    I wrote my thesis on this very topic about 1 1/2 years ago and it is always great to see this topic get brought up more and more

  7. N D says:

    a lot of western optoelectronic companies have moved away from China after the mid 2000’s because of IP infringement. Unlike complex high-density CPU’s on silicon, optoelectronic tech involves a lot of III-V semiconductor epitaxy and bespoke fab processes – once those are know it’s a lot easier to replicate and sell them for a significantly cheaper price.
    In the UK a lot these industries were lost over the last couple decades. With regards to warfare we’re constantly on the cusp of losing our steel industry. I guess paying profits to shareholders is a lot more important than state security.

    • mynameisjoejeans says:

      @Robert Liu exactly, and it’s only introduced by ideologues who are so market fundamentalist that they’re convinced things can only work efficiently when privatised (or they’re just self serving). This is not true, and for public goods etc nationalisation and insourcing makes a lot of sense. I don’t know a lot about defence industry technology, but it’s feasible that this could be the case there.

    • Robert Liu says:

      @mynameisjoejeans yeah those back doors are really corruption that could bring down the whole system.

    • mynameisjoejeans says:

      @Robert Liuthe NHS was the most cost-efficient healthcare system in the world for a very long time. It’s current crisis is due to back door privatisation, not nationalisation. Health and social care act 2012 meant hospital units required independent management and purchasing systems, introducing huge inefficiencies to enable privatisation of individual areas and drive up operation costs to discredit the national system. This is the exact tactic that was used for older privatisations – intentionally make them glaringly inefficient until ppl won’t complain when you privatise them n sell em to your mates on the cheap.

    • Robert Liu says:

      @Stan the quality is dictated by how much you are willing to pay for it, many Chinese factories are forced to cut corners because the customers just want chepos.

    • Robert Liu says:

      @86pp I guess there are more than Nexperia needed to rebuild the defense industry, and what then? how efficient can they run it? efficient like NHS?

  8. Randall Stephens says:

    @1:16 You’ve incorrectly marked the input/output terminals as transistors. The actual transistors are all the stuff in the middle.

    • kennypu says:

      yeah I saw the same thing and was like “aren’t those just input/output pads?” it’s clearly marked as such. Looking into it, it doesn’t even have 4 transistors, it had, quote: “First conceived in 1952 by Geoffrey Drummer, it was implemented first by Jack Killby in 1958, who wire-bonded 3 transistors together…” so it had 3, not 4.

    • Cat C 🧋 says:

      I didn’t even bother to check if they’d labeled the right thing or not. I’m just glad if people are even aware of the importance of semiconductors when they’re not looking at 60-week lead times. 😆

    • Tibo Rijpers says:

      @marcos the west is making chips the size of 3 to 4 nm

    • marcos says:

      this is video is 90% wrong about a lot of things, and people who don’t know are saying that’s is brillant. China is already making chips with 7 nanometers, China don’t lose at all this ”chip war”. The US make China do this most fast than never!

    • CatKinKitKat says:

      I laughed so hard when I saw it

  9. DevBravo says:

    The Taiwan story is something people really need to pay more attention to. Learned a lot in this one.

  10. A P says:

    Amazing video, now I’ve got a better understanding of why the USA is so openly willing to protect Taiwan in the case if China decides to make a move.

    • Lars Höfler says:

      @Vera Mae I swear to God Almighty, democracy for you is just another excuse to uphold your TYRANNY.

    • Lars Höfler says:

      @Vera Mae “Democracy vs dictatorship” 🤣🤣🤣 The US is the greatest DICTATORSHIP the world has ever seen. If we have democracy in the world, the US would not be able to impose its will on the rest of the world being a tiny minority (3%). China is by far the lesser evil. The kind of evil they have done is not even a fraction of that of America.

      You think this is about “democracy”? Your country waged a CHIP WAR on Japan as well, in 1980s. What, was not Japan a democracy and an ally? Yet you Americoids still hated the Japanese for being too competitive.

      Americans like you are absolutely SHAMELESS.

    • Praise The Sun says:

      @Romstar Transportation You are a racist and you are totally ignorant that the chinese populace wants China. Since their government responds more to the will of their public than any western government has even pretended to in the last 30 years.

    • Robert Liu says:

      @pp pp it will hurt US more than economically….actually it hurts both sides. No one wins in a war.

    • Robert Liu says:

      @pp pp if reverse engineering is that easy it would already been done, China can’t produce those machine and materials even if it has the blueprint, I very much doubt if there’s any tangible benefit.

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