Global Risk Of Weaponizing Chips

On the ninth of August, US President Biden signed the CHIPS Act that analysts fear could be the starting point of wider weaponization of the global IT supply chains.

The CHIPS and Science Act of 2022 includes a $52 billion package to boost semiconductor manufacturing in the US, however, the underlying strategic objective seems geopolitical.

As Asia dominates semiconductor manufacturing, the US semiconductor industry no longer controls the global supply chains. However, it still accounts for over 80% of the world’s chip design equipment, 50% of intellectual property for chip designs, and 50% of chip manufacturing equipment worldwide.

The problem is that no single nation can any longer control entire supply chains. Consequently, any effort to weaponize the system is naturally understood as a step ahead to counter China.

Currently, the US, Taiwan, South Korea and Japan supply most of the world’s semiconductors, whereas China represents the highest demand in the industry. The Biden administration would like to keep it that way.