The U.S. and its allies are joining hands on chips to halt China's advancement in the major technology

According to analysts speaking to CNBC, major chip-producing countries, including the U.S. are creating alliances in part to preserve their supply chains for semiconductors and prevent China from overtaking the market leader position. Countries with robust semiconductor industries, such as the United States, South Korea, Japan, and Taiwan, have sought to form alliances around the crucial technology. “The immediate reason for all this is definitely China,” said Pranay Kotasthane, chairperson of the High Tech Geopolitics Programme at the Takshashila Institution, in reference to the alliances. Because they are used in so many of the things we use, including smartphones, vehicles, and refrigerators, semiconductors are a crucial component of modern technology. They are also essential for applications of artificial intelligence and even for armament. The Covid pandemic-related shortage of chips, along with a rise in consumer electronics demand and supply chain interruptions, brought the significance of chips into sharp relief. Governments all across the world were informed of the necessity to secure chip supplies as a result. Under President Joe Biden, the US has promoted the reshoring of manufacturing. However, the semiconductor supply chain is intricate and involves everything from packaging to production and the equipment needed to execute those things. For instance, the only company in the world capable of creating the extremely complicated equipment required to produce the most cutting-edge circuits is ASML, situated in the Netherlands. Despite being strong in several market segments, the United States no longer leads in manufacturing. The production of the most cutting-edge semiconductors has mostly been dominated by Samsung and TSMC for the past 15 years or so. The biggest chipmaker in the US, Intel, lagged far behind. “What has happened is there are many companies spread across the world doing a small part of it, which means there’s a geopolitical angle to it, right? What if one company doesn’t supply the things that you need? What if, you know, one of the countries sort of puts things about espionage through chips? So those things make it a geopolitical tool,” Kotasthane said. “The other geopolitical significance is just related to Taiwan’s central role in the semiconductor supply chain. And because China-Taiwan tensions have risen, there is a fear that, you know, since a lot of manufacturing happens in Taiwan, what happens if China were to occupy or even just that there are tensions between the two countries?” Kotasthane said.