The Chip Industry is going Global but more to Asia
With the chip shortage of 2021, what’s becoming clear is the U.S. will lose its hegemony on chip and AI chip production by 2030.
For example, according to Chinese media report on April 19, there have been at least 21 AI chips investments involving 17 companies since the beginning of 2021, totaling approx. RMB 20 billion (USD 3.1 billion). Meanwhile South Korea is even more ambitious to disrupt the future chip supply with its own winners.
The nation’s government said Thursday (mid May, 2021) that 510 trillion South Korean won ($452 billion) will be invested in chips by 2030, with the bulk of that coming from private companies in the country.
With the dominance of Taiwan’s SCMC in the chip industry, the U.S. as the dominant player in the chip sector in the future could slowly be thwarted by Asia. Intel’s pivot will unlikely be unable to correct their execution issues. Meanwhile it’s not clear if NVIDIA’s acquisition of the U.K’s ARM will go through. It would realistically give them too much monopoly power in the future.
In the chip shortage which impacts many many industries, Taiwan’s leader has become more important than ever. The global shortage of chips that forced several automakers to halt production has brought attention to Taiwan’s outsized role in semiconductor manufacturing.
Taiwan is such a small country but so key to this chip sector. Taiwan dominates the foundry market, or the outsourcing of semiconductor manufacturing.
By building massive chip capabilities, South Korea will have the power to decide its own trajectory, instead of being forced in a specific direction. This will enable South Korea to be among the most innovative societies per capita in the 2030s. South Korea is outpacing Japan and China in innovation per capita.
Through the so-called “K-Semiconductor Strategy,” the South Korean government said it will support the industry by offering tax breaks, finance, and infrastructure. This also displays how behind the U.S. is in anticipating the future supply-demand.
Think about it, Taiwan’s TSMC and South Korea’s Samsung Electronics control more than 70% of the semiconductor manufacturing market. A global semiconductor shortage and tensions with China have bolstered U.S. scrutiny of the supply chain and created a drive to regain leadership. One of the main failings of the Trump term was not anticipating the future of AI properly or preparing the U.S. for it.
In China, among the 11 companies focused on developing cloud AI chips, while at least eight financing rounds amounted to more than RMB 1 billion. In the U.S. BigTech are beginning to produce their own AI chips. The chip industry is supportive of the AI arms race and so is rather key.
In sheer manufacturing capacity, Taiwan is #1 and South Korea is #2, with the U.S. in third place and China gaining quickly. However when it comes to AI papers, R&D , startup ecosystems and real world innovation China is quickly overtaking the U.S. in its capabilities that will scale very quickly in the 2030s and 2040s. The 21st century really does belong to Asia, the Last Futurist predicts.