Chips

While Americans anxiously watch the price of gasoline tick higher as the war in the Middle East squeezes the global oil supply, the conflict has highlighted another energy vulnerability that could prove just as costly: Taiwan’s dependency on foreign natural gas. At first blush, energy issues an ocean away seem peripheral to American interests. They are anything but. Though the effect on the American economy won’t be immediate, energy insecurity in Taiwan is a looming disaster. Qatar, the source of 30 percent of Taiwan’s natural gas, has been effectively bottled up The reason is that AI – in fact, virtually all modern computing – is highly reliant upon the steady production of semiconductors in the world’s only true hub, Taiwan.

The chip war between China and America is heating up, with an increasingly assertive Joe Biden battling with Xi Jinping as he enters his third term as Chinese leader. The US last week further restricted China’s access to advanced American know-how, in what were some of the most stringent export controls for decades. Xi didn’t mention semiconductors in a speech on Sunday marking the opening of the Communist party’s twice-a-decade congress in Beijing, but he did pledge that China would ‘resolutely win the battle in key core technologies’. To compete with the US, China will need better tech. These new export controls will make Xi’s vision much harder to achieve.

The United States and China are locked in a battle for technological superiority. President Trump has blacklisted tech giant Huawei over concerns the company will leverage its control of 5G networks to spy on behalf of the Chinese Communist party. The crackdown shows the administration is acutely aware of the national security implications of outsourcing network and chip technology. But the concerns don’t end with foreign-owned companies. Qualcomm, US-owned and the one of the world’s largest chip companies, has developed an intensely close relationship with China, potentially making it a trojan horse for communist influence. Qualcomm has been on Trump’s radar.