How the race for nano-scale technology is changing geopolitics.

Swarms of drones that can pick out high-value targets and overwhelm enemy ground forces, unmanned stealth jets that can seek out and engage enemy aircraft, all supported and directed by artificial intelligence – this is not a sci-fi movie, but building the next generation in the new race to dominate the battlefields of the future.

But all of these high-tech systems, including many of the sophisticated weapons already in the arsenals of international forces, are based on tiny microchips.

Increasingly powerful, small and difficult to manufacture, the steady and secure supply of “leading-edge” microchips will determine which troops will dominate the next decade.

Falling behind the competition in microchip development or risking missing out on access to advanced chips altogether.

This is not just a matter of the future – sanctions imposed on Russia since the invasion of Ukraine in February have had a significant impact on Moscow’s ability to secure the supply of microchips.

A UK-based defense think tank, the Royal United Services Institute (Russia), said in an August report that the Russian military has begun tapping civilian objects to harvest components such as microchips. Sanction.

But taking “dual-use” chips for weapons from parts of equipment such as game consoles would make them safer, he said.

Meanwhile, NATO countries have maintained an uninterrupted supply of advanced weapons to Ukraine’s armed forces.

Super power race to get the best chips

For now, the U.S. seems to have the edge in the high-tech microchip race, but that lead is not due to domestic expertise, but alliances.

Today, the Dutch company ASML leads the way in building the most advanced machines to make chips, while the Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest chipmaker. While the Netherlands and Taiwan are both US allies, neither are US companies.

TSMC can build advanced artificial intelligence systems, supercharge quantum computers, and even make tiny chips that can control the next weapon.

The US has successfully pressured Taiwan to cut off supplies of these types of chips to Russia and to Chinese technology companies such as Huawei and research facilities, including the China Aerodynamics Research and Development Center.

But Russia and China are out of the game.

That’s because most existing high-tech devices don’t require the sophisticated chips necessary for highly specialized AI applications. This gives countries and militaries time to invest in their own supplies.

The world’s best microchips are miniature in size and made of up to 15 billion transistors – tiny devices that send signals across circuits. Each is between 5 and 10-nanometers in diameter. By comparison, a single human hair is 100,000 nanometers across.

The more transistors packed into a chip, the more powerful the processor. For example, a chip with 15 billion transistors can perform 15 trillion operations per second.

Apple’s A15 chip represents the pinnacle of computer science and engineering using a 5-nanometer process.

However, IBM says it has made test transistors with 2-nanometer transistors thinner than DNA.

Although these are the fastest and most complex, they are not yet essential for most weapon systems.

“Most military devices operate on older chips between 14 and 30 nanometers or more,” said Charles Wessner, a research professor at Georgetown University. National.

“There’s a paradox where the chips in the leading devices don’t always lead the chips.”

In the year In 2018, TSMC started mass production of 7-nanometer transistor chips and is already making 3-nanometer chips for Apple, with products to show them next year.

China recently developed a 7-nanometer chip that analysts say is the flagship of the previous generation’s “deep ultraviolet” lithography technology. However, Beijing cannot mass-produce such dense chips.

This “deep ultraviolet” lithography process, which uses ultraviolet light to etch microchip patterns on silicon, has gone through a process known as extreme ultraviolet (EUV) lithography.

This EUV process is very difficult, many companies gave up until ASML made the discovery using what the manufacturer called “the most accurate mirrors in the world”. They currently have a monopoly on technology.

Today, TSMC uses EUV machines to produce Apple’s 5-nanometer transistor M1 chips for new MacBook laptops, iPad Pros and other high-end devices.

While the US has pressured TSMC and ASML not to sell their chips and machines to China and Russia, Washington is heavily dependent on the companies.

In the year In 1990, the US produced 40 percent of the world’s microchip supply. Today, it is only 12 percent.

However, US companies still design half of the world’s chips – itself a very complex process and requiring powerful computer software – but manufacturing is often outsourced to the likes of TSMC.

This is partly due to their dominance, but building a new chip foundry can cost anywhere from $10 billion to $15 billion.

Except that US Intel has invested in local sourcing and will begin manufacturing 7-nanometer chips next year.

South Korea’s Samsung has also invested in development for a long time and is another leading chip maker. Both Samsung and TSMC are in the midst of a $100bn investment plan to maintain their leadership positions in the industry.

Now the US, EU and China are trying to do just that.

In the year In July 2022, the U.S. Congress passed the CHIPS Act to provide $50 billion in domestic microchip production to match the heavy subsidies some foreign competitors are giving their chip industries.

The EU is spending as much as the US to boost GDP.

China’s National Integrated Circuit Industry Investment Fund has provided $100 billion in subsidies for chip production and development. Currently, only 17 percent of China’s chip demand is met domestically, and only half is done by Chinese-led companies.

But experts say there won’t be a clear “winner” from the spending bonanza anytime soon. This is because chip manufacturing relies on a global ecosystem of highly specialized skills and supply chains, rather than a small number of firms that can manage the entire process.

“The broader concern of the CHIPS Act is just the complexity of the industry and trying to bring these extremely complex supply chains back to America,” Mr. Wesner said.

“The device manufacturers are part of that, but by no means the whole part.”

Taking technology by investment, labor or stealth

Last month, a special competition research project led by former Google CEO Eric Schmidt said China could eventually reverse the US position and dominate the industry.

While investing heavily in the industry, some experts say Beijing could block the industry’s key hub.

As Taiwan produces 60 percent of the world’s chips, the island’s political or military ties to the mainland could boost Beijing’s ambitions.

But ultimately, the complex manufacturing process and dominance of the global supply chain make it more difficult to easily buy or steal, experts say. Plans cannot be easily reversed if the chips are stolen.

The Soviet Union learned this the hard way. In the year In the early 1980s, the CIA estimated that Moscow had acquired 2,500 machines needed for the “full spectrum” of microelectronics manufacturing.

But even with the device, he couldn’t build competitive computers with only 5,000 transistors on a chip at the time, compared to billions.

They are still decades behind the West.

“If you steal a concept, it’s only a piece of the puzzle if you steal intellectual property,” said Jonathan, a Taipei-based industry analyst who spoke only by name.

“Given the semiconductor manufacturing process and the trade secrets behind it, it’s very important that you have access to the entire process and have access to the best materials and equipment.”

Jonathan’s father designed microchips in the 1960s and 70s and now documents the growth of the microchip industry. Asianometry Podcast.

One aspect that is difficult to enforce is the human dynamic: Jonathan says companies have developed close relationships in recent decades that are difficult to produce quickly.

“In addition to a lot of state-of-the-art expertise, there’s the ability to work closely with the best suppliers in that particular field of TSMC or Intel or Samsung,” he said.

“They don’t get calls from anyone except people they’ve worked with closely because they already know those people are experts in that particular field. So you have these connections that are very close and not easy to access.

For example, ASML makes very advanced machines for building microchips. The German company Carl Zeiss offers curved mirrors with atomic precision that produce ultra-high ultraviolet light. They are the only company to make such accurate mirrors.

ASML seeks US Simmer and German Trump for specialty lasers.

The technology company IBM says the entire process to make chips requires more than 1,000 steps.

This shows how easily ASML or TSMC can copy their machines and know how to make their chips.

Cooperation to create an ecosystem

Although ASML is TSMC’s main supplier, they also rely on collaborations with scientific institutes and universities in the US and Europe. TSMC sources critical materials and software from Japan and the US.

The industry is very connected.

“There is certainly a movement to do more cooperation with Japan, Korea, Taiwan, the US and Europe,” Mr Wessner said.

“Samsung and TSMC are both building major facilities in the U.S., but they’re not at an alarmingly high level of production. And this may be due in part to some talent challenges.

“They work very hard, but that does not describe the general culture of Taiwan. I’m talking about TSMC’s culture, you know, that’s really very driven.

Mr. Wesner and Jonathan believe that while American companies such as Intel face major hurdles in bringing supply chains home, they may still have an edge as long as they are open to international partners.

“I was asking the German Minister of Research what he would think if we wanted a company to renovate the factory [chip foundry] Build a testing and assembly facility in Italy in Ireland and a research facility in France and build a large fab in Germany. Well, that’s what Intel is doing. So, it’s a complete breath of fresh air to the semiconductor ecosystem.

So where does this leave the United States to seek resiliency and avoid a situation like Russia where it loses the opportunity to use its chips at a critical moment?

“I don’t see him suddenly losing access to the United States,” Jonathan said.

Domestically, however, competing with Taiwan is still a tall order.

“For us to bring this back to America, I wouldn’t say it’s impossible,” he said.

“The question is whether TSMC is commercially competitive in a scenario where TSMC builds five fabs a year over the next four years. I don’t see it being commercially competitive in the United States.”

But China faces similar obstacles.

“The Chinese hardware in semiconductor manufacturing is also not there yet. Especially when it comes to AI chips and GPUs – very few companies can make those.

Updated: September 30, 2022, 3:08 am