I tell you about the world war for chips. Aresu speaks
There is an "invisible" world war on technology, and in particular on chips, explains the analyst Alessandro Aresu, author of the essay "The dominion of the XXI century" , published by Feltrinelli . All the moves of the United States, China and Italy – and the different weights played by the States – in the Startmag interview
What are chips and why has an all-out war between the United States and China been triggered for control of their production? What role has the state played in guiding the development of the chip supply chain ? And what space has our country carved out for itself in the global semiconductor market?
These questions are answered in an interview for Start Magazine by the author of an essay that better than others illustrates the characteristics and challenges of an increasingly fundamental economic sector as well as being central to our daily lives. We are talking about Alessandro Aresu , scientific adviser to the geopolitical magazine Limes and author of Il dominio del XXI century , published by Feltrinelli .
Aresu, first of all what is a chip?
Chips, divided into various product groups, including microprocessors, memories, sensors, are electronic components based on semiconductors such as silicon, so named for their electrical properties. In a nutshell, they are increasingly accurate devices that characterize all advanced computer science and electronics, which is called microelectronics because these devices are increasingly smaller and more precise.
Our digital life has been based on these objects and their evolution over the past seventy years. Everything we do, including this telephone conversation, exists because there is this technological substrate. Without these devices we could not use any of the tools with which we communicate just as we could not use cars, weapon systems or household appliances. We are therefore talking about the basis of our lives, in this epoch of the history of humanity.
How is the chip industry structured?
As with any technological device, there are places where they were conceived, literally invented, particularly in the United States, and places where they are produced. Keep in mind that the chip manufacturing process has spawned an extremely complicated and diverse industry.
This means that there is no unitary organization in the world but a very complex supply chain which includes, among other things, the software with which to design chips, companies dedicated to chip design, chemical components and gases and which are necessary in the processes production, the machinery and instrumentation necessary for the same production, finally the production that takes place in huge factories, then the tests necessary to have working chips. All these processes are very important because they lead us to the finished product.
There are countries that have capabilities in this industry and others that don't: the number of countries that have such capabilities is not large but not very small either; to date the most important countries are the United States, South Korea, Japan, Taiwan.
And the control of this industry is at the center of the competition between the United States and China, because chips are the main import item of the People's Republic which wants to become progressively more and more autonomous and self-sufficient in this sector. Beijing's subsequent policies, such as Made in China 2025, have generated profound reactions from the US, and this is the main macro trend of this industry over the past seven years. The best way to follow these trials is to subscribe to Nikkei Asia and read the best reporter in the world on the subject, her name is Cheng Ting-Fang.
And here we come to the so-called 'war of the chips', which you describe in your book with one adjective: invisible.
I'll tell you right away what that mysterious adjective means. Invisible identifies two things: firstly, since we are talking about microelectronics, we are talking about processes that are not visible to the naked eye and therefore literally escape our sight. Here we are dealing in some cases with futuristic processes, such as plasma etching methods, epitaxy, extreme ultraviolet lithography, all things almost from science fiction which however exist and are repeated on an industrial scale millions and millions of times. Secondly, the adjective invisible is pertinent because the companies fighting this war between are almost unknown compared to their enormous importance. These same companies are the basis of the operation and work of more famous realities, such as the so-called Big Tech.
Therefore, I repeat, there are companies that are part of our daily life and bear names such as Intel, Samsung, Tsmc etc., but I could mention many other less known ones, from the Dutch Asml to the German Trumpf up to fundamental American companies such as Synopsys, Applied Materials, Lam Research. These companies are essentially invisible giants for a large audience, despite their substantial turnover: just think that Applied Materials alone had a turnover of 23 billion dollars in 2021.
In your book, the determining role of the State clearly emerges which, with its policies and its investments, is able to guide the development of this industry. It's right?
It is essential to underline that we are talking about an industry that is not based only on the logic of the market, but on a substantial dose of public intervention, which however varies from state to state according to a differentiated case history that must be studied by looking at the individual realities. There is therefore no generic model of state intervention to apply, even if there are some processes, for example in East Asia, described among other things in a fine book from a few years ago, Tiger Technology .
Let's take some examples.
In countries like South Korea and Taiwan there have been specific state interventions through tax incentives, but also and above all with the construction of ecosystems that include relevant aspects such as training and research.
More examples?
Another example comes from the history of the United States, where the main public intervention concerned the birth of this same industry, which undoubtedly initially had a very strong military imprint but then evolved with market dynamics, with the development of consumer electronics since the 1960s. However, at a certain point the USA found itself having to contend with Japan's commercial rise and in contrast with this country the role of the state proved to be extremely complex, based on a key but problematic principle such as the defense of national security. The US has therefore used trade protection instruments (such as Ronald Reagan's tariffs), but above all they have taken action to prevent Japan from getting its hands on some historic national semiconductor companies. It is precisely in this phase that today's US system for controlling foreign investments was born. But then the US success over Japan in the 90s also derives from market aspects, in particular the relaunch of Intel.
And in Europe? And in China?
In the history of the main European success in this field, that of the Dutch Asml (a company which at the end of this decade aims to reach 40-60 billion in turnover), the role of the public has instead been not very incisive. As far as the Chinese case is concerned, in the last fifteen years we have seen the activation of many public interventions and investments, which however have not managed to solve China's main problem which is the control by the US of some crucial segments of the supply chain . The Chinese have channeled tens and tens of billions to achieve this goal, but it has not been achieved. Now, also for political reasons, we see and will see an increase in incentives globally.
And what role has Italy managed to carve out in this ecosystem?
First of all, as I said at the beginning, it must be remembered that there are countries that exist as active players in the chip supply chain and countries that are merely customers. And Italy, although not in the very first bracket, is one of the countries that has important production realities.
There is a very long history of skills that have been born since 1957 in Brianza thanks to figures such as Floriani, founder of Telettra, and Roberto Olivetti with a company called SGS and which today in its various incarnations has become the Italian-French company STM, one of the main European players in the supply chain, especially in automotive and industry, and one of the main R&D investors in Italy. "A history of pioneers", to take up the title of the book that gives voice to the Italian protagonists of this story, from the 1950s to today. Around STM, one of the main research and technology ecosystems of Southern Italy was born, which is located in Catania and is active in important and promising technologies such as silicon carbide and gallium nitride.
But in the supply chain there are other interesting companies, such as that of Giuseppe Crippa, who worked for STM and after retiring founded the Technoprobe of Cernusco Lombardone, specialized in test systems for the supply chain and in this niche he is a world leader. Then there are other little-known and important national companies such as Spea, Seco and Sapio, which has just celebrated a century of activity. In the wider ecosystem we can also consider Datalogic, the Bologna-based world leader in automatic data acquisition, founded fifty years ago.
The Italian ecosystem therefore has its own consistency and has, among other things, excellent capabilities in the field of research within the CNR and various universities.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/guerra-chip-alessandro-aresu/ on Fri, 30 Dec 2022 06:33:00 +0000.