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This Strategy Is Seen as 'America's Only Hope' in the High-Stakes Global Chip War

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The global semiconductor industry, also known as the "chip" industry, is projected to exceed $1 trillion by the end of the decade. 

Analysts are concerned that the United States may face national security issues if it does not keep up with the demand for these chips. Some experts warn that America could be left behind because it contributes less than 10% of the world's chip supply. 

According to Dr. Chris Miller, author of The Chip War, if the U.S. wants to maintain its military edge against its rivals, it needs to develop the technology that will make this possible – specifically, the smartest and fastest chips needed for artificial intelligence. 

"While this may not seem relevant to your bank account today or tomorrow, the reality is that our military edge is closely tied to our economic success," Miller said. 

In his book, Miller explains the interconnected web of chip manufacturing – how companies have risen to power and which countries now own their market share. Chips are mostly designed in the U.S., however, they are predominately manufactured in Taiwan which produces more than 90% of the world's most sophisticated chips. 

"And that's why it's more important than ever, that we make sure that Taiwan remains independent from China because it's Taiwan that's producing all of the world's AI chips," said Miller. 

Taiwan's top company, TSMC, had planned to build a $40 billion production facility in Arizona but postponed the project due to a shortage of qualified workers. 

"If you look, for example, at efforts to ramp up missile production – one of the challenges has been that we don't have enough supply of the components and also the skilled workers who understand how to make the electronics work," said Miller. 

To bolster the U.S. position, the Biden Administration announced a $5 billion investment in research and development on top of the 2022 Chips Act, which provided $52 billion to motivate companies to build new plants at home. 

"The key is to realize that, unlike most parts of the economy, where competition mostly happens between different companies, in this industry, competition is happening between companies but it's also happening between countries," explained Miller. "China is trying right now to make itself the world's most important player in semiconductors. And that's why when it comes to national security, there are substantial ramifications about which countries are on top in the chip industry."

Last year, the U.S. sanctioned China to slow its ability to get AI chips. In return, China banned the U.S. and other countries from using its rare earth extraction separation technologies. 

"China has a 90-95% market share in their processing," said Miller. "It's not actually that mining or the minerals themselves only come from China, but the processing factories are largely based there." 

The private sector is now stepping in. At the World Economic Forum, OpenAI CEO Sam Altman urged investors to support a groundbreaking $7 trillion tech initiative, aimed at boosting global chip production and advancing artificial intelligence. 

Dr. Zachary Collier, an assistant professor at Radford University, explained how an over-demand for these chips could further constrict the chip supply chain. 

"One of the most popular kinds of chips are called GPUs, 'graphical processing units'. They're the same kind of chips that are used as graphics cards in your computer," said Collier. "They turned out to be well-made to run the sort of calculations and things that AI requires. And so, there's a shortage of these because everybody is trying to use them for their own AI applications." 

Meanwhile, Collier says the chip industry is also grappling with how to make production more environmentally friendly. 

"The chip industry does use a lot of resources – it's a resource-intensive thing to make a chip. It takes lots of different chemicals, it takes lots of water, and it takes lots of energy."

Data following the chip industry estimates some 50 new semiconductor fabs will be built in 2024. And 21 of those will be built in the U.S., with Arizona and Texas being hotspots for production. However, China leads chip fabrication plant expansions with roughly 18 projects. While China strives to pump out more chips than anyone else, Miller says strong alliances are key to winning the Chip War.  

"The good news is that when it comes to the most advanced technologies, the U.S. coupled with Taiwan and Japan, we're ahead when it comes to technological quality, essentially the race," Miller said. "China's going to produce more than anyone else. But if we can produce better, then we can still stay ahead when it comes to civilian technology, but also military technology. And that's why it's critical, in my view, that we keep investing in cutting-edge technology, because that's really, America's only hope to keep ahead of China."


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About The Author


Brody Carter has been reporting and anchoring at CBN since 2021. In his time at CBN, he has found his stride in national news, including political and foreign affairs, extreme weather, and in-depth faith-based reporting. Brody frequently covers news for The 700 Club, Faith Nation, Newswatch, and Christian World News. Brody is passionate about news and displays standout dedication and work ethic in the field. Since starting at CBN, Brody has not only grown as a journalist but also as a person of faith thanks to close family, friends, co-workers, and the church body in Virginia Beach. He