Battle for Future of Chips: How US & China Are Racing to Dominate Semiconductor Industry

August 9, 2023

Micro chips, like those in smartphones and planes, are made from special materials. These materials are super important because we need a steady supply of them to make sure our devices work properly every day.

China stopped selling important materials called gallium and germanium, needed for making semi cinductor chips. This could cause problems for the world's supply of chips and create risks for global supply chains.

China makes around 80% of gallium and 60% of germanium used worldwide. These materials are crucial for making chips.They now require special permission to export these materials. This is because of a law by the US that restricted sending advanced chips and tech to China. The US also convinced its friends to join, to limit China's progress in electronics, AI, and supercomputing.

To see why people are worried and how US-led penalties could hurt the tech industry, let's find out what chips are made from.

What is the definition of "semiconductor"?

Semiconductors are in between conductors (let electricity flow) and insulators (prevent electricity). They have crystal structures and can conduct electricity in specific situations, giving control over its flow. This is vital for electronics.

Which materials are commonly used for making semiconductors?

Microchips, also called semiconductors, semis, or chips, are created using materials like silicon, germanium, gallium arsenide, and indium phosphide.

Silicon and germanium are special materials that act like both metals and nonmetals. We use them as "semiconductors" in things like computers.

Long ago, people used germanium as a first type of semiconductor. It's known for handling space or cosmic radiation better than silicon, which is great for space technologies like solar cells or panels.

Gallium arsenide (GaAs) is a special material made from gallium and arsenic. It's used instead of silicon in electronic industry. Gallium is a soft silvery metal like aluminum, and arsenic is a material used in different mixtures and combinations.

Indium is a shiny, bendable metal. When combined with phosphorus, they make something called indium phosphide. This is used in lasers, opto electronics, and solar panels.

Which kind of silicon is used in microchips?

The silicon in computers comes from sand, which is very common. They use a special kind of sand called silica sand, made mostly of 95% of silicon dioxide.

Which metals are required for making microchips?

In addition to gallium and indium, which are soft metals, making special semiconductor devices also needs valuable metals like gold and platinum. Microchips also use aluminum and its mixtures for wiring.

What's the reason for using gold in microchips?

Gold is selected because of its excellent ability to conduct electricity and its resistance to rust, which are needed for top-notch performance.

What quantity of gold is utilized in microchips?

Experts suggest that around one-third of a gram of gold is found in many computers. They also mention that from one ton of PC circuit boards, you could extract about 5 troy ounces or 155.5 grams of gold.

From where are the materials for microchips extracted?

Microchips depend on silicon and rare earth elements (REE), emphasizing the significance of mining the latter. Currently, China holds the top position globally, producing 60% of rare earths and possessing 85% of processing capacity.

The largest places where rare earth elements are dug up are in China. One spot called Bayan Obo in northern China has about 40 million tons of these elements, experts say. China has a total of 44 million tons of these elements stored up, and they mine around 140,000 tons every year.

Vietnam and Brazil hold the second and third biggest amounts of these elements, but they don't dig up as much (only about 1,000 tons every year). Russia has the third largest stored amount (12 million tons), but they're seventh in how much they actually mine. In the US, they dig up around 38,000 tons each year, but they're believed to have 1.5 million tons still underground.

Right now, Taiwan is in charge of making most of the basic computer chips. A company called Taiwan Semiconductor Manufacturing Co. creates about half of all the chips around the world. So, both China and Taiwan are very important for the computer chip market worldwide.

Which gases are utilized when making semiconductors?

Special gases or inert gases(not reacting with other substances) like neon, argon, helium, xenon, and krypton are crucial for making semiconductors.

Inert gases don't mix with other stuff, which is super useful when making computer parts. They prevent unwanted reactions. Overall, more than 30 different gases are needed for this process.

Argon gas is used to shield silicon crystals from reacting with oxygen or nitrogen as they form. When turned into a liquid, argon is used to clean tiny computer chips.

Neon is important in making lasers for creating circuits on wafers in electronics.

"Wafers" refer to thin slices of semiconductor material, usually made of silicon, which are used as a base for manufacturing electronic components like microchips and integrated circuits.

Helium helps manage and stop chemical reactions when making computer chips.

Which company provides the most noble gases?

Before the conflict, Russia and Ukraine were responsible for roughly half (50-55%) of the inert gases supplied to the global market. They contributed about 40-50% of the world's neon supply and 25-30% of xenon and krypton, . There were instances when these countries' export of neon even reached as much as 70%, according to international experts. Independently, Russia alone constitutes 30% of the worldwide provision of three noble gases: neon, krypton, and xenon.

Ukraine's important production places were Mariupol and Odessa. Mariupol is now part of Russia after a 2022 referendum. Conflict caused disruption in Ukraine's noble gas production since March 2022, due to the West's involvement. Russia restricted noble gas supplies to unfriendly countries in response to sanctions, raising global prices.

Is the production of microchips a complex process?

Creating microchips is a complex task with hundreds of steps, potentially requiring around four months from design to mass production. The process is intricate and costly, especially for complex chips, and recent geopolitical shifts have added further challenges and expenses.

The global chip shortage was caused by the COVID pandemic affecting supply chains. Additionally, Western countries' sanctions on China and Russia have worsened the situation by limiting access to crucial resources like rare earths and inert gases for semiconductor production.





By Girish Linganna
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