Global semiconductor competition heats up with $81 billion subsidy increase | International News

Superpowers led by the US and European Union have funneled nearly $81 billion toward cranking out the next generation of semiconductors, escalating a global showdown with China for chip supremacy. This move marks the first wave of close to $380 billion earmarked by governments worldwide for companies like Intel Corp. and Taiwan Semiconductor Manufacturing Co. to boost production of more powerful microprocessors.

The surge in funding has pushed the Washington-led rivalry with Beijing over cutting-edge technology to a critical turning point that will shape the future of the global economy. The competition has become one of the top strategic national objectives for both sides, with the stakes ranging from the revitalization of US tech manufacturing to the assertion of an upper hand in artificial intelligence.

The US, under President Joe Biden, has unveiled significant funding for chipmakers, with plans to invest a total of $39 billion in grants, loans, guarantees, and tax credits to revive domestic semiconductor production. The goal is to counter China’s advances in semiconductor technology and close the gap on countries like Taiwan and South Korea, which have been leading the chip industry for decades.

The European Union has also committed $46.3 billion to expand local manufacturing capacity, with Germany and other European countries making significant investments in semiconductor projects. Emerging economies like India and Saudi Arabia are also looking to break into the semiconductor industry with substantial government funding.

However, the global surge in government support for semiconductor manufacturing raises concerns about creating a glut of chips. Despite the risks, countries like China are aggressively investing in semiconductor plants and domestic alternatives to Western technology, posing a significant challenge to US and EU dominance in the industry.

The geopolitical implications of the semiconductor race are significant, with tensions between the US and China escalating over export controls and technological advancements. The competition for chip supremacy is not only about economic power but also about national security and strategic influence in the global tech industry.