China vs the US: who will win the chip war?

There is a joke in Taipei that if China invades Taiwan, the best place to shelter will be in microchip factories, because they are the only places the People’s Liberation Army can’t afford to destroy. The country that controls advanced chips controls the future of technology – and Taiwan’s chip fabrication foundries (‘fabs’) are the finest in the world. Successful reunification between the mainland and its renegade province would give China a virtual monopoly over the most advanced fabs. Given Xi Jinping’s designs on Taiwan, it is no wonder that the US government is worried.

For this reason, in recent months the United States has taken various steps to thwart China’s attempts to make advanced semiconductors. New fabs are technically challenging to build, and eye-wateringly costly. A recent study by Boston Consulting found the cost of a large chip plant is now more than a next-generation aircraft carrier or a new nuclear power station.