Chip Wars

The Struggle for Semiconductors Supremacy

Abstract

The Global Financial Crisis (GFC) between 2007 and 2009 led to a sharp decline in economic activity, plummeting output, and increasing unemployment. The crisis did not spare the world’s only superpower, the USA, which was reeling under an economic setback brought about by the GFC and worsened by its burgeoning defence expenditure due to the operations in Iraq and Afghanistan. China, which had benefited from globalisation and had impressive economic growth, pumped billions of dollars into its domestic economy to prevent the fallout of the GFC. Sensing the preoccupation of the USA and Europe in the multiple crises, China slowly but surely started becoming more aggressive, giving wings to its expansionist dreams. Using a potent mix of inducement, cooperation and coercion, China’s footprints in global affairs were on the upswing. Its uncontested actions in militarising the South China Sea (SCS) emboldened it to simultaneously augment its non-kinetic war against the West by using stolen technology and huge
capital to strike at its technological underbelly. Chinese telecom companies such as Huawei and ZTE expanded their global reach and secured access to critical telecom networks. In doing so, they installed backdoors that enabled it to spy and gather data. However, it took some time for the USA to initiate action. In 2012, a US House of Representatives committee launched an investigation that concluded that Huawei had broken American laws and was either unable or unwilling to explain its ties to the Chinese government. The report recommended not using Huawei systems in any government or contractor network. 1 At this stage, the world at large was dithering and, in many cases, even opposed to acting against Chinese telecom companies. This inaction enabled China to embark upon its mission to be the world’s technology leader, thereby paving the path towards global supremacy.