Source: Why China is losing the microchip war - YouTube

The first semiconductor chip invented in the 1950s and after that semiconductors have improved
at an exponential rate. Since chip companies were making better and better chips each year the
US government believed that it always had access to the most advanced ones.

At first, these chip companies handled the entire supply chain. So many chip companies moved
their manufacturing to factories in Japan, Taiwan, South Korea and Hong Kong where labor was
cheaper. At the same time, it banned these chip companies from sharing technology with its
rivals: the Soviet Union and China.

By the 1990s, the Cold War was over. The US had become friendlier with China and it had lifted
most of its export controls. And so China enticed many chip companies to move their assembly
operations to China. And by the 2000s, China dominated this end of the supply chain.

But China was importing more and more chips to feed its assembly industry and it put them in a
tricky position. So the Chinese government poured money into its own chip design and
manufacturing companies. To start, only 3 American companies make the software needed to
design advanced chips. In order to decrease its reliance on this foreign supply chain China was
identifying choke points like ASML and copying them. But the plan backfired. => the
relationship between the US and China was becoming less cordial and more competitive.

In 2022, Joe Biden, targeted China's chip industry more broadly. First, it banned all US
companies from selling advanced chips to China but it also blocked Chinese design companies
from using US made design software and US made manufacturing equipment. Plus, it banned
global companies who use US semiconductor technology from selling advanced chips to China
as well.

With companies that are indispensable to both the US and Chinese chip industries, Taiwan,
where they manufacture 63% of all chips and about 92% of all advanced chips, has built itself
some protection. But the US export controls forced Taiwan's companies to make a choice: defy
the US and keep selling to China or comply and cut off China from some of its chips. => Taiwan
cut off China. China and the US imposed it on countries and companies around the world.
Asking them to pick sides in what looks a lot like a new Cold War.