Chip market contest: Who will win the race?
Not all chips are created equal. No country can produce all of the types that are needed. Investments in Germany or the US will not change this, but at best reduce the dependence on Asian countries.
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00:00 So tiny, yet so important - chips.
00:06 If they aren't available, car production can come to a standstill.
00:12 European car manufacturers have incurred over 100 billion euros in losses due to cars that
00:16 could not be produced.
00:19 Chips are indispensable.
00:21 There are more than a thousand of them in an electric car.
00:23 You can find them here, and here, and here, and even here.
00:31 Both the West and China are dependent on chip imports.
00:38 To become more self-sufficient, new chip factories have been and are being built in many countries.
00:43 In Germany alone, there will be five more in the coming years.
00:47 A new plant or more plants.
00:52 More production in Europe contributes to more supply security, especially for the European
00:55 industry.
00:56 This applies to automotive, but also to other industries.
01:01 The new chip factories like this one in eastern Germany are being built with the assistance
01:05 of extremely high subsidies.
01:07 The EU is providing a total of 43 billion euros for this, the USA 52 billion US dollars,
01:14 and China 17 billion per year.
01:17 Emerging economies such as Vietnam can hardly keep up.
01:22 There's no need to warn of a coming subsidy race.
01:25 It's already here.
01:26 That's simply the way it is.
01:27 Wealthy countries also have certain advantages.
01:32 But how independent can individual countries like the United States become?
01:38 The US wants to be more independent across a range of what I would call basic chips,
01:46 because there was a shortage in 2022.
01:51 Manufacturers specialize in certain chips.
01:53 There are more than 10,000 different ones.
01:56 No country produces even close to every type.
02:00 Therefore countries are highly dependent on each other for their supply of chips.
02:04 For example, Taiwan, the world's largest manufacturing country, exports 52 billion dollars worth
02:10 of chips to China.
02:12 In return, China supplies Taiwan with 23 billion US dollars worth.
02:18 Exports to South Korea similarly amount to 23 billion dollars.
02:23 From there, China receives chips worth 90 billion.
02:28 South Korea specializes in high-quality, complex chips.
02:33 The value per chip is 1 US dollar and 8 cents on average.
02:39 The figure for Taiwan is 32 US cents, and both simple and complex chips come from there.
02:46 China largely relies on cheap, mass-produced goods worth less than 20 US cents per piece.
02:54 So there are a lot of different chips, you know, across the whole spectrum of uses, from,
03:02 you know, very simple things like household appliances to very complicated things like
03:08 missiles and artificial intelligence.
03:13 So how much independence is realistic in the end?
03:16 50 or maybe 90 percent?
03:18 I would have a hard time nailing down a specific number.
03:21 It's not going to be 100 percent.
03:23 That's utopian.
03:24 Independence isn't realistic.
03:27 For any one country to think that it can produce them all, you know, is just a fool's dream.
03:39 But there might be one exception - China.
03:42 It is the only country in the world that has the necessary raw materials, such as rare
03:47 earths.
03:48 Plus, plenty of money and a lot of stamina.
03:54 There are plans up to 2049, and as they say, the steady drip wears away the stone.
03:59 The strategic goal is indeed autonomy, 100 percent independence.
04:03 I really think it's possible that they will achieve that at some point.
04:07 How quickly is another question altogether.
04:12 In the end, countries remain dependent on each other.
04:15 Good relations are therefore enormously important for economic survival.
04:19 The current trade restrictions between the US and China on chip-related transactions
04:23 are highly explosive.
04:25 The US prohibits the export of high-performance chips, while China regulates the export of
04:30 rare earths.
04:31 By all accounts, the problems in the Chinese economy are likely to make them wary of really
04:37 engaging in a full tit-for-tat with the United States.
04:41 And at the same time, the US government is very cognizant of the fact that taking drastic
04:49 actions has an impact on US companies, that they don't want to do things that are counterproductive.
04:58 Even with billions invested in its own chip production, no country in the world can make
05:02 itself independent of imports.
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