Semiconductors, The Fourth Industrial Revolution and the End of Globalization
Semiconductors are a key player in the Fourth Industrial Revolution as they are at the heart of so many inventions with potential to dramatically affect the production capabilities in many industries, including computing, healthcare, military systems, transportation, and clean energy.
But, as only a handful of countries have the complex knowledge and capital capacity needed to produce them, their limited supply became a geopolitical thorn involving harsh trade wars and security risks.
The US is all in
In the four months since he signed the Chips and Science Act of 2022 into law, President Biden visited the ground-breaking of an Intel Corporation (NASDAQ: INTC) facility in Ohio and a Micron Technology Inc (NASDAQ: MU) plant in upstate New York. On December 6th, the Taiwan Semiconductor Manufacturing Company (NYSE: TSM) hosted President Biden as it unveiled plans for an upgrade of its capabilities in Phoenix and announced plans to build a second facility nearby.
For the occasion, TSMC founder Morris Chang, considered the father of Taiwan's chip industry, said geopolitics have drastically changed the circumstances the industry finds itself in and warned that the days of globalization and free trade are numbered.
Many industry executives agree that the era of globalization is coming to an end which is why sourcing locally is now a top priority. In the case of the US, this support came in the form of a $52 billion commitment from the Biden administration wrapped up in the CHIPS and Science Act, which was signed into law in August this year. With the aim of revitalizing the market, funding for new semiconductor programs has been provided along with $39 billion grant programme and funds for research and development, among many other efforts.
How does Netherlands fit into the semiconductor picture?
The Netherlands is home to a star of the global semiconductor supply chain, ASML Holding (NASDAQ: AMSL) that produces a cutting-edge chipmaking machine that China wants in its possession. For now, the U.S. appears to have persuaded the Netherlands to prevent shipments to China but the Dutch are weighing up the consequences of being cut off from the world’s second-largest economy.
Interestingly, the company does not make chips at all but it builds and sells $200 million extreme ultraviolet (EUV) lithography machines to semiconductor manufacturers like Taiwan’s TSMC. If they are shipped to China, they would enable Chinese chipmakers to manufacture the world's most advanced semiconductors which can be applied to a variety of military and advanced artificial intelligence concepts.
ASML has a de facto monopoly on the ability to build the world’s most advanced chips because it’s the only company in the world that makes the machines needed to make them.
Other news from the semiconductor space
Axcelis (NASDAQ: ACLS), a leading supplier of enabling ion implantation solutions for the semiconductor industry, announced on December 7th that it will showcase its Purion™ and GSD Ovation™ Series of ion implanters at the SEMICON Japan 2022 exhibition. The conference and exhibition will be held from December 14th to December 16th, at the Tokyo Big Sight in Tokyo, Japan.
After celebrating its 3rd listing anniversary on the Nasdaq on December 5h, WISeKey International Holding (NASDAQ: WKEY), a leading cybersecurity AI and IoT, Europe-based company, presented its strategy on Ladenburg Thalmann Virtual Technology Expo on December 7th.
2022 was a transformative year with FY 2022 semiconductor revenue expected to increase by 34% over FY 2021. FY 2023 guidance expects a 40% increase in revenue as compared to FY 2022 with a pipeline of opportunities that are valued at $100 million.
The company claims it is uniquely positioned because its offering combines secure hardware with a platform that manages the physical and cyber pairing. As digital security is anchored in hardware inside the device, this unique proposition that enables the company to introduce digital trust to the physical world.
Intel Corporation (NASDAQ: INTC) is prepping for return to cutting edge in 2023. Last year, Intel broke the convention used since 1997 of using nanometers, or “nm,” name its chips. It revealed its Intel’s 18A is scheduled to come out in early 2025. 18A would be comparable in transistor size to TSMC’s planned 2-nm architecture, but more importantly, it is supposed to be the tool with which Intel will catch up to TSMC in terms of cutting-edge technology.
Recap
Chips promise to build both a better America and a better world but only time will tell if they can live up to this promise.
Along with unprecedented demand, there are new technological developments hitting markets almost every week with markets still rebounding from the havoc brought on by COVID-19. A new era is in the making and semiconductors are helping bring it to life with many new and unprecedented developments on the horizon.
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