Asia's Dominance in Chip Production and Western Efforts to Diversify

Asia's hold on chip production is strengthening as the West grapples with reducing its dependency. Once tech leaders, the U.S. and Europe now account for less than 10% of global chip production. Geopolitical tensions and supply chain disruptions are prompting governments to enhance local semiconductor manufacturing. The U.S. is offering $39 billion in grants, and the EU has its own initiatives.

However, transitioning chip production is intricate. Asia's dominance is entrenched, with Taiwan and South Korea spearheading high-end semiconductors. U.S. efforts, such as TSMC's Arizona factory, encounter delays and depend on Asian materials and European machinery. Chips produced in the West will still require Asian assembly and testing.

What lies ahead? A partial shift away from Asia, but not a complete one. New Western factories aim to diversify and bolster supply chains, albeit at increased costs. Isolation strategies, like restricting tech exports to China, could rebound, spurring China to innovate more. The chip war is underway, with no clear victor yet.