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The chip war between the U.S. and China is escalating – with global repercussions

Sep 27, 2022

On August 9, President Joe Biden signed a law that provides $52 billion in subsidies and incentives to the American chip industry, aimed to boost construction of factories in the U.S. While the EU is moving in a similar direction, Washington has made this a national priority – as a way of countering China’s global ambitions.

A sense of crisis is currently marking the chip industry in South Korea, due to an escalation of the U.S.-China chip war. Business managers as well as politicians are worried that big national companies, such as Samsung and SK Hynix, will move chip production to the U.S. following American tax deductions and subsidies.

As a result of significant state support, Chinese industry has accelerated within the domain of memory chips, in which South Korean companies used to dominate. The Chinese chip industry is still lagging behind South Korea, the U.S. and Taiwan overall – but once it starts to catch up, this will have major consequences for Beijing’s actions in its neighborhood. When China becomes less dependent on the Taiwanese chip industry, the risks for Chinese military action around Taiwan and the South China Sea will increase.

Do not hesitate to reach out to Consilio if you want to know how the chip war and U.S.-China decoupling may impact your company!