The episode explores China's ambitions in the semiconductor industry amidst U.S. sanctions and the global geopolitical landscape that affects chip production. It sheds light on China's progress in manufacturing advanced semiconductors despite numerous challenges and how U.S. sanctions impact China's ability to become self-sufficient in this critical technology sector.

The podcast emphasizes the pivotal role semiconductors play in technology and national security and scrutinizes the measures taken by the U.S. to curb China's access to advanced semiconductor technologies. It highlights key players in the semiconductor supply chain and their strategic importance, such as companies like TSMC, Samsung, and ASML.

Main takeaways from the episode:

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Key Vocabularies and Common Phrases:

1. semiconductors [ˌsemikənˈdʌktərz] - (n.) - Materials that have a conductivity between conductors (generally metals) and nonconductors or insulators (such as most ceramics). These components are used in electronic devices. - Synonyms: (microchips, circuits, transistors)

But rather a country able to produce its own advanced semiconductors

2. adversarial [ˌædvərˈsɛriəl] - (adj.) - Involving or characterized by conflict or opposition. - Synonyms: (hostile, antagonistic, contentious)

And under that, there was a big shift in tone towards China, where he, him and his administration saw them in a more adversarial respect.

3. sanctions [ˈsæŋkʃənz] - (n.) - Official orders that prevent trade, communication, etc. with a particular country, as a way of forcing its leaders to make a decision on an important issue. - Synonyms: (penalties, restrictions, embargoes)

And so what you've seen under the Trump administration and into the Biden administration is continued use of various sanctions, export restrictions on certain technologies to China.

4. geopolitical [ˌdʒiˌoʊpəˈlɪtɪkəl] - (adj.) - Relating to politics, especially international relations, as influenced by geographical factors. - Synonyms: (global, international, foreign-policy)

So these very, very, very tiny components, electronic components, have become the focal point of geopolitical tension in the world over the last sort of four or five years.

5. supply chain [səˈplaɪ ˈtʃeɪn] - (n.) - The sequence of processes involved in the production and distribution of a commodity. - Synonyms: (logistics network, distribution channel, supply system)

When you talk about export restrictions, we're really getting to the nub of how the US can sort of curb their access, which is the supply chain, disrupting the supply chain

6. lithography machines [lɪˈθɒɡrəfi məˈʃinz] - (n.) - Machines used in the process of printing patterns on silicon wafers, crucial in the fabrication of semiconductors. - Synonyms: (engraving machines, printing machines, etching devices)

They make these things called lithography machines, and these are machines that use light to print patterns on silicon wafers.

7. nanometer [ˈnænəˌmiːtər] - (n.) - A unit of measure equal to one billionth of a meter, used especially when describing the scale of semiconductor technology. - Synonyms: (nm, metric unit, micrometer)

Now, this nanometer figure you hear a lot in the chip world effectively refers to the size of the chips or the number of transistors able to fit on the chips

8. euv machines [iː juː vɪ ˈməˌʃinz] - (n.) - Extreme Ultraviolet lithography machines used to fabricate the most advanced semiconductor nodes. - Synonyms: (extreme lithography machines, advanced printing machines, high-tech etching devices)

Now, euv machines are used by TSMC and others to make chips on a scale of say seven, five, three, and eventually 2 nm.

9. recurrence [rɪˈkɜːrəns] - (n.) - The act of occurring again or repeatedly. - Synonyms: (repetition, cycle, return)

So there is a shift happening in the gaming industry more broadly away from just we sell you our hardware and then we sell you a disk that you put into that hardware and then that's kind of it to more of recurring revenue and subscriptions and various other things, too.

10. proficiency [prəˈfɪʃənsi] - (n.) - A high degree of competence or skill; expertise. - Synonyms: (skill, expertise, competence)

Under pressure from the US, has never shipped an EUV machine to China.

China appears to be making strides in cutting-edge chips, despite U.S sanctions

Not a paradise filled with french fries, though that does sound good. But rather a country able to produce its own advanced semiconductors. Despite US sanctions, China are on the path to developing next generation chips. But Beijing still face major challenges to become self sufficient in the semiconductor industry beyond the valley.

But it's good to be back after a week off. How was your week last week? Not having beyond the valley? Yeah, week was good. It was busy, of course. Lots of tech news, but yeah, there was a lot going on. I'm off to a show next week called Mobile World Congress in Barcelona. Biggest mobile industry show in the world, so been prepping for that. A lot of work.

Arjun, we talked about it in previous episodes. But why are microchips or semiconductors so important? Because they're in everything we use, Tom. They are in your smartphone, in your car, even in some home appliances, in your dishwasher, dishwasher or washing machine. They're everywhere. And they're crucial because they are key to the running of these electronic devices.

So the context, I guess, for all of this was the Donald Trump presidency. And under that, there was a big shift in tone towards China, where he, him and his administration saw them in a more adversarial respect. And that stemmed from things like trade, but it also very much spilled into technology. And what was born was effectively now a new era of competition in technology.

For China to be able to access technology from around the world, that's the key to this, right? Yeah, you hit that nail on the head, I guess. Complexity of the chip supply chain has come under scrutiny. No one country sort of owns chips, let's put it that way. Put it quite simply, there's various parts of a chip supply chain, right, from the design of the chip all the way to the manufacturing the actual making of those chips.

The US has a very strong presence in things like design tools. Not as much these days in manufacturing asian companies, particularly, as I mentioned, TSMC in Taiwan, Samsung in South Korea, they have a very strong presence in manufacturing those chips. And then you've got companies in South Korea, in Japan and in Europe who do everything in between the tools, the machinery, the tools required for manufacturing, the design. And so that's the state of play right now in the semiconductor industry.

Now, euv machines are used by TSMC and others to make chips on a scale of say seven, five, three, and eventually 2 nm. Now, this nanometer figure you hear a lot in the chip world effectively refers to the size of the chips or the number of transistors able to fit on the chips. The smaller the number, the theory goes, the more efficient, energy efficient, the more advanced the chip is.

The issue that SMIC has, and this is what it comes down to, yes, they can produce 5 nm, but what euv machines give you is a newer technology and a much more efficient technology. So when SMIC eventually produces these five nanometre chips, if that report, you know, does come to pass, there's going to be two big issues. One, can they do it profitably? And two is a question of yield.

Technology, Global, Economics, Semiconductors, China Chip Industry, Us Sanctions, Cnbc International