What's happened
Geopolitical tensions between the U.S. and China are impacting the chip sector amid high demand. Former President Trump criticized Taiwan for taking away U.S. chip manufacturing, while the Biden administration is considering severe trade restrictions on advanced chip technology to China. These developments have led to a drop in shares of major tech companies. Meanwhile, U.S. executives are set to visit Beijing following China's third plenum to discuss economic and trade issues.
Why it matters
The escalating tensions between the U.S. and China over chip technology are significant due to the critical role semiconductors play in the global economy and national security. The potential trade restrictions could disrupt supply chains, impact tech companies' stock prices, and strain international relations. For consumers, this could mean higher prices for electronic goods and potential delays in technological advancements. The outcome of these tensions will likely shape the future of global tech industries and international trade policies.
What the papers say
Axios reports that former President Trump criticized Taiwan for taking away U.S. chip manufacturing and using the U.S. as an 'insurance policy' against China. Business Insider UK highlights the market impact, noting significant drops in shares of ASML, Nvidia, and Taiwan Semiconductor following the news. The South China Morning Post provides context on the upcoming visit of U.S. executives to Beijing, organized by the US-China Business Council, to discuss economic and trade issues.
How we got here
The U.S.-China trade tensions have been ongoing, with both countries imposing tariffs and trade restrictions on each other. The semiconductor industry, crucial for various sectors including consumer electronics, automotive, and defense, has been a focal point. The U.S. aims to limit China's access to advanced chip technology to maintain its technological edge and national security. This situation draws parallels to the U.S.-Japan trade tensions in the 1980s, which had long-term economic impacts.
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More on these topics
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China, officially the People's Republic of China, is a country in East Asia. It is the world's most populous country, with a population of around 1.4 billion in 2019.
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The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
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Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
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Joseph Robinette Biden Jr. is an American politician who is the 46th and current president of the United States. A member of the Democratic Party, he served as the 47th vice president from 2009 to 2017 and represented Delaware in the United States Senate
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Taiwan Semiconductor Manufacturing Company, Limited is a Taiwanese multinational semiconductor contract manufacturing and design company.
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Beijing, alternatively romanized as Peking, is the capital of the People's Republic of China. It is the world's most populous capital city, with over 21 million residents within an administrative area of 16,410.5 km².