The Rise of Technological Sovereignty: The Nanometer Race (Article 1)
Serhii Volkov
The Nanometer Race is a series of publications dedicated to semiconductors, technological sovereignty, and its implications.
Content:
Introduction
Factors of development of semiconductor technologies
Understanding how the semiconductor industry works
Technological sovereignty and its relationship with state sovereignty
It is impossible to imagine our modern world without the advantages and opportunities provided by semiconductor electronics. Modern electronic devices are used in a wide range of devices ranging from basic electrical appliances to the latest satellite communication systems, and they significantly simplify our everyday life.
It is clear that semiconductors are also widely used in the production of weapons and as a component of these weapons, which has made it possible to produce weapons much more efficiently and make wars more ferocious. The development of modern semiconductor electronics in the military sector has made it possible to create weapons (such as drones en masse) that no one would have even imagined 40-50 years ago. And weapons have always had an impact.
Therefore, let us note for ourselves: semiconductors provide a civilisational advantage in the context of interstate competition and are a strategically important industry for individual states, state associations and political blocks. Sovereignty in the production and application of the latest semiconductor systems is one of the features that characterises truly technologically sovereign states. Which states have this sovereignty? Is this technological sovereignty an objective per se? How is the latest semiconductor technology shaping the face of modern warfare? What is standing behind the technological wars of the major players? Can Ukraine gain technological sovereignty and do Ukrainians need it? We will try to answer these and other questions in further articles in this series, but first, let's understand what technological sovereignty means in terms of the latest electronics and semiconductors in particular, and which countries are currently leading in this area of high technology.
In the author's opinion, technological sovereignty in electronics - is the ability to develop, manufacture and use modern semiconductor devices to meet the critical needs of the economy and defence sector. Why semiconductors? Because all control, information processing, communication, and partially power electronics devices are now based exclusively on semiconductor technologies, which have been developed significantly over the past 70 years and currently enable the creation of the most efficient devices and systems. Since the author is not an expert in other areas of technology, here and further on, technological sovereignty means technological sovereignty in semiconductors.
What factors influence the development of semiconductor technologies in a particular country, or why some countries gain leadership while others fail?
The development factors include the organisation of science (both basic and applied), education (quality and quantity of training of new specialists), a favourable political and investment climate (attracting capital to finance the latest developments and production), a stable legal framework and the attitude of society towards the technological sphere.
The right organisation of science makes it possible to carry out capital-intensive, high-risk research and development activities, the results of which are then commercialised. The time, capital and risks that are involved in basic research make it unacceptable for private capital of small and medium-sized companies. But without basic research, it is impossible to create the so-called know-how, the breakthroughs in technology that enable a competitive advantage. This is where government funding and grants from large businesses interested in further commercialising scientific developments come into play. And high-quality basic research forms the basis for applied developments and commercial technologies.
In other words, we have a combination: basic research - applied research - commercial technology. This is the way science is organised in the leading technologically sovereign countries and, in the author's opinion, is the most productive.
The quality of education goes side by side with the attitude of society towards the technological sphere. The mood in society creates motivation for young people to study complex disciplines such as mathematics, physics and chemistry, without which technological development is impossible. Positive attitudes in society are shaped by the existence of social lifts and the positive relationship between education, work and the quality of life of an individual. To make a long story short, if the following chain works: I studied the exact sciences very well - I entered a technical university - I worked in a promising company - I got a stable life with high quality, then the value of technical education in society increases, companies have more well-trained specialists available, and the number and level of technological innovations in the country increases. If the educational programmes are also of high quality, tech companies start growing like mushrooms after a warm rain. This is an important basis for technological sovereignty.
How do the political, investment climate and legislation facilitate (or not) the stability, availability and involvement of financing?
Looking back at the current leaders in semiconductor technologies, they have different combinations of the aforementioned factors that provide the environment, motivation and future for such technologies in these countries. At the moment, the leading countries are the United States, China, Europe, Taiwan, Japan and South Korea. But do they have their own technological sovereignty or is it more about leading positions within the context of interstate cooperation? Let's try to define the concept of technological sovereignty more precisely, but for this we need to understand how the semiconductor industry is organised today, what role interstate cooperation and the international division of labour play in the industry, and whether it makes sense to talk about technological sovereignty in today's globalised world.
The semiconductor industry operates in such a way that in most cases the developer of a microchip (which houses an electronic device that performs a certain function) is not organisationally connected to the factory that physically produces the microchip. The role of a device developer - factory works in such a way that the factory has tested semiconductor technology with known parameters of active (e.g. transistor) and passive devices (e.g. inductor) that must be used according to certain technological rules. The factory provides the device parameters and rules to the designer, who creates the device according to the technology parameters, and then sends the design to the factory for physical manufacturing. Technological rules and technology parameters vary greatly from manufacturer to manufacturer, even within the same technology family (e.g. 7nm technology). In other words, we can say that the microchip design is developed for a specific technology provided by the manufacturing plant. This feature of microchip design is key to achieving technological sovereignty. The fact is that when you have a range of semiconductor technologies in your country that can be used by local electronics developers to meet the critical needs of the local industry, economy and consumer market, it means that your country has achieved technological sovereignty.
But does this mean that developers of technological devices from leading countries will only work with local factories? Yes and no. Cooperation between developers and local factories enables better communication, reduced supply chain risks, and in some cases even faster and better chip debugging. However, local manufacturers may not always have the best technology in terms of developing certain classes of devices. Therefore, in some cases, development companies focus on a foreign manufacturer even if there are local ones producing semiconductor systems. For example, Taiwan's TSMC has technologies that are optimal for the production of various kinds of processors, so most leading developers order them from TSMC.
This is how the international division of labour works.
However, it should be understood that if local manufacturers have acceptable technologies, the chance that a developer will focus on a foreign manufacturer is extremely small. A local manufacturer (or a manufacturer from a friendly country) provides the most important service - reliability. If you are a technology company, even a one-month interruption in the supply of microchips is unacceptable for you, leading to critical losses within the company and loss of market share. If you are a leading company in the industry, the losses and problems become global. This thesis is vividly illustrated by the shortage of chips for car manufacturering during the corona crisis, when a large number of cars could not be fully equipped and delivered to customers precisely because of the lack of control electronics. Therefore, technology companies weigh the risks first and foremost, and under acceptable conditions, priority is usually given to a local semiconductor manufacturer.
With regard to technological sovereignty, it should be understood that a technologically sovereign country (or a group of countries, as in the case of the EU) is one that can meet its critical needs in both civil and military production through local production. Technological independence in the civil sector means the production of a sufficient range of devices to saturate the industry and consumer market, which significantly mitigates the effects of trade and technological confrontation between countries (e.g. Trump's tariffs). In the military sector, such sovereignty is manifested in the ability not to ask other countries what weapons can and cannot be produced and used if necessary.
Leading positions in the production of semiconductors can bring significant dividends for both foreign policy and national security. Other countries will mostly try to have friendly or neutral relations with a country that is a leader in semiconductors, also in order to ensure the same reliability in supplying their own technology companies. A good example here is Taiwan, which is politically and technologically protected by the United States, at least because the interruption of semiconductor supplies from Taiwan and/or the transfer of Taiwanese factories under Chinese control poses critical global and national security risks to the United States.
As we can see, the semiconductor manufacturing industry has become important for a particular country not only in terms of filling the budget (although this is also important), but also in terms of national security and international relations. This understanding is important for us to realise that in today's world, real state sovereignty is almost impossible without a technological component. A country that wants to be truly independent in its politics must also take care of a set of factors that are important for achieving technological sovereignty.