Chip less than 7 nm is important in the global semi conductor market but it is not the decisive factor. Market share of less than 7 nm chip is very small now. 2021 Report of China Semi conductor Industry Association states that market share of below 7 nm chip in the global market is mere 2% at the moment. But market share of 14 nm and above 14 nm chips is 70%. Moreover, TSMC Quarter 1, Report states that 14 nm and above 14 nm chips account for 60% of revenue globally.

Downstream market for below 7 nm chips is shrinking while it is expanding rapidly for 14 nm and above 14 nm chips. Below 7 nm chips are mainly needed to make smart-phones and global market for smart-phones has little room to expand. In fact, global smart-phone shipments are shrinking for four consecutive years. But 14 nm and above 14 nm chips are mainly required in Electric Vehicles, new 5G-AI-IoT related machines and robots. So demand for 14 nm and above 14 nm chips is rising and likely to rise further in the age of Fourth Industrial Revolution.

Moore's law is the observation that the number of transistors in a dense integrated circuit (IC) doubles about every two years. Moore's law is an observation and projection of a historical trend. Rather than a law of physics, it is an empirical relationship linked to gains from experience in production. In 1975, looking forward to the next decade, he revised the forecast to doubling every two years, a compound annual growth rate (CAGR) of 41%. Moore's prediction has been used in the semiconductor industry to guide long-term planning and to set targets for research and development, thus functioning to some extent as a self-fulfilling prophecy.

Moore in 2016 said that Moore's Law is no longer working. This is because since TSMC broke through the production of 14 nm chips, time consumed for each new lower nm chip production is often several times than that of the production of previous high nm chip production. It is predicted that 1 nm is going to be the limit below which no silicon chip making will be possible. It is already possible to make 3 nm chips commercially and 2 nm chips in research level. So further improvement of silicon chips will be even more difficult.

These three points clearly prove that US chip war on China has little chance to succeed. Firstly, China can already produce 14 nm and above 14 nm chips at mass level and hence will continue to share 60% of the global revenue from chip production. With this revenue China can easily carry on its research to produce less than 7 nm chips independently. But USA will have to content by monopolizing mere less than 2% of the global chip market as US companies have already been asked to avoid Chinese buyers. USA will find it more difficult to reduce the size of chips while China will find it relatively easier to catch up.
The only way to size down the chips further is by moving from silicon chips to photonic chips or graphine (carbon) chips. Chinese research is ahead of US in both photonic chips and graphine chips. So US has little prospect of using its power of being historically ahead in these two fields unlike the case of silicon chips.

Author: Saikat Bhattacharya