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Developments in Chinese Chipmaking

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Abstract

The global semiconductor industry has become a key source of global economic and geopolitical risks. Due to a combination of huge fixed costs, highly specialized human capital, and a high degree of geographic concentration at different stages of production, chipmaking exhibits extremely low substitutability throughout the value chain. Consequently, the industry is vulnerable to supply chain shocks, which, given the role of semiconductors as a necessary input to a huge array of manufactured goods (figure 1), can have large and persistent global effects. Moreover, chips are also viewed as crucial to developing frontier technologies such as artificial intelligence and are increasingly critical to national security.

Suggested Citation

  • Colin C. Caines & Sharon Jeon & Cheyenne Quijano, 2025. "Developments in Chinese Chipmaking," FEDS Notes 2025-01-17, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfn:2025-01-17
    DOI: 10.17016/2380-7172.3647
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