Taiwan's new 2nm chip set to power the AI revolution
On April 1, 2025, the Taiwanese manufacturer TSMC introduced the world's most advanced microchip: the 2-nanometer (2nm) chip.
Mass production is expected for the second half of the year, and TSMC promises it will represent a major step forward in performance and efficiency – potentially reshaping the technological landscape.
Microchips are the foundation of modern technology, found in nearly all electronic devices, from electric toothbrushes and smartphones to laptops and household appliances. They are made by layering and etching materials like silicon to create microscopic circuits containing billions of transistors.
These transistors are effectively tiny switches, managing the flow of electricity and allowing computers to work. In general, the more transistors a chip contains, the faster and more powerful it becomes.
The microchip industry consistently endeavors to pack more transistors into a smaller area, leading to faster, more powerful and energy-efficient technological devices.
Compared to the previous most advanced chip, known as 3nm chips, TSMC's 2nm technology should deliver notable benefits. These include a 10%-15% boost in computing speed at the same power level or a 20%-30% reduction in power usage at the same speed.
Additionally, transistor density in 2nm chips is increased by about 15%, over and above the 3nm technology. This should enable devices to operate faster, consume less energy, and manage more complex tasks efficiently.
Taiwan's microchip industry is closely tied to its security. It is sometimes referred to as the 'silicon shield', because its widespread economic importance incentivizes the US and allies to defend Taiwan against the possibility of Chinese invasion.
TSMC recently struck a US$100 billion deal to build five new US factories. However, there is uncertainty over whether the 2nm chips can be manufactured outside Taiwan, as some officials are concerned that could undermine the island's security.
Established in 1987, TSMC, which stands for Taiwan Semiconductor Manufacturing Company, manufactures chips for other companies. Taiwan accounts for 60% of the global 'foundry' market (the outsourcing of semiconductor manufacturing) and the vast majority of that comes from TSMC alone.
TSMC's super-advanced microchips are used by other companies in a wide range of devices. It manufactures Apple's A-series processors used in iPhones, iPads, and Macs, it produces NVidia's graphics processing units (GPUs) used for machine learning and AI applications.
It also makes AMD's Ryzen and EPYC processors used by supercomputers worldwide, and it produces Qualcomm's Snapdragon processors, used by Samsung, Xiaomi, OnePlus, and Google phones.
In 2020, TSMC started a special microchip miniaturisation process, called 5nm FinFET technology, that played a crucial role in smartphone and high-performance computing (HPC) development. HPC is the practice of getting multiple processors to work simultaneously on complex computing problems.
Two years later, TSMC launched a 3nm miniaturization process based on even smaller microchips. This further enhanced performance and power efficiency. Apple's A-series processor, for example, is based on this technology. TSMC makes the world's most advanced microchips. Photo: Michael Vi / Shutterstock
Smartphones, laptops and tablets with 2nm chips could benefit from better performance and longer battery life. This will lead to smaller, lighter devices without sacrificing power.
The efficiency and speed of 2nm chips have the potential to enhance AI-based applications such as voice assistants, real-time language translation and autonomous computer systems (those designed to work with minimal to no human input).
Data centers could experience reduced energy consumption and improved processing capabilities, contributing to environmental sustainability goals.
Sectors like autonomous vehicles and robotics could benefit from the increased processing speed and reliability of the new chips, making these technologies safer and more practical for widespread adoption.
This all sounds really promising, but while 2nm chips represent a technological milestone, they also pose challenges. The first one is related to the manufacturing complexity.
Producing 2nm chips requires cutting-edge techniques like extreme ultraviolet (EUV) lithography. This complex and expensive process increases production costs and demands extremely high precision.
Another big issue is heat. Even with relatively lower consumption, as transistors shrink and densities increase, managing heat dissipation becomes a critical challenge.
Overheating can impact chip performance and durability. In addition, at such a small scale, traditional materials like silicon may reach their performance limits, requiring the exploration of different materials.
That said, the enhanced computational power, energy efficiency, and miniaturisation enabled by these chips could be a gateway to a new era of consumer and industrial computing.
Smaller chips could lead to breakthroughs in tomorrow's technology, creating devices that are not only powerful but also discreet and more environmentally friendly.
Domenico Vicinanza is an associate professor of intelligent systems and data science, Anglia Ruskin University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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Asia Times
10 hours ago
- Asia Times
China's industrial policy has an unprofitability problem
Analyzing American economic policy isn't that interesting these days, except perhaps as a grim spectacle. So I've been thinking a little about Chinese economic policy. China's leaders leave much to be desired, but to their credit, they still think economic policy is about strengthening their nation, enriching their people and improving their technology instead of pursuing domestic culture wars by other means. Anyway, China has a lot of policy initiatives right now — cleaning up the fallout from the real estate bust, retaliating against America's tariffs, improving their health care system, and so on. But their most important policy — and the one everyone talks about here in the US — is their big industrial policy push. If you want to understand Chinese industrial policy, I recommend starting with Barry Naughton's free book, 'The Rise of China's Industrial Policy: 1978 to 2020.' The basic story is that until the mid-to-late 2000s, China didn't have a national industrial policy as such. It had a bunch of local governments trying to build up specific industries, usually by attracting investment from multinational companies. And it had a central government that tried to make it easy for local governments to do that, using macro policies like making sure coal was cheap, holding down the value of the Chinese currency in order to stimulate exports and so on. But it was not until the end of Hu Jintao's term in office — and really, not until Xi Jinping came to power — that China developed a national industrial policy, in which the government tries to promote specific industries using tools like subsidies and cheap bank loans. If you want a good primer on just how big those loans and subsidies are, and which industries they're going to, I recommend CSIS' 2022 report, 'Red Ink: Estimating Chinese Industrial Policy Spending in Comparative Perspective.' It's a lot. Here are the authors' estimates from 2019: Source: CSIS In some respects, this policy was successful. For example, it moved China up the value chain — instead of doing simple low-value assembly for foreign manufacturers as in the 2000s, China in the 2010s learned to make many of the higher-value components that go into things like computers, phones and cars, as well as many of the tools that create those goods. This had the added security benefit of making China less dependent on foreign rivals for key manufacturing inputs. China has doubled down on its centralized, big-spending industrial policy since then. In 2021-22, China suffered a huge real estate bust, crippling a sector that had accounted for almost one-third of the country's GDP. China's leaders responded by doubling down on manufacturing, encouraging banks — essentially all of which are either state-owned or state-controlled — to shift their lending from real estate to industry. In 2023, you saw charts like this: Source: Shanghai Macro via Bert Hofman Along with this industrial policy, you saw a massive surge of Chinese-manufactured exports flowing out to the rest of the world. The most recent export surge has been labeled the 'Second China Shock', but in fact, the trend was already headed in that direction well before the pandemic: Source: CSIS China's competitive success in manufacturing industry after industry has been nothing short of spectacular. In just a couple of years, China went from a footnote in the global car industry to the world's leading auto exporter: Source: Visual Capitalist Obviously, this export surge is the most important way that people in countries like the US experience the results of China's industrial policy. So most commentary on the policy has focused on exports, trade balances and so on. But it's important to remember that most of what China is producing in this epic manufacturing surge is not being exported. For example, take cars. Even though China is now the world's top car exporter, most of the cars it makes are sold within China: Source: Brad Setser China's auto industry is actually unusually domestically focused, compared to other auto powerhouses like Germany, South Korea, and Japan: Source: Bloomberg via Noahopinion In fact, this pattern holds across the whole economy. For an industrialized country, China is unusually insular — its exports as a percent of its GDP are higher than the US, but much lower than France, the UK, Germany, or South Korea: Source: World Bank Most of China's enormous manufacturing subsidies are not actually for export manufacturing; they're for domestic manufacturing. The rest of the world is just getting a little bit of spillover from whatever Chinese companies can't manage to sell domestically — except for a country as huge as China, a 'little spillover' can seem like a massive flood to everyone else. And here lies the rub. 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Price wars across much of the economy create deflation. In fact, China is already experiencing deflation: China's consumer prices fell for a fourth consecutive month in May…with price wars in the auto sector adding to downward pressure…The consumer price index fell 0.1% from a year earlier…CPI slipped into negative territory in February, falling 0.7% from a year ago, and has continued to post year-on-year declines of 0.1% in March, April, and now May…Separately, deflation in the country's factory-gate or producer prices deepened, falling 3.3% from a year earlier in May[.] A lot of this is probably due to weak demand from the ongoing real estate bust, but price wars prompted by industrial policy will make it worse. Deflation will exacerbate the lingering problems from the real estate implosion. Debts are in nominal terms, meaning that when prices go down, those debts become harder to service. 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But if China's top manufacturers are constantly skating on the edge of bankruptcy, that means they'll have fewer resources to invest in long-term projects like technological innovation and new business models. Basically, prices are signals about what to build, and China's industrial policies are sending strong signals of 'build more stuff today' instead of 'build better stuff tomorrow.' There's also the danger that China's government won't allow the price wars to end. Ideally, you'd want these price wars to be temporary; eventually, you'd want weak producers to fail, allowing top producers to increase their profitability. This good outcome relies on the government eventually cutting subsidies and letting bad companies die. But letting bad companies die means a bunch of people get laid off. Bloomberg recently had a good report about the political pressures on the Chinese government to keep the subsidies flowing: Local leaders laden in debt are rolling out tax breaks and subsidies for companies, in a bid to stave off the double whammy of job and revenue losses…For China's top leaders, employment is an even more politically sensitive issue than economic growth, according to Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute's Center for China Analysis…Already there are signs the weakening labor market is becoming a touchy subject: One of China's largest online recruitment platforms Zhaopin Ltd. this year quietly stopped providing wage data it's compiled for at least a decade. Already, Bloomberg reports that economic protests are proliferating across the country; with the real estate crisis ongoing, the government will be under even more political pressure to keep manufacturing employment strong. This could mean keeping crappy companies on life support. These so-called 'zombie' companies, kept alive only by a never-ending flood of cheap credit, were a big part of why Japan's economy slowed down so much in the 1990s. So this is the scenario where China's industrial policy ends up backfiring. Subsidies and cheap bank loans dished out to high-quality and low-quality companies alike could flood the market with undesired product, spurring vicious cutthroat price wars, destroying profit margins, exacerbating deflation, and generally making the macroeconomic situation worse. And then China's government could double down by trying to protect employment, by never halting subsidies for companies that fail. Usually, when we think of the costs of industrial policy, the main thing we think about is waste, and there is certainly plenty of waste in China's current approach. But China's experience is illuminating a second problem with industrial policy — the risk of vicious price wars and deflation due to the subsidization of too many competing companies. This article was first published on Noah Smith's Noahpinion Substack and is republished with kind permission. Become a Noahopinion subscriber here.
HKFP
a day ago
- HKFP
EU bans Chinese firms from major state medical equipment contracts
The European Union on Friday banned Chinese firms from government medical device purchases worth more than five million euros (US$5.8 million) in retaliation for limits Beijing places on access to its own market. The latest salvo in trade tensions between the 27-nation bloc and China covers a wide range of healthcare supplies, from surgical masks to X-ray machines, that represent a market worth 150 billion euros in the EU. 'Our aim with these measures is to level the playing field for EU businesses,' the bloc's trade commissioner Maros Sefcovic said. 'We remain committed to dialogue with China to resolve these issues.' In response, China accused the EU of 'double standards'. 'The EU has always boasted that it is the most open market in the world, but in reality, it has gradually moved towards protectionism', foreign ministry spokesman Guo Jiakun said at a regular press briefing. 'Under the guise of fair competition (the EU) actually carries out unfair competition, which is a typical case of double standards.' The European Commission said in a statement the move was in 'response to China's longstanding exclusion of EU-made medical devices from Chinese government contracts.' Brussels said just under 90 percent of public procurement contracts for medical devices in China 'were subject to exclusionary and discriminatory measures' against EU firms. In addition to barring Chinese firms from major state purchases, 'inputs from China for successful bids' would also be limited to 50 percent, it said. Over the last three years, Brussels and Beijing have come into conflict in a number of economic sectors, including electric cars, the rail industry, solar panels and wind turbines. The decision on medical devices comes at a time of heightened trade tensions with President Donald Trump's United States, which has imposed customs surcharges on imports from all over the world, including Europe. The EU has decided to take a tougher stance on trade in recent years, adopting a vast arsenal of legislation to better defend its businesses against unfair competition. In April 2024, the commission opened an investigation into Chinese public contracts for medical devices, the first under a new mechanism introduced by the EU in 2022 to obtain better access to overseas state purchases. China, on the other hand, accuses Europe of protectionism. After a year of negotiations, the commission, which manages trade policy on behalf of the 27 member states, said it had failed to make any progress with China. 'The measure seeks to incentivise China to cease its discrimination against EU firms and EU-made medical devices and treat EU companies with the same openness as the EU does with Chinese companies and products,' Brussels said.
South China Morning Post
a day ago
- South China Morning Post
SoftBank pitches US$1 trillion US AI, robot hub to TSMC, Trump team, with eyes on Arizona
Son envisions a version of the vast manufacturing hub of China's Shenzhen that would bring back high-tech manufacturing to the US, according to people familiar with the billionaire's thinking. The park may comprise production lines for AI-powered industrial robots, they said, asking not to be named as the plan remains private. SoftBank officials are keen to have the Taiwanese maker of Nvidia 's advanced AI chips play a prominent role in the project, although it's not clear what part Son sees for TSMC, which already plans to invest US$165 billion in the US and has started mass production at its first Arizona factory. Nor is it clear that TSMC would be interested. A person familiar with the chipmaker's thinking said that SoftBank's project has no bearing on TSMC's plans in Phoenix. Shares of SoftBank jumped as much as 2.3 per cent in Tokyo on Friday. TSMC's stock price rose 1.9 per cent in Taipei. Code-named 'Project Crystal Land', the Arizona complex represents the 67-year-old SoftBank chief's most ambitious attempt in a career that's spanned numerous bet-the-house bids, thousands-fold returns and billions of dollars in losses. Son, who's often expressed disappointment in his own legacy, has repeatedly said he means to do everything he can to hurry AI development. TSMC's new plant in Phoenix under construction in January 2023. Photo: Matt Haldane SoftBank officials have spoken with federal and state government officials to discuss possible tax breaks for companies building factories or otherwise investing in the industrial park, including talks with US Secretary of Commerce Howard Lutnick, the people said.
