Technology

Once China achieves the capability to produce chips comparable to the latest cutting-edge designs domestically, it will be a watershed moment. As the world’s largest chip market, China’s self-sufficiency would immediately deprive Western firms of a large chunk of their revenue stream. Worse still, China would begin exporting competitively priced chips to global markets, as it did in sectors like electric vehicles, solar panels, and other technologies where it has leveraged scale and state-backed innovation to outpace rivals.

It will be an extinction level event for the Western chip industry, potentially eroding decades of technological leadership and market share in a matter of years. The chip industry operates on razor-thin margins, and companies rely on high-volume sales of new chips to justify the immense capital investments required for their development. A sharp decline in demand would inevitably stall innovation and R&D progress, as firms grappling with eroding profit margins will be under pressure to prioritize short-term survival over long-term technological investment.

This is a great article explaining how the industry works https://compactmag.com/article/fighting-a-chip-war-on-the-cheap