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Tiny weapons

Balance of Power
Bloomberg

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The most advanced ones have circuits measuring in the billionths of a meter. They may be exceptionally tiny, but their impact on the global economy and geopolitics is enormous.

As the fight between the U.S. and China for tech dominance heats up, focus is turning to the semiconductor industry. Chips are the basic component of modern digital life — in everything from smartphones to missiles — and the electronics industry that depends on them is worth more than $5 trillion a year, making it a market worth fighting for.

Alan Crawford, Debby Wu, Colum Murphy and Ian King explain how one of the most highly-globalized products has choke points that the U.S. has been seeking to squeeze in order to cut China off. Beijing accounts for more than 50% of all chips sold and is keen to develop its own production capability while preserving its access to supply from elsewhere.

The front line in all of this is Taiwan, the democratically-governed island that China sees as its territory which is responsible for 70% of chips manufactured to order. Beijing has been ramping up threats of military intervention if Taipei draws even closer to the U.S.

This is all happening against the backdrop of the U.S. election.

The reality, though, is that President Donald Trump wasn't first to recognize the threat posed by China on tech (the Obama administration, where Democratic nominee Joe Biden was vice president, did as well), even if he has accelerated the conflict.

Whoever wins the presidency is likely to keep the pressure going. The semiconductor value chain has become a geopolitical weapon.

Rosalind Mathieson

Tell us how we're doing or what we're missing at balancepower@bloomberg.net.

Global Headlines

Meddling charge | The top U.S. spy chief accused Iran of making its most direct efforts to interfere in the closing days of the presidential election, saying the Islamic Republic faked a series of intimidating messages to Democratic voters. Director of National Intelligence John Ratcliffe, an ally of Trump's, said both Iran and Russia had obtained voter registration information and that the Iranian effort was meant to undermine the Republican candidate, without explaining how he reached that conclusion.

Campaign 2020

There are 12 days until the election. Here's the latest on the race for control of the White House and Congress.

Trump and Biden will square off for 90 minutes in their final debate tonight, but the biggest risk for each candidate comes more from their own weaknesses and less from each other. The event will take place at 9 p.m. New York time in Nashville, Tennessee.

Other developments

Sign up to receive daily election updates as a direct mobile notification on Twitter. Simply click on this link and like the tweet.

Back on | The topsy-turvy Brexit talks are due to resume, with growing signs an accord is near, less than a week after U.K. Prime Minister Boris Johnson suspended the discussions. Negotiators are scheduled to arrive in London today in the hope of reaching a deal on Britain's post-divorce trading arrangements with the European Union by mid-November.

  • The impact of the coronavirus is giving British companies a test run for the upheaval Brexit is expected to cause.
  • U.K. Chancellor of the Exchequer Rishi Sunak will today set out a further package of support for businesses affected by the pandemic.

NATO's dilemma | Turkey isn't backing down from demands the U.S. transfer missile technology and share production in return for Ankara ending its pursuit of Russian air-defense equipment. North Atlantic Treaty Organization defense ministers start a virtual meeting today, about a week after Turkey is believed to have tested a S-400 missile defense system it bought from Moscow last year.

Conflicting messages | Brazil's President Jair Bolsonaro criticized a Chinese coronavirus vaccine, saying Brazilians "WON'T BE ANYONE'S GUINEA PIG," a day after his heath minister announced a nationwide rollout. The incident underscores Bolsonaro's contradictory stance toward China, the South American giant's biggest trading partner.

A nurse shows a vaccine produced by Chinese company Sinovac Biotech at the Sao Lucas Hospital in southern Brazil on Aug. 8.

Photographer: Silvio Avila/AFP via  Getty Images

Stepping back | Thai Prime Minister Prayuth Chan-Ocha ordered the withdrawal of a week-old state of emergency in Bangkok that barred large gatherings, in a bid to calm pro-democracy demonstrators calling for the resignation of his government. Still, one of the main protest organizations said it was preparing to call another mass rally.

  • Read why the protesters want to change the monarchy.

What to Watch

  • Nigerian protests against police brutality have turned increasingly deadly after the authorities cracked down against the three-week-old upheaval that has disrupted commerce in urban centers.
  • The Vatican renewed an agreement with Beijing on the appointment of bishops, brushing aside pressure from the U.S. which has denounced attacks on religious freedom in China.
  • Guinean President Alpha Conde won a majority in 14 of 20 regions where votes in Sunday's election have been counted, while former Prime Minister Cellou Dalein Diallo has already declared victory in the 12-person race to lead the world's top bauxite producer.
  • Senate Republicans are steaming ahead with plans to elevate Amy Coney Barrett to the Supreme Court by early next week, with the Judiciary Committee set for a vote today.

And finally ... Two bronze lions standing guard outside HSBC's main Hong Kong office have made their return in a city subdued by a Chinese crackdown on dissent. The lions, nicknamed "Stephen" and "Stitt," were splashed with spray paint and partly set ablaze during protests at the start of the year. The attack came after HSBC closed an account linked to the city's pro-democracy movement in November. Under pressure from Beijing, the lender has also publicly endorsed China's new security law.

Photographer: Chan Long Hei/Bloomberg


 

 

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