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1. Building a Coalition - the U.S. Faces Down Competition with China in the Chip Sector

Author:
Damian Wnukowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In recent months, the U.S. has intensified its international efforts to limit China’s ability to produce the most advanced chips. The result includes the introduction by Japan and the Netherlands of restrictions on the export of modern machines for chip production. In response, China is trying to attract foreign investment and develop its own potential in this sector. The U.S. actions may significantly slow the pace of China’s technological development and economic growth and limit its potential to further strengthen its military capabilities. This may make it difficult for China to support Russia with dual-use products and render possible offensive actions against Taiwan harder.
Topic:
Economy, Production, Semiconductors, and Competition
Political Geography:
China, Asia, North America, and United States of America

2. China’s Semiconductors Reflections on Sources and Solutions to an Expensive Problem

Author:
Jonathan Liebenau
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
The semiconductor industry has been a renewed topic of political debate for over three years. Due to recent US sanctions on the most advanced semiconductors, the industry has quickly become another flashpoint in the competition between the US and China to dominate the 21st century’s strategic technologies. In this Strategic Update, Dr Jonathan Liebenau explains the development of the semiconductor industry in the context of China’s rise to become an increasingly capable technology power. China’s sustained efforts in industrial policy to cultivate a domestic innovation system coincided with Western firms’ offshoring strategies since the 1990s, transforming China into a large producer and consumer of semiconductors. While Taiwan and the West retained cutting edge chip design capabilities, Chinese firms such as Huawei and Hikvision have become competitive providers of mobile phones, surveillance equipment and related infrastructure services. Despite Washington and its partners’ conviction to constrain in China’s technological prowess, industrial policy initiatives such as the CHIPS Act will face an uphill battle when it comes to bringing manufacturing capacity back to Western economies. In this context, the UK must combine short term incentives with a longer-term strategic vision to remain competitive in one of the 21st century’s key strategic arenas.
Topic:
Science and Technology, Sanctions, Strategic Competition, Production, and Semiconductors
Political Geography:
China, Asia, North America, and United States of America

3. Mexico’s Automotive Industry: A Success Story?

Author:
Jorge Carreto Sanginés, Margherita Russo, and Annamaria Simonazzi
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In less than three decades Mexico’s automotive industry has gone from a minor role to the 7th largest world producer of automotive vehicles. The Mexican experience is part of the more general case of the “integrated peripheries.” The development of these cannot be accounted for separately from the developments occurring in its core country. Unlike the core-periphery literature, however, our analysis emphasizes that the various clusters of cores and integrated peripheries are not alike. In the case under study, the core has been systematically lagging behind the main transformations pioneered by its competitors. The paper traces the evolution of the Mexican automotive industry, emphasizing the difficulties faced by a late-comer country in developing an independent industry, and the importance of policy choices as well as the macroeconomic context in affecting its development. NAFTA represents the culmination of an integration process that has profoundly transformed the structure of the Mexican automotive industry, deepening its dependence on the US market. While there is no doubt that it has contributed to the spectacular growth of the Mexican auto industry, whether it also increased its resilience or, rather, its dependence is still an open question. This issue is particularly relevant in view of the transformations that are taking place in the automotive sector and in the geopolitical scenario. These include the end of NAFTA and the advent of USMCA, the entry of powerful competitors into the global market, and the transition to electric and autonomous vehicles, which all entail risks and opportunities. The lens of the centre-periphery relationship can help to understand the present integration of North America and its future direction.
Topic:
Networks, Manufacturing, Trade Policy, Production, and Automotive Industry
Political Geography:
North America and Mexico

4. The Future of the Automotive Industry: Dangerous Challenges or New Life for a Saturated Market?

Author:
Annamaria Simonazzi, Jorge Carreto Sanginés, and Margherita Russo
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The automotive industry is undergoing a radical transformation. New social, technological, environmental and geopolitical challenges are redefining the characteristics of a saturated market, opening new scenarios while offering opportunities for the entry of new players. These challenges are bound to trigger reorganization of the global value chain between old and new suppliers and car makers and their suppliers, affecting the distribution of employment, the regionalization of production and the dynamic evolution of the comparative advantage of nations. In this paper we address the issue of the reorganization of global value chains in the face of these challenges. The analysis will compare the relative position of core and peripheries in the North-American and European macro-regions, focusing on Mexico, which represents a significant case study for analysis of the impact of the digital transformation on the domestic value chain in an “integrated periphery”, and of trade agreements on the location policies of big multinationals. The dependency of the Mexican automotive industry on the strategic decisions of global players is considered a factor of great vulnerability, especially in a context of rapid change in the patterns of consumption, technologies and international trade agreements. For Mexico, as for European producers in the integrated and semi-peripheries, the main challenge in the near future will be posed by the radical transformation the industry is going through in electrical and autonomous-driving vehicles, which sees regions and players outside the traditional automotive clusters in the lead. The transformations taking place are bound to change the global structure of automotive production. The rise of new competitors from the emerging economies and would-be entrants from other sectors, competing in mastering the new digital and software technologies, threatens the established structure of the industry. The pandemic has led to a spectacular acceleration in the process of change, while heightening uncertainty about future developments. This is why the governments of leading countries are joining in the race, wielding carrots and sticks in support of their industries and in the endeavor to encourage risk-taking and investment in research and innovation, step up e-vehicle production while providing for the necessary infrastructures, and guarantee their companies a place in the new industry.
Topic:
Markets, Networks, Integration, Decarbonization, Digitalization, Production, and Automotive Industry
Political Geography:
Europe, North America, and Mexico