Intel and AMD have informed their Russian customers that no more processors or high-end equipment will be delivered due to the Russian-Ukraine war. Why is the world so dependent on semiconductors, what did Intel and AMD announce, and how does this demonstrate the need for countries to manufacture their own semiconductors?

Why is the world so dependent on semiconductors?

If the past two years have taught us anything, it’s that semiconductors are the lifeblood of our society. Without semiconductors, modern life grinds to a halt, people panic, markets crash, and humanity seems to simply cease to exist. But how did we get to this point of such dependency?

When looking at semiconductors, our dependency on them should be viewed from the lens of the history of other technological improvements. For example, the move to the Iron Age saw society dependent on the iron as it was the basis for tools, equipment, and weapons, the invention of the printing press has helped bring knowledge to the masses. The introduction of electricity saw society move away from gas lighting and candles to electrical lighting and other equipment. Trying to imagine life without one of these is almost impossible as each plays a crucial role in society.

Now, consider the use of semiconductors in modern life. Just 70 years ago, semiconductors were seen as a niche electronic component whose functionality was limited. The invention of the integrated circuit changed everything when suddenly, large bulky valve-based electronics could be integrated onto a silicon die no bigger than a pea. The miniaturisation of electronics saw them integrated into every aspect of life, including washing machines, calculators, traffic lights, aviation equipment, vehicles, and computers.

If all semiconductors on the planet were to disappear, modern life would revert several hundred years, arguably pre-1500s, for the simple reason that technologies after the 1500s but before semiconductors are now reliant on semiconductors.

What did Intel and AMD announce?

Recently, Intel and AMD have announced to their Russian customers that no more processors or other high-tech equipment will be sent in light of the trade restrictions and sanctions against Russia due to their invasion of Ukraine. While this restriction doesn’t cover consumer-grade equipment (such as laptops and processors), it will significantly limit the Russian supply to military-grade equipment, including processors and servers. Even companies in Taiwan, which have nothing to do with the conflict or trade restrictions, have said they will comply with the export control rules on parts sent to Russia.

It is expected that the restriction of semiconductors to Russia will result in a shortage of military equipment and banking systems, servers, and research. As such, limitations in these fields will further affect the country, with expected losses for Russian-owned businesses. The result of loss of business will then potentially see industry leaders pressure the Russian government to pull out of Ukraine.

Of course, this restriction is a double-edged sword as many businesses worldwide deal with Russia, including Intel and AMD. This means that such restrictions will also hurt the West’s companies, especially those with assets in roubles (Russian currency), which has seen a significant fall in valuation.

How does this further demonstrate the need for semiconductor sovereignty?

If the Russian-Ukraine war demonstrates anything, it’s that the need for semiconductor sovereignty is extremely important. A good way to think about this is to imagine if there existed a country that was dependent on its neighbour for its water. If the two countries get along, this is not much of a problem, but if anything, conflict should arise. The water-providing country merely needs to turn off its taps.

Semiconductors are identical to this, and it is worrying how many countries around the world depend on other countries for their semiconductors. While creating cutting-edge semiconductors requires equipment whose design is a closely guarded secret, the ability to develop semiconductors down to 20nm is not exactly difficult to achieve. In fact, it would be easily possible for a nation to focus on creating 250nm devices that were in mass production back in the 90s. While these cannot be used for the latest processors, they are more than capable for use in microcontrollers and many everyday electronics.

Overall, the dependency on other nations for semiconductors is a significant problem that needs to be solved, and the Russian-Ukrainian war further demonstrates this need for semiconductor sovereignty.