How Far into 2023 will the US vs China Chip War Continue?

How Far into 2023 will the US vs China Chip War Continue?

How Far into 2023 will the US vs China Chip War Continue?The tension between the US and China, and the chip war between the two is also taking a new turn.

The chip war rages on between the US and China. Semiconductors have emerged as one of the fiercest battlegrounds in the intense rivalry between the US and China. As the tension between the US and China mounts as a fall-out of Nancy Pelosi’s provocative Taiwan visit, the technology war between the two is also taking a new turn.

The US is trying to reinforce its central role in the world’s semiconductor ecosystem and ensure that China is unable to produce the most cutting-edge chips. The US aims to re-shore the semiconductor industry back to the US. China is a net importer of semiconductors, heavily relying on foreign manufacturers, notably the US, to enable most of its technology. Chip-design solutions providers Synopsys and Cadence Design Systems look like solid choices in the present situation.

 

The US vs China Chip War:

China is a tech powerhouse. Like other major economies, China relies heavily on semiconductor production in Taiwan. Chips are crucial for smart weapons. This is one of the reasons many policymakers are so concerned about the development of China’s semiconductor industry. The bulk of the market is in chips for which China already has the technology or can play catch up with its investments in research and in building the entire supply chain, including chip fabrication.

The plight of the U.S. semiconductor companies is not likely to end anytime soon. Supply-chain snags are already playing spoilsport in the U.S. semiconductor industry. The global semiconductor shortage shows no signs of slowing down soon, according to US officials. There are certain costs to the U.S. economy in case of a decoupling of the U.S. and China.

The world’s semiconductor industry is clearly at a crossroads with the risk of the global supply chain splitting into two competing blocks, one led by the US and the other by China. Interestingly, only three U.S.-based companies Synopsys, Cadence Design Systems, and Mentor Graphics have an oligopolistic command over the globally. The average CDNS price target is $195, presenting 12% upside potential. The average SNPS stock price prediction comes in at $420.82.

The sheer number of electronics factories and consumers in China makes it the biggest buyer of semiconductor chips from the US. Meanwhile, China has also not been sitting on its hands, waiting for the US to ratchet up its sanctions on its high-tech ambitions in this area. Overall, it is still too early to say how far the restrictions on business with China will go. Synopsys and Cadence, being world leaders in this niche technology market, seem to be the best buys for long-term returns.