In the world of geopolitics and technology, certain rivalries dominate headlines—like the United States vs. China in the race for artificial intelligence or the constant tug-of-war over rare earth metals. Yet beneath these high-profile battles lies a lesser-known, but equally critical conflict: the global competition for dominance in legacy semiconductor chips. This is the chip war you’ve never heard about.
While cutting-edge chips used in AI, high-end smartphones, and supercomputers often steal the spotlight, legacy chips—older-generation semiconductors—remain vital to the modern economy. These chips power everything from automobiles and home appliances to industrial equipment and basic consumer electronics. The struggle to control their production and supply chains is reshaping alliances, triggering policy overhauls, and redefining global tech power dynamics.
What Are Legacy Chips?
Legacy chips are semiconductors made using older fabrication nodes, generally at 28 nanometers or above. They don’t offer the ultra-fast performance or energy efficiency of modern chips like those produced at 5nm or below by TSMC or Samsung, but they are cheaper to produce, more reliable for certain use cases, and incredibly important in industries where high performance is not the top priority. For instance, automotive systems, medical devices, and utility infrastructure heavily depend on these chips.
Even seemingly simple devices like refrigerators, washing machines, and LED lighting systems require legacy semiconductors. Unlike leading-edge chips that have a life cycle of just a few years before becoming obsolete, legacy chips can remain in use for decades.
The Hidden Backbone of the Global Economy
The COVID-19 pandemic starkly revealed the world’s dependence on legacy chips. Car manufacturers, unable to source these essential semiconductors, were forced to halt production lines, leading to months-long delays in vehicle deliveries. It became painfully evident that while the tech world chased ever-smaller and faster transistors, the steady supply of old-school chips was just as essential to keeping economies running.
According to data from the Semiconductor Industry Association (SIA), legacy chips accounted for over 50% of all semiconductors shipped globally in 2023. Their value might not lie in cutting-edge technology, but in volume, ubiquity, and function.
Why the War?
At the heart of the legacy chip war is a strategic vulnerability. Most legacy chip manufacturing is concentrated in East Asia—particularly in Taiwan and China. This regional dependency poses risks not just to businesses, but also to national security.
The United States and Europe, once leaders in all types of chip manufacturing, allowed much of their semiconductor production to shift overseas in the pursuit of lower costs. While this strategy succeeded in trimming budgets, it inadvertently ceded significant control over critical supply chains. Now, with rising geopolitical tensions and supply shocks fresh in memory, governments are racing to reverse this trend.
The U.S. CHIPS and Science Act, passed in 2022, allocates billions in subsidies and investments not just for leading-edge fabs but also for revitalizing legacy chip manufacturing. Similarly, the European Union’s Chips Act has earmarked funds to strengthen local chip production capabilities.
China’s Ambition and Strategic Focus
China, for its part, has long focused on becoming self-reliant in semiconductor production, especially in legacy nodes. With companies like SMIC (Semiconductor Manufacturing International Corporation), China is pumping billions into the development of older chip manufacturing technologies to reduce dependence on Western firms.
Legacy chips, unlike advanced nodes, are less restricted by the U.S. export bans on tools like EUV lithography. This means China can feasibly scale production without being as technologically constrained, making it a viable strategy in their broader tech ambitions.
Moreover, China views dominance in legacy chips as a way to establish stronghold positions in developing nations and sectors where cost, not performance, drives decisions. By offering affordable legacy chips, China can exert influence and expand its geopolitical footprint through infrastructure, smart cities, and consumer goods.
The Industrial and Military Dimension
Beyond consumer use, legacy chips are critical in defense and industrial applications. Missile guidance systems, radar, and aircraft often depend on chips that have proven their reliability over time. The ruggedness and durability of legacy semiconductors make them indispensable in harsh environments, from military hardware to space exploration.
This military dependence amplifies the urgency for governments to secure legacy chip supply chains. Losing access to these components—whether due to geopolitical conflict, trade barriers, or production halts—could have catastrophic consequences for national defense capabilities.
The Role of Private Industry
Tech giants and industrial leaders have begun re-evaluating their supply chains and investing in domestic manufacturing capabilities. Companies like Texas Instruments, GlobalFoundries, and Infineon are expanding their fabrication facilities, specifically focusing on mature nodes.
Auto manufacturers, having learned hard lessons during the pandemic, are forging direct relationships with chipmakers or even funding dedicated fabs. Ford and General Motors, for instance, have announced partnerships and investments to ensure a steady supply of semiconductors for their vehicles.
Southeast Asia and the Rise of New Players
Amid the superpower standoff, Southeast Asian nations like Vietnam, Malaysia, and Thailand are quietly becoming critical players in the legacy chip war. Their lower labor costs, relatively stable governments, and investment incentives are attracting global semiconductor companies looking to diversify away from China.
These countries are positioning themselves as alternative hubs for back-end processes like assembly, testing, and packaging, and increasingly for front-end wafer fabrication. While they may not have the capacity to build cutting-edge chips yet, they can certainly compete in the legacy segment—where volume matters more than innovation.
Environmental Considerations
Interestingly, legacy chip manufacturing can also present environmental advantages. The older production equipment, while less efficient in terms of transistor density, consumes less water and energy than modern fabs producing sub-10nm chips. This makes scaling legacy chip production more environmentally viable in regions with tight ecological regulations.
Several chipmakers are also repurposing older fabs or restarting mothballed plants rather than building entirely new ones. This trend not only saves money but reduces the environmental impact associated with new construction and equipment installation.
The Road Ahead
As the world increasingly digitizes, the importance of legacy chips will only grow. Every sensor in a smart city, every controller in an EV, and every piece of industrial machinery needs reliable, cost-effective semiconductors. While cutting-edge chips may define the bleeding edge of technological prowess, legacy chips underpin the foundation on which modern life operates.
The quiet struggle for these mature-node semiconductors is shaping the future of global technology in ways most people don’t realize. Nations are not just fighting for leadership in the next big thing—they’re scrambling to secure the old, proven technologies that still run the world.
This overlooked chip war—rooted not in speed or size, but in scale, supply, and strategic control—is every bit as important as the more visible battles for AI and quantum supremacy. In fact, it might just be the one that decides who keeps the lights on.
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