this is bbc news. we'll have the headlines and all the main news stories for you at the top of the hour, straight after this programme. a hundred years ago, oil was the most sought after commodity. today, it's these chips that run the world. they provide the processing power for everything we use, from smartphones to aircraft and cars to microwaves. but the fight for who controls the supply chains, the network of companies that make these devices, is escalating. translation: we will focus on national strategic needs l

and pool our resources together to boost cutting—edge research in science and technology domestically, and resolutely win the battle in key technologies. so instead of relying on chips made overseas in places like china, the supply chain for those chips will be here in america. welcome to talking business asia. i'm suranjana tewari. most semiconductors are made in asia. i'm in one of the areas of singapore where a lot of that fabrication happens, but the entire ecosystem stretches throughout the world. take this iphone, for example. it's been built around chips that were designed by apple over in the us, manufactured by companies like taiwan semiconductor manufacturing company, ortsmc, in taiwan. chips made injapan and south korea may also be in this phone. a lot of the assembly then happens in china.

with the war over chips heating up, countries like india might play a bigger role in production in the future. now, in this industry, size matters. the smaller, the better. these chips have transistors — think of tiny switches — and they measure about five nanometres. a nanometre is, get this, a millionth of a millimetre. just to put that into perspective, a human hair is 50,000 to 100,000 nanometres. so we're talking 50 to 100 times smaller than a strand of hair on my head. that's what enables, you know, our phone to get faster each generation, our digital photo archive to get bigger, our smart home devices to get smarter over time, you know, and our social media content to get richer. so that's definitely one of the goals. and that's what the semiconductor industry calls moore's law, essentially doubling the transistor density over time almost every two years. and that's a hard goal to achieve.

the world's leading manufacturer of semiconductors is taiwan. companies there, including tsmc, mass—produce the majority of these types of chips at the highest quality. at this point, only very, very few players, namely three across the globe, can manufacture the bleeding—edge semiconductor chips. those are the smallest transistors, the densest transistor ones. one of them is tsmc in taiwan, and tsmc commands the lion's share of leading—edge foundry capacity. and until very recently, i would say, they have been mainly building up capacity in taiwan. and that's why taiwan, as a region, plays a very important role in the semiconductor industry. the united states is concerned about this, and its reliance on taiwan. it's also concerned about china making advances in the sector. and so it's ramping up efforts to stop beijing's progress when it comes to chip technology. 0n china's part, it's made

the production of cutting—edge chips a national priority. it wants to be self—sufficient when it comes to semiconductors. it's not quite a high—tech superpower yet, and us controls are causing problems. translation: in order- to maintain tech hegemony, the united states has misused export control measures to maliciously block and suppress chinese businesses. this practice deviates from the principle of fair competition and violates international economic and trade rules. now the us is investing billions of dollars to expand the production of chips on american shores. the legislation that allows for that is called the us chips and science act. one of the companies taking advantage of it is micron. it's one of the biggest players in the memory chips business. memory chips are essential for anything that has a processor, but also for bigger items like supercomputers. i sat down with the chief

executive of micron, and started by asking him how that legislation will affect his business. well, the us chips act is helping level the playing field. over the course of the last couple of decades, a lot of the manufacturing of silicon moved to asia because of the incentives provided by the governments here, and now us chips act is able to bridge the cost gap that exists in production in the us versus asia. so us chips act will provide the necessary grants and the investment tax credits to enable more manufacturing in the us. yeah, i'm glad you mentioned cost, because there's a reason that the supply chains move to asia in the first place, isn't there? are you confident that the us can be the dominant manufacturer? well, the supply chains for memory manufacturing will be diversified. of course, micron has a well—diversified footprint of manufacturing here in asia, and micron will continue to invest in ourfabs in asia to meet the demand needs of the future. but also in order to meet the growth in demand, we need to add new capacity.

so us new manufacturing fabs that we'll be building in boise, idaho as well as near syracuse in new york, will be part of our overall globalfootprint, including fabs in the us as well as in asia, to supply the demand that is needed for the 2030 era demand. what are you telling your customers and your clients and your suppliers in this region, then, as the us ramps up its manufacturing? yeah, so micron investments in boise, idaho, when we announced that investment for manufacturing fab, we said we'll be investing $15 billion over the course of ten years. similarly for clay, new york, near syracuse, we have announced that we'll be investing $20 billion over a course of ten years to build a leading—edge memory manufacturing fab there. last year, we announced that micron will be investing $150 billion through the course of the decade for leading—edge r&d and manufacturing

worldwide. so you can see that majority of the investments will, of course, be occurring in our supply chain, wafer manufacturing and assembly and test manufacturing infrastructure that we have here in asia. so all of this is going to coexist. micron will continue to, of course, make investments in our asia manufacturing operations, waferfab, as well as assembly and test, as well as continue to advance our r&d teams here in asia as we continue to bring up manufacturing in us to meet the second half of this decade demand. is the us right to be so concerned about china's progress on advanced semiconductors? well, ithink, you know, i'm not going to be commenting specifically on us policies because that is really a matter for the governments to decide.

what is important is that there be a level playing field across the globe in terms of ability to do free business, address the markets freely, and of course, factors such as ip protection as well. but the government has put its onus on manufacturers like yourself. what i will tell you is what micron is focused on, what we are focused on is continuing to maintain our technology, leadership, continuing to focus on strengthening, accelerating momentum in products, manufacturing excellence. if you look at micron today, we are focused on gaining our strength in the markets through these aspects of technology, manufacturing and product portfolio and deep customer engagements. and this is what has really positioned micron over the years in terms of industry—leading technologies that we produce. right here in singapore, micron produces the world's most advanced 232 layer nand.

so as we navigate through these changing times on the global front, of course we don't lose sight of what we need to do to maintain our technology, leadership and manufacturing excellence and strong products that meet the requirements of our customers. yeah, i mean, we're living in unique economic times, aren't we? there's rising inflation, there's rising interest rates, there's the war in ukraine, geopolitical tensions. how far does the us—china trade war affect micron�*s business? so, with respect to some of the factors that you mentioned, the russia—ukraine war, the covid lockdowns in china, of course, the high inflation impacting consumer demand for electronics goods, and certainly the macroeconomic environment that is resulting in some cautionary sentiment on part of the businesses to buy products, all of these trends have certainly led to a change in the demand expectations for memory.

and today, as you know, customers during the covid period had supply chain shortages, they had semiconductor shortages, and they scrambled to get supply of semiconductors, and they built high levels of inventory. these are some of the factors impacting the demand to micron and to other memory suppliers today as well. and inventory adjustments are happening at our customers. the ordinary person doesn't get much insight into how something like the war in ukraine affects a semiconductor business. could you elaborate on that? well, you know, the war in ukraine certainly weakened the sentiment around electronics—buying, and resulted in some of the demand reduction. of course, you know, consumers, when they have to worry about energy, food, and of course, post—covid, some of the travel aspects, basically reallocation of consumer spend away from electronics toward food, energy and other factors. so these are some of the factors that have impacted

some of the consumer demand. as a memory chip—maker, you really have a first—hand pulse of the entire industry and the demand for consumer products. you've mentioned it already. what's your sense of the current economic conditions for the next year? 0ur memory industry currently is experiencing inventory adjustments by our customers in various end markets, and that has resulted in a reduction in demand to the suppliers of memories. we have taken decisive actions in terms of reducing our capex, in terms of reducing the supply growth, as well as increasing underutilisation in the current fabs. these actions over time will help us to bring supply and demand in balance. so yes, the near term is challenged by the inventory adjustments, but we have confidence in the longer—term

demand drivers are very much intact, and i'm confident that we will emerge stronger at the other end of the current downturn. that's the outlook from one of the biggest brands in the game. now companies are having to contend with a slowdown in the chip sector. plus, recent us export controls are disrupting the industry globally. translation: countries should stand up and not let _ washington's unilateralism and protectionism go unchecked. this concerns the stability of the global trade system and, more importantly, international justice. in october, the us introduced wide—ranging controls requiring licenses for companies that export certain chips using us tools and software, no matter where they're made in the world. the controls also stop us companies from exporting goods and services to china for the manufacture of chips of a certain sophistication.

now it's impossible to produce the smallest, most advanced chips at scale without specialist equipment. china relies on international suppliers for that kit. washington's measures already stop american companies from supplying those machines to china. a dutch company called asml has a monopoly on the most advanced lithographic machines. japan also manufactures a lot of cutting—edge chip—making machines. the us is now asking both countries to restrict sales of these machines to china. washington's rules also target american citizens and green card holders working for certain chinese chip companies. that will effectively cut—off a key pipeline of american talent to china, and further isolate the world's second largest economy from the global semiconductor ecosystem. even this camera i'm talking to you through uses chips. how small will they be in the future? how much power will they have, and where in the world will they be made?

well, to discuss this and more, i'm joined by chris miller, assistant professor of international history at the fletcher school of law and diplomacy at tufts university. he's also the author of chip wars: the fight for the world's most critical technology. linghao bao is a tech analyst at policy research firm trivium, china. hejoins me from shanghai. thank you both for speaking to the bbc. chris, if i can start with you. the us concerns about china advancing in chip technology, are they justified? well, there's no doubt that chinese firms have been making real strides in the past decade, especially in the sphere of chip design capabilities. and what you find historically is that whenever powerful countries have advanced computing technologies, they deploy them to intelligence and to military systems. so i think the us is not wrong to infer that as china makes more advances in chips and more advances in computing, it will try to apply those to intelligence capability then to military systems, since that's what all great powers have tended

to do in the past. linghao, if i can bring you in, how are the us efforts to try and prevent china from advancing and chip technology affecting chinese companies? i think the most famous example is huawei, right? the company was cut—off from getting advanced chips for a smartphone. and to give you a bit of context, like how impactful that was, at that time, huawei was the second largest smartphone maker in the world, after samsung. but now, huawei's smartphone business is essentially dead. so that'sjust, you know, how easy it was for washington to cripple a chinese tech company. if you look at the latest us export controls,

that is the most aggressive actions that from the us the world has seen. previously the us was targeting individual chinese companies, but this time the scope has expanded to the entire country. beijing has gone to the world trade organization and has lodged a complaint regarding these controls. i mean, does beijing have a point? what's happening right now is an arms race. there's an arms race between the chinese military and the us military in the asia—pacific region, and this is an arms race that takes place both in traditional spheres like numbers of ships or missiles produced, but increasingly it's taking place in terms of the quality of ai algorithms that can be employed in military systems. and if you look ten years down the road, that's going to be more and more important.

and so that's how both defence planners in beijing and washington view this issue. fairness, i don't think, is a criteria that either country is taking into account. and, linghao, if i can bring you in here, what are the main players saying about these types of controls? in general, the sentiment on the ground is that, you know, this is unfair, because if you're working in china's semiconductor industry, ithink, different people in the industry also will have a different view because for chip—makers, they need those us equipment or the japanese equipment to make advanced chips. but when the equipment ban happened, it also created room for the local equipment makers to step into the market, because previously there's really no market condition for them.

if you could get very advanced equipment from foreign countries, why would you take a chinese equipment that's less reliable and which is going to increase your production cost? so i think one of the knock—on effects of this export control is that it actually incentivised china's local semiconductor industry to fix these weak points they have been working on for years, but they haven't seen any progress. is this an opportunity for chinese companies? well, for certain chinese companies, it might be an opportunity. but for many others, it's, of course, an extraordinary headache, because they have to find alternative sources of equipment, components that are, in many cases, not as good as what they were previously using.

i think, in aggregate, it's going to set the chinese chip industry back by at least several years, even if you can find individual companies that might try to benefit. i think there's a common argument that you hear that, now facing these controls, the chinese government will really double down its support for the chip industry. i think that's actually unlikely, if only because the chinese government has been fully supporting its chip industry for much of the past decade. since 2014, chinese leaders have identified semiconductors as a major focus area for tens of billions of dollars a year in government support into the industry, so there's not that much more the chinese government can do that it already wasn't doing. i think chris is right that the government has thrown a lot of money into this sector, and they're also cognizant of that this is very capital intensive and the success rate is actually pretty low. if you look at the development of the chinese semiconductor industry in the past ten years,

ymtc, which is a memory chip maker based in wuhan, is one of the very few success stories in china, so the government is very much aware of that. but i think the one thing that they're going to focus on is talent. because if you look at the export controls, one of the very damaging part is that it also bans us persons from supporting china's advanced chip—making. and if you look at the executive of china's semiconductor companies, a lot of them hold american passports. they are trained in the us and they've got green cards, or whatever. so that is really a big problem for china. and that's why you hear

president xi jinping talk about how to get more talent into china during the 20th party congress report he delivered to the party when he took his third term. the us science and chips act, of course, is another tool that the us is using, investment in the us through subsidies. will all those subsidies be enough to attract business to us shores? well, i think they're certainly going to attract a fair amount of investment. will they create a completely onshore chip supply chain? certainly not. but one of the key drivers over the past two decades of increased investment in fabrication in east asia and taiwan and south korea, and especially in china, was the cost differential between building a facility there versus in the us, and the key driver of the cost differential was not labour cost, because the labour costs

are actually not that large in a very automated facility, but rather tax policy and tax incentives. so, what the us is trying to do with the chips and science act is to level the playing field when it comes to tax incentives by offering some pretty generous tax policy, tax credits, to firms that build new chip facilities in the us. and the goal is to say the tools you put in the chip—making facility are the same regardless of which country you build a facility in. the power and electricity costs ought to be pretty similar. and so if the tax policy is similar as well, then there shouldn't be huge gaps in terms of the cost in producing in east asia versus in europe orjapan or the united states. then, so long as the chips and science act remains in place with the tax incentives that they've outlined, i think we will see a pretty meaningful increase in the amount of chip

manufacturing facilities that are being constructed in the us. is the us chips act a real threat to china? i don't think the us chip act is really something that china really worries about, i think what china really worries about is the export controls. because i mean, if you look at the as chris mentioned, the tsmc arizona fab, yes, they are building what is going to be the most advanced fab in america, but when that fab kicks into mass production, the tsmc's taiwan fab already moved on to next generation. so i think tsmc will always keep its most advanced chip—making on the island. so that makes the island indispensable to the rest

of the semiconductor industry. but they sort of have to work with the us to have american interest to potentially defend the island in the event of chinese aggression, military aggression, towards the island. so, i'm not sure if that chips act is really on top of chinese leaders' minds. i think in beijing's mind, they're really trying to focus on building its own semiconductor supply chain. five years down the road, i want you to tell me how small you think the chips in my phone will be and where they will be produced. 0h, they're definitely being produced in taiwan, without question. tsmc is the leading edge of advanced chip—making, right? i mean, that's why apple is having its chips being manufactured by tsmc.

i'm not sure how small, i don't know how to count the atoms, so i can't tell you how small it's going to be, but it's going to be pretty small. i agree with that answer. i think the question that i set next to that one is, in ten years' time, where will the most advanced chip used in data centres be produced? because the smartphone market has peaked in size. today, almost everyone has a smartphone and the real growth market is in al and data centres. and i think that's where chip—makers are focused right now, and there's an open question as to which companies and which countries will win the lion's share of that market over the next decade, and that's where i think the next battle in the chip war is going to be fought. thank you both for talking to the bbc. that's all for this edition of talking business asia. thanks for watching. hello.

more wind and rain coming to just about all on tuesday. the dry days have been very hard to find for some of late. take 0diham in hampshire. this is where we saw the driest conditions during the summer. 46 days without rain in the last 2a — only two have been completely dry and only two in the last — 38 culdrose in cornwall. wet is relative to average so far this month, though has been bala in gwyneth, and i reckon by the end of tuesday we'll have seen an entire month's worth of rainfall in the first 10 days. and that's because here and across north west england is where we see the wettest weather on tuesday, the greatest impacts, risk of flooding up to 100 millimetres on the hills. all responsible is this weather system which has been working its way in from the west overnight. northern eastern areas are dry enough starts, even a bit of a chill about with a touch of frost for one or two and some morning sunshine in northern scotland. but the morning rush hour in western england,

wales and northern ireland will be thoroughly wet and increasingly windy. by the end of the rush hour of that rain into eastern england centres on the scotland snow in the hills, rain continues to push its way northwards. the rain does ease off, though. it does turn dry for a time across england and wales, a little bit brighter in one or two spots, some drizzle on the hills. there's another batch of rain coming in from the west later. as i said, it turns windy, 40, maybe 50—mile gusts possible. but coming in from a south south—westerly direction, a very mild day for this stage injanuary, 10—14 celsius for many especially, we get some brighter breaks briefly across the south. so here's that slice of milder weather. it's contained between the heavy rain in the morning and a batch of not quite as heavy rain spreading eastwards during the first part of tuesday night. into wednesday, that allows westerly winds back, strengthening but bringing in the blue colours here, an indication of cooler air. now, it will be a sunny start to wednesday across some central and eastern parts. one or two staying dry, but plenty of showers already in the west, strengthening winds, touching gale force at times. and that will drive those showers, heavy with hail and thunder, eastwards

as we go into the afternoon. temperatures down on tuesdays, still a degree or so higher than we normally expect for this stage injanuary. cool night will follow across the north where with lighter winds, a touch of frost. but in the south, the next weather system will bring outbreaks of rain. most persistent southern counties of england and wales, gale force winds here, bright enough start further northwards and eastwards, but showers get going and spread to many areas before the day is out and it will feel chilly in the north, especially in those strengthening winds once again. take care.

welcome to bbc news. i'm monika plaha. our top stories: there have been mass arrests in brazil following sunday's violence on government buildings by supporters of the ousted president jair bolsonaro. in response to the attack, pro democracy rallies have taken place across the country — the biggest one in sao paolo. a uk space mission launched from a modified plane ends in failure after a technical issue stops a rocket reaching orbit. at a summit in mexico, joe biden discusses cross—border migration and economic co—operation. and in his latest tv interviews, prince harry claims camilla the queen consort used the media to promote herself at the expense of family members.