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TThey are at the heart of the modern global economy, implanted in billions of consumer devices – from phones to cars, tablets to game consoles. They also generate billions of dollars in exports for some of the world's largest companies such as Samsung, Qualcomm and Intel.
But after years of robust growth of 13 pc per year on average, headwinds are now hitting the global semiconductor market, estimated at $ 412 billion. In recent weeks, billions of dollars have been swept away by stock market valuations of major computer chips manufacturers in the wider market.
The stagnation of global sales of tablets and smartphones – a trend dubbed "the peak of the iPhone" by analysts – is only part of the problem, analysts said.
Equally alarming, some companies, such as US companies Micron Technologies, Korean Samsung Electronics and SK Hynix, found themselves caught in the escalation of the trade war between Donald and Trump between the United States and China.
After a series of attacks perpetrated from Washington DC, China has accused these three companies of a series of antitrust violations, citing undisclosed "massive evidence."
The three chip makers are hardly actors in the world of technology. They combine their production and together make about 95 pc of all the DRAM chips each year, the most popular type of memory chip in modern devices.
The anti-monopoly office in Beijing has accused manufacturers of pricing chips for several years, said a representative at a press conference last week. It is not yet known what action China intends to take against them.
The inclusion of Micron Technologies in the investigation is of particular interest to observers, as it could signal the Chinese government's retaliation for an ongoing investigation into industrial espionage by the US Department of Justice.
Earlier this month, the Ministry of Justice indicted Chinese state-owned chip maker Fujian Jinhua and Taiwan's United Microelectronics Corp. The two companies are accused of conspiring to steal trade secrets from Micron Technologies.
Fuijan Jinhua denied the charges. A spokesman for the company posted a message on his website, in which he stated that the company "still attaches great importance to the protection of intellectual property rights".
In December 2017, Micron Technologies, headquartered in the United States, sued Fujian Jinhua and United Microelectronics Corp. in the United States Federal Court. He accused companies of persuading former Micron employees to upload confidential files to laptops and portable players for transfer to competing companies.
Fujian Jinhua and United Microelectronics Corp. both denied the allegations.
"Memory and storage have been a festive or famine market for decades," said Patrick Moorhead, senior analyst at Moor Insights and Strategy. "The chip makers are building new capacity to meet the demand when prices are high, then reach an over-supply state and a price crater. These lawsuits multiply when prices are high, "he said.
Ongoing conflicts between US and Chinese chip makers are a clear sign that high-value technology companies are embroiled in a trade war that could disrupt a crucial global market.
China has struggled to establish a nation-wide chip manufacturing giant that can compete with US companies, making it dependent on US imports to supply local manufacturing companies.
Of the world's top ten semiconductor manufacturers, six are American, two are South Korean, one is Japanese and one is Taiwanese. The fact that none of them are Chinese is an understandable source of irritation for China, given its otherwise powerful role in the manufacture of global electronic products.
But the US is desperate to protect their own flea industry, which directly employs 250,000 Americans and supports 1 million additional jobs. It is also one of the pillars of the US computer industry.
Being dragged into a geopolitical storm, however, is not the only problem faced by some chip makers.
Other suppliers, however, face a very different problem. The Nvidia chip maker, which designs and manufactures graphics processing chips, is shaken by the continued decline in cryptocurrency prices.
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