The G7 Wants to Get Involved with Semiconductors and Subsea Cables 

The Group of Seven countries are forming a group that will rejigger the semiconductor supply chain and lay out new subsea internet cables.

Photo of a semiconductor chip
Photo by Vishnu Mohanan via Unsplash

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Their own private supply chain. 

According to a Bloomberg report published on Wednesday, the Group of Seven countries — the US, Canada, France, Germany, Italy, Japan, and the United Kingdom — are forming a group that will rejigger the semiconductor supply chain and lay out new subsea internet cables. The G7’s involvement is the latest signal of the shift towards thinking of these services as a public good rather than a private product.

Why? AI Of Course.

Sales of semiconductors are soaring, buoyed by Silicon Valley’s mad rush for generative AI dominance. “The global semiconductor industry posted double-digit sales increases on a year-to-year basis during each month of 2024,” John Neuffer, CEO of the Semiconductor Industry Association (SIA), said in a statement last week, adding that April saw a month-on-month increase as well. The voracious pursuit of semiconductors has flung the value of chipmaker Nvidia’s shares into the stratosphere.

But fears of a bubble-burst are never far behind a meteoric rise, and the world has already reckoned with one semiconductor shortage. During the early days of the pandemic, the semiconductor supply chain became severely snarled, hamstringing a wide range of companies. Similarly and more recently, the vulnerabilities of subsea internet cables have been thrown into somewhat painful relief:

  • In February, a cable that runs from Europe to India through the Red Sea was damaged, and going out to fix it was an even more delicate process than usual given it was situated in a warzone.
  • According to a draft statement seen by Bloomberg, the new G7 group will help ensure both the security and the robustness of internet cables, suggesting world leaders are starting to fret about the security risks of dodgy cables. 

Over the past decade, Silicon Valley tech giants such as Meta, Google, Microsoft, and Amazon have become the biggest players in the subsea cable industry, bankrolling cable-laying across thousands of miles of ocean. The same set of companies will be competing for semiconductor orders, which makes for a heck of a Venn diagram.

States of Play: As the G7 divvy up their computer chips, individual countries are plowing money into domestic semiconductor companies. The Biden Administration set the tone by setting up subsidies for chipmakers worth billions of dollars. Now the German government has taken the direct investment route, funneling 228.7 million euros ($248.1 million) into a startup called Black Semiconductor, which is trying to develop next-generation chips. You know what they say, Vorsprung durch Technik.