Trade dispute: Intel apologizes after threat of boycott in China

EFirst move forward, then row back – this is how the foreign trade policy of the chip manufacturer Intel can currently be described in the most important export market of China. Chinese bloggers published a letter from the group on the microblogging service Weibo, in which Intel expressly warns its Chinese business partners against using products from Xinjiang province.

After the Chinese state media threatened to boycott the company, Intel / China promptly published an apology. “Our customers and investors have asked us whether Intel is buying goods or services from the Xinjiang region,” said the original Intel letter. “Intel is committed to ensuring that our supply chain does not use any services, labor, or goods from Xinjiang.”

The background to the letter are sanctions by the US government against China. US President Biden accuses the Chinese of human rights violations against the Muslim Uyghur minority in Xinjiang. As a result, various Chinese tech companies were only blacklisted by the US Department of Commerce in mid-December.

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Geopolitical power game

According to the current sanctions, US corporations are not allowed to supply Chinese companies on the one hand, and on the other hand they are not allowed to buy any services or preliminary products that come from the crisis region of Xinjiang. The Chinese drone manufacturer DJI and various other high-tech companies are among the companies sanctioned in this way.

The USA accuses all of them of having participated in the development of an electronic surveillance network against the Uyghurs. All of them can no longer obtain chips from Intel, Nvidia or AMD.

China is irritated by Western pressure

The Chinese government is becoming increasingly irritated at any attempt by Western trading partners to exert pressure over human rights violations in Xinjiang. A resolution by 43 states, including the USA and Germany, from the autumn was responded to by China with diplomatic pressure and boycott threats.

But how loudly the press organs of the communist party reacted to the Intel letter seems to have surprised Intel. The group makes 26 percent of its global sales in China, where it operates a smaller chip factory and two downstream assembly plants.

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Play by Beijing's rules or stay out?

Apple, Google, Amazon and Co.

At the beginning of the year, the group had planned to open a new wafer factory for the production of raw silicon wafers for chip production in Chengdu, China. However, in view of the global scarcity of semiconductors, the Biden government is increasingly viewing chip production as a strategic field.

The USA wants to bring as many plants as possible into its own country and thus minimize the risk of downtime due to trade disputes. Accordingly, according to a Bloomberg report from mid-November, US officials reacted to the Intel plans and warned of security risks. Intel then buried the plans.

Intel’s withdrawal

The Chinese foreign newspaper “Global Times”, the English-speaking mouthpiece of the Communist Party, had already complained about Intel’s withdrawal as a result of an “extremist ideology” in the USA. “Washington’s ruthless efforts to rebuild a chip industry chain without China will be in vain.”

Now, after the Intel letter on the subject of Xinjiang became known, the tone of the “Global Times” became even more shrill: “We have to make it more and more expensive for companies to insult China so that their losses outweigh their profits,” the party wrote. Commentators and call for a boycott of Intel.

Intel’s China offshoot then published a letter of apology on the Weibo social network, referring to obligations arising from the US sanctions policy. Intel’s intention was only to “observe American laws”.

China is becoming a difficult place for US corporations

Intel does not yet have to worry too much about a boycott from China – all attempts by the Chinese to set up their own competitive chip industry for high-performance computers have so far failed. As recently as March, the Chinese chip maker Wuhan Hongxin Semiconductor Manufacturing wrote off a state-subsidized $ 20 billion project to manufacture competitive 7-nanometer chips and dismissed all employees without further ado.

But in the long term, according to the Global Times, China wants to make itself independent of chip technology from the USA. For years, the Chinese have been looking eagerly at successful chip manufacturers such as the world market leader TSMC, which comes from Taiwan, of all places.

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China is becoming increasingly difficult for US tech companies. On the one hand, they are reluctant to do without the billions of customers and users in the Middle Kingdom. On the other hand, they are currently under pressure both at home and in China. At the beginning of December, Reuters reported how the retail giant Amazon is cooperating with the Chinese propaganda apparatus and does not allow any negative reviews on books by or about the head of state Xi Jinping.

The Amazon subsidiary AWS also cooperates with the surveillance technology manufacturer Hikvision, which earns money with surveillance technology for Xinjiang. And Apple has also signed special deals with the Chinese government: According to a report by AppleInsider, Tim Cook personally signed an agreement in 2016 that Apple can invest in China undisturbed – and in return, surrender the data of its Chinese users to government control. The role of US corporations in China is unlikely to get any easier in the coming Olympic year – the US is already threatening a diplomatic boycott of China.

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