2023-06-16 04:10:31
The US and its allies carry out an anti-China policy in the field of semiconductors, imposing restrictions to prevent Beijing’s access to cutting-edge technologies and trying to contain the Asian giant in the technological, scientific and military sectors. At the same time, China reacts to these sanctions by not only adapting to changing conditions, but also applying its own response measures. Meanwhile, experts warn of the serious consequences that this growing confrontation could bring.
Washington vs. Beijing: measures and countermeasures
On October 7, 2022, the US Department of Commerce launched new trade restrictions against China aimed at restricting Beijing’s ability to source advanced chips, develop and maintain supercomputers, and manufacture semiconductors.
Assessing these restrictions, former Swedish Prime Minister Carl Bildt stated on October 22 that “this dramatic escalation of technological warfare is going to have equally dramatic economic and political consequences, some of which will be immediately obvious and some of which will take a long time.” time to materialize.” “The new chip war removes any remaining doubt that we are witnessing further Sino-US decoupling,” he added.
In addition, Bildt predicted that despite Washington’s aspirations to restrict Beijing’s development in the military area, “the real effect will be to reduce China’s development in sectors that will be critical to national power in the coming decades.” “China will certainly respond with stronger efforts to develop its own capabilities,” said the former president.
In fact, China reacted to the US restrictions and last December filed a lawsuit against the US before the World Trade Organization (WTO) for trying to block its high-tech sector. Meanwhile, in February, the largest Chinese chipmaker, Semiconductor Manufacturing International Corporation (SMIC), which has been under Washington sanctions since 2020, published its 2022 results of operations. According to these data, its revenue was about 7,273.3 million dollars, which represented a new record, surpassing that of 2021 by 33.6 percent. The company’s profit in 2022 also grew by 6.8 percent compared to 2021, amounting to 1,817.9 million dollars.
Likewise, Beijing protects its high-tech market. In early April, the Cyberspace Administration of China (ACC) opened an investigation into the local sales of US semiconductor maker Micron Technology. According to a statement in this regard, the investigation seeks to “safeguard the security of the supply chain of key information infrastructures” and “prevent risks to the security of cyberspace due to problematic products.” The ACC then banned Micron’s products after finding “relatively serious” cybersecurity risks in them. According to a Micron fiscal 2022 report, the Chinese market generated 10 percent of the company’s total revenue.
Meanwhile, the escalation of confrontation between China and the US in the semiconductor sector was commented on at the end of May by Jensen Huang, CEO of Nvidia, in an interview with the Financial Times. According to Huang, the escalation can cause “enormous damage” to US companies, and if US politicians “are not thoughtful about regulations, they will harm the technology industry” in the North American country. “If we are deprived of the Chinese market, we have no contingency for this,” said the executive, adding that “there is no other China, there is only one China.”
forming unions
Washington tries to act against Beijing not only through unilateral sanctions, but also by establishing cooperation formats with like-minded countries. In January, US President Joe Biden met with Japanese Prime Minister Fumio Kishida. During their negotiations, Biden and Kishida discussed the semiconductor and chip markets. The Japanese president pointed out that “Japan will maintain close communication with allies and like-minded countries, including the US, and will think about how to deal with semiconductors.”
In early February, US Undersecretary of Commerce Don Graves acknowledged that there is an agreement with Japan and the Netherlands to impose restrictions on exports of chip-making tools to China. Later, in early March, the Dutch Ministry of Commerce announced new export control measures for semiconductors to protect national security.
Also, in April, US Commerce Secretary Gina Raimondo asserted that Washington and European countries have to cooperate in the global competition with China in the chip sector.
Consequences for Asia
However, various experts point out that Washington’s attempts to form anti-China coalitions in the high-tech sector do not take into account the negative impact of the Sino-American confrontation on third countries.
Last week, ratings agency Fitch Ratings issued a report forecasting that two South Korean tech giants, Samsung and SK Hynix, will be able to cash in on Beijing’s crackdown on Micron if they can fill the gap. However, they could risk production disruption if the US and China impose new regulatory measures and bans, because they would impact the price and accessibility of semiconductor components.
“When China announced its cybersecurity review of Micron, the US urged the South Korean government to discourage SEC [Samsung Electronics] and SK Hynix to fill the gap in local memory sales in China in case China ends restrictions on the sale of Micron’s chips. However, we expect the SEC and SK Hynix to at least partially fill this gap. It will be difficult to monitor what capacity lost by Micron is currently filled by South Korean companies, given the commodity-like nature of memory chips,” the document reads.
However, it is highlighted that “at the same time, there is an opportunity for Micron, which leads the industry from a technological perspective, to redirect sales of its memory chips to markets outside of China. The logistics of this strategy may take some time, but it may neutralize any positive effect the SEC and SK Hynix may gain from banning Micron in China in light of the world’s oversupply of memory chips.”
Taiwan, whose semiconductor industry plays a crucial role in the global industrial chain, may also suffer from escalating tensions between Beijing and Washington. In March, Robert O’Brien, a former US National Security adviser, said that the North American country could destroy chip plants on the island so that they do not fall “into the hands of China” in the event of a possible conflict, it says. The Business Insider.
As for the island of Taiwan, the malicious US chip war has played a dangerous game, during which Washington will not hesitate to seize the semiconductor production sector as cannon fodder for Taiwan’s own interests. USA The threatening words towards Taiwan’s semiconductor plants are a type of economic fascism. The real goal is to induce local companies to relocate and hollow out Taiwan, and if the island’s semiconductor sector cannot be put in the US pocket, some US politicians would rather destroy it all,” the newspaper reported in March. Chinese state Global Times.
Europe, another “battle front”
The US’s European allies are also involved in the confrontation in the sector. In April, the EU approved an investment program in the chip sector worth some 47 billion dollars, which, according to the European Commission, “will increase Europe’s competitiveness and resilience in semiconductor technologies and applications and It will help achieve both the digital and green transition.” Within the framework of this objective, the EU’s share of the global chip market is expected to double by 2030, from 10 percent to 20 percent.
However, the EU may have problems narrowing the gap in the sector with its competitors, said Paul Triolo, an expert at the Center for Strategic and International Studies, quoted by Reuters. “The critical piece of the equation that the EU will need to get right, as far as the US is concerned, is how many industry supporting supply chains can be moved to the EU and at what price?” the analyst noted.
In China there are also doubts that the EU can achieve its goal. “With only €3.3bn coming from the EU budget, it remains to be seen how much marginal effect it can generate and whether it can mobilize enough capital in the end,” Fu Liang, an independent technology analyst, was quoted as saying by the Global Times.
The Netherlands, one of the European leaders in the semiconductor sector, may also experience problems in this regard, given the restrictions imposed against China. In late April, Peter Wennink, chief executive of Dutch company ASML, which makes sophisticated machines used in the production of chips and semiconductors and is Europe’s most valuable technology company, called access to the Chinese market a “necessary” given that the Asian giant is one of the main markets for ASML.
Wennink added that a Chinese blockade in the chip sector is a mistake, because “if they can’t get those machines, they will develop them themselves.” “The more they are pushed, the more likely they will double down on their efforts,” he concluded.
Taken from Russia Today
Cover Photo: Taken from Sputnik
#consequences #chip #war #China #West