Monday, October 2, 2023

US-China chip war: the link between high-tech and geopolitics

A week ago, on August 16, the American tech giant Intel terminated a contract of sale for a tower semiconductor based in Israel valued at $5.4 billion after failing to reach the necessary deal with Chinese regulators. China It is one of the most important markets for Intel. This cancellation, the latest salvo in a series of hostilities that have been going on for several months, marks the continuation of China’s unrelenting tactics in its chip war against China. USA and their allies

3rd of July, Pretty It required licenses from exporters of gallium and germanium, rare earth metals used in the manufacture of semiconductor technologies such as computer chips, spy satellites, and artificial intelligence. The need for rare earths responded to increasing government restrictions on exporting microchips to China.

Joe Biden
Joe Biden

The chip war is largely driven by concerns about the USA’s use of semiconductor technology in its army. In 2022, President Xi Jinping He presented his vision for building a “world-class” Chinese army. According to the report on Chinese military power in 2022, China intends to develop advanced dual-use technologies that could surpass those of Washington.

However, the extent of military capability is not yet clear ChinaIts technological prowess makes it a force to be reckoned with. TOPP500a ranking of the 500 most powerful supercomputers in the world points to the USA with 150 supercomputers in first place, followed by China He follows closely behind with 134.

Percentage Of Top 500 Supercomputers Owned By A Country, June 2023

However, China’s military industry has a key weakness: foreign technological inputs, including exports of microchips, are the basis for most of its cutting-edge applications. According to one report, China produced just 5.9% of the semiconductors it consumed in 2020, while another report found that In 2020, the country imported $350 billion worth of semiconductors, more than the combined value of its crude oil imports. In 2021, China was the world’s largest consumer of semiconductor manufacturing equipment, accounting for 26% of global demand.

In his quest to reduce the risk in his relationship with China, the US government has imposed various restrictions on the export of microchips, which are slowing down the rapid technological development of microchips. In October 2022, Boeing imposed an export license requirement that restricted access from China to semiconductor technologies from American companies.

All About Semiconductors: Types And Examples |  Repsol

Since then, It has convinced other global players to follow suit. Specifically, in July 2023, the Japanese officially banned the sale of 23 kinds of semiconductor devices in China. Japan’s restrictions are much broader than Japan’s. EU, and impede production in China of advanced chips as well as basic chips used in technologies such as automobiles and smartphones.

In addition, on September 1, the Netherlands began curbing their exports of semiconductor technology to China. This new regulation prevents the Dutch ASML from exporting advanced chip manufacturing technologies without first obtaining government-approved licenses. ASML today produces the most advanced photolithographic scanner equipment essential to the manufacture of microcircuits for high-performance computing devices.

Semiconductor Manufacturing

These export controls have been enforced Pretty take revenge Earlier this year, the Chinese government banned the US company’s chips from being imported and imposed trade and investment sanctions against Raytheon Technologies and Lockheed Martin. China’s recent regulation on gallium and germanium exports serves as a direct counterattack to global partners in the EU. The data suggests that by 2022, Japan and the Netherlands will be among the largest importers of gallium products from China.

However, this regulation does not have to have serious long-term effects. already before Pretty When the regulations were introduced, there was an extensive network for smuggling rare earth metals. In 2009, smuggling accounted for 40% of China’s overseas exports, and at its peak, the black market for rare earths may have accounted for nearly half of all transactions.

Semiconductor - What

The repressive measures taken by China They have been ineffective for the past decade. In 2014, smugglers reportedly exported up to 40,000 tons of rare earth metals from the country. Considering the historical inability of China To curb smuggling, illegal sales are likely to increase in the coming years as the supply of gallium and germanium on the market decreases.

In addition to smuggling, the increasing diversification of imports may hamper the effectiveness of China’s new export controls. JapaneseIn fact, the company has already taken steps to minimize the impact of Chinese sanctions by entering into rare earth development agreements with Australia, Mongolia, and Vietnam. And while import diversification comes with time and financial constraints, a concerted effort by a coalition of countries could mark a turning point in the future of the rare earths market.

Semiconductors, Stocks, Nvidia
Semiconductors, Stocks, and Nvidia

While Chinese controls on rare earths may backfire, U.S. chip regulation could also have unintended consequences. Without foreign technology support, Chinese companies must join forces and develop innovative approaches to semiconductor manufacturing. The sanctions against Beijing could ultimately stimulate the long-term growth of China’s tech sector.

Other countries could also suffer the consequences. The failed deal between Intel and the Chinese government will hamper China’s ability to manufacture chips. Israel. In addition, since China produces 40% of memory chips, Samsung produces 40–50% of it SK HynixThe South Korean chip giants could face supply shortages due to recent export restrictions.


The effects are more severe for Taiwan. Because more than 90% of the world’s most advanced microchips are made there, Taiwan There is a risk of military conflict if a chip war ensues and China goes on the offensive in the distant but not immediate future. However, former national security adviser Robert OBrien should keep that up, USA Destroy the semiconductor factories of Taiwan instead of letting them fall into your hands, China, in case of an imminent invasion. The chip war continues to put Taiwan in a difficult position in the changing geopolitical landscape.

The past few months have created a multitude of uncertainties surrounding the semiconductor industry and the federal government’s role in technology development. However, one thing is very clear: the chip war is an issue that does not only affect the global community USA j China. If tensions continue to escalate, the chip wars could spread beyond semiconductors to industries like electric vehicle technology China take advantage of something. Therefore, both countries will have to think twice before introducing new restrictions that could have a much wider impact than expected.

It is clear that the future of high technology is at stake.

Us Flag And Chinese Flag

A special thanks goes to Jeffrey Xu for her exceptional editing, content, research, and quantitative graphics. Jeffrey Xu is a summer analyst at CJPA Global Advisors and a freshman student at Princeton University.

World Nation News Desk
World Nation News Desk
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