US chip controls threaten China’s technology ambitions
The rivalry between China and the United States has been brewing for years. Lately, the two countries have been at odds over computer chips. For China, the chips are central to their ambitions in industries such as artificial intelligence (AI) and telecommunications. Unfortunately, US efforts have limited their access to the technology. In this article, we delve deeper into this conflict and explore the implications for the world as a whole.
China’s dependence on foreign chip technology
China imports more than $300 billion worth of foreign chips every year. Countries such as Japan, the Netherlands, and the United States have limited China’s access to technology that could help them create advanced chips for applications such as AI and computer servers. China does have its own chip foundries, but they typically produce only low-end processors used in cars and appliances. This means that even as China works to develop its chip technology, it remains heavily reliant on foreign imports to support many of its industries.
The ASML machine debacle
A significant hurdle for China in its quest to create advanced chips has been its inability to purchase a machine made by Dutch firm ASML. This machine uses ultraviolet light to etch circuits into silicon chips on a scale measured in nanometers. The technology is vital for creating faster, more efficient transistors. Without it, China’s ambitions may be stalled.
China’s pushback and the possibility of decoupling
The Chinese Communist Party is throwing billions of dollars at accelerating chip development, aiming to reduce China’s reliance on foreign technology. Additionally, Beijing has accused Washington of engaging in a “containment and suppression” campaign, with President Xi Jinping calling on the public to “dare to fight.” However, Beijing has thus far been slow to retaliate against US companies, possibly due to concerns over disrupting Chinese industries that manufacture most of the world’s smartphones and other electronic devices.
The conflict raises fears of decoupling, with the world splitting into separate spheres with incompatible technology standards. This could lead to rising costs and slow innovation as computer and mobile device manufacturers would have to design products compatible with different regions.
Related Facts
- In 2020, the US Department of Commerce’s Bureau of Industry and Security added Semiconductor Manufacturing International Corporation (SMIC), China’s biggest chipmaker, to its “Entity List,” which bans US companies from exporting technology to the Chinese company.
- As of 2019, China produced 15% of the world’s semiconductor chips, while the US produced 47%.
- China aims to produce 70% of the chips it uses by 2025, but lack of technology and equipment could delay this goal.
Key Takeaway
The conflict over computer chips between China and the United States could have significant ramifications for global technology and industry. The dependence of China on foreign technology and its inability to purchase the ASML machine is slowing its ambitions in chip manufacturing, AI and other advanced applications. The conflict raises concerns about potential decoupling and its impact on global innovation and rising costs.
Conclusion
The competition between China and the United States is set to intensify further in the coming years. In the tech world, chips are the backbone of the current technological revolution. For China, advancements in this area are crucial for boosting its ambitions in areas like AI, consumer electronics and telecommunications. However, the conflict with the United States over chip technology is limiting China’s growth in these areas. Addressing this issue while avoiding the negative consequences of decoupling will be a significant challenge for both nations.
