China Technology
China is one of the most sophisticated technologically.US curbs on microchips could throttle China’s ambitions.
China's Tech Projects in 2022 - 2023
With the installation of more than a dozen experiment racks and an extravehicular experiment platform, hundreds of research projects in areas like astronomy, space life science, biotechnology, microgravity, fundamental physics, and space materials will be supported.
(Laura He, October 31, 2022, analysis)
In Hong Kong
The push by Chinese leader Xi Jinping to "win the battle" in core technologies and bolster China's position as a tech giant may be seriously hampered by Washington's unprecedented actions to restrict the sale of advanced semiconductors and equipment for chip manufacturing to the nation, analysts warn.
The Biden administration revealed a comprehensive set of export rules on October 7 that prohibit Chinese firms from acquiring sophisticated chips and chip-making machinery without a licence. The rule also limits the help that "US people" (including US nationals and holders of green cards) may give to the "research or production" of chips at certain Chinese manufacturing sites.
In a recent research paper, Capital Economics analysts Mark Williams and Zichun Huang stated that "the US initiatives represent a big danger to China's technology goals." The researchers said that for chip design, manufacturing equipment, and fabrication, the global semiconductor sector is "nearly totally" reliant on the United States and related nations.
According to the analysts, without them, Chinese companies "would lose access to not only cutting-edge chips but also to technology and inputs that would over time have helped domestic chipmakers to climb the ladder and compete at the cutting edge." They said, "The US has removed the rungs."
Chips are essential for everything from cellphones and autonomous vehicles to high-end computing and the production of weapons. The action has been described as a step to safeguard national security interests by US officials. Additionally, it comes at a time when the United States is aiming to invest heavily in strengthening its own chip production capabilities after chip shortages earlier in the year revealed the nation's reliance on imports from abroad.
The most recent US sanctions, according to teaching professor Arthur Dong of Georgetown University's McDonough School of Business, "are unparalleled in contemporary times."
China to become a global leader
In the past, the US government has prohibited sales of particular electronic equipment to particular Chinese firms, including Huawei. Additionally, it forced a number of significant US semiconductor manufacturing companies to stop shipping to China. But the most recent action is considerably bigger and more important. It forbids not only the export of advanced semiconductors produced anywhere in the world utilising US technology to China, but also the transfer of the machinery required to produce those chips.
Beijing has established a goal for China to become a global leader in a variety of industries with its Made in China 2025 road map, including artificial intelligence (AI), 5G wireless, and quantum computing.
The country would promote tech and innovation and expand its talent pool to create local technology, Xi highlighted during the Communist Party Congress earlier this month, where he won a historic third term.
In the party congress report, which was released on October 16, Xi stated, "China will look to enter the ranks of the world's most inventive countries by 2035, with great self-reliance and strength in science and technology."
Given the importance of advanced processors in both industries, Dong claimed that the most recent US sanctions will hinder China's ability to advance in both 5G and AI.
Williams from Capital Economics stated that China would find it difficult to gain global tech leadership in any situation.
large-scale departures of US executives?
The prohibition on American citizens and legal residents working for Chinese chip companies is a striking and potentially disruptive component of the regulations.
Such sanctions are often "only applied against 'rogue regimes'" like Iran and North Korea, according to Dane Chamorro, a partner at Control Risks, a global risk consultancy with offices in London. According to Chamorro, it is "unprecedented" to use this against China.
Many executives who work for Chinese companies may now have to decide between remaining at their current positions and posing as legal US residents. It is impossible to do both, Chamorro stated.
According to Dong from Georgetown University, the restriction may cause a wave of mass resignations among senior executives and key research personnel at Chinese chip companies, which would be devastating for the sector.
The number of Americans employed in China's domestic semiconductor business is currently unknown. However, a review of corporate documents reveals that senior executives from more than a dozen chip businesses hold US citizenship or green cards. One of the nation's leading manufacturers of advanced micro-fabrication equipment,
The most recent corporate filings reveal that among the top semiconductor equipment makers, at least seven executives, including Gerald Yin, founder and chairman, are US citizens.
Other instances include Shu Qingming and Cheng Taiyi, who are today vice chairman and deputy general manager of advanced memory chip manufacturer GigaDevice Semiconductor, respectively. Citing unnamed sources, the Financial Times said that Yangtze Memory Technologies had already requested that American staff in key technical positions leave. But the exact number is unknown.
Requests for comments from AMEC, GigaDevice Semiconductor, and Yangtze Memory Technologies went unanswered.
According to Dong, if these senior executives leave, "this will create a leadership and technological hole within China's chipmaking industry" as the nation loses executives with years of expertise in one of "the most difficult industrial processes known to mankind," chip manufacture.
Start of a Technological war?
China depends on imported chips, particularly for modern processor and memory chips and associated equipment, despite the fact that the majority of the world's chip manufacturing is concentrated in East Asia.
It is the largest semiconductor importer in the world and has spent more money on semiconductor purchases than on oil. According to government records, China imported chips worth a record $414 billion in 2021, or more than 16% of the overall value of its imports.
However, in response to the US export restrictions, some Western suppliers have already begun to plan to stop their supplies to China.
The Dutch supplier of semiconductor equipment ASM International (ASMIY) stated on Wednesday that it anticipated the export restrictions to have a negative impact on more than 40% of its sales in China. In the first nine months of this year, 16% of ASML's equipment sales were from the nation.
The US export restrictions, which Lam Researc (LRCX)h, a provider of semiconductor equipment and services, warned about last week, may cause it to lose between $2 billion and $2.5 billion in sales annually in 2023.
According to observers, the recently concluded party conference has slowed China's reaction to the most recent US export limits. Beijing, however, might counterattack as it begins to weigh the impact of the actions. According to US President Joe Biden in a speech on Thursday, Xi is "concerned" about US ambitions to increase domestic chip production as his administration works to limit China's ability to produce them.
Chamorro declared that the conflict was only getting started.
The supply of processed rare earth minerals, which Beijing may decide to embargo, may be the most valuable "card" in China's hand, according to Chamorro. Rare earth minerals are crucial components in the manufacture of batteries, renewable energy systems, and electric vehicles.
China dominates the supply chain and the processing, according to Chamorro, and both cannot be replaced fast or simply.
Meanwhile, the Biden administration is considering additional limitations on the export of other technologies to China, a senior US Commerce Department official reportedly told the New York Times on Thursday.
The United States and China's technological arms race may reach a new level if either nation pursues these actions.
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