Posted on 11/30/2022 5:25:55 AM PST by FarCenter
The United States has unleashed its arsenal to go “full throttle” in the chip war against China regardless of the potential consequences, including the impact on its allies.
On October 7, 2022, the Bureau of Industry and Security (BIS) of the US Department of Commerce laid out high-level export controls on supercomputers and semiconductors to China.
The market was shaken in September 2022 by restrictions on the sale of graphic processing units by NVIDIA and Advanced Micro Devices to China. Companies had already begun to pull their staff out of China in response to new controls prohibiting US citizens from supporting the development and production of chips in Chinese firms.
The new license requirements for items destined for a chip fabrication facility in China are blocked subject to a number of thresholds. The new measures are meant to halt Chinese chip companies at their current levels of progression.
Ten days after the BIS announced the reinforced export controls, the US International Trade Commission announced a Section 337 investigation into semiconductors in response to two cases filed by the non-practicing entity Daedalus Prime LLC, which holds intellectual property of US chipmaker Intel against Qualcomm, Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung.
TSMC and South Korea’s Samsung and SK hynix have received one-year waivers from the BIS regulations, but the doors may soon close on upgrading their businesses in China. SK hynix is reluctantly contemplating selling or relocating its equipment in China to South Korea.
South Korea’s Samsung is caught in the middle of the US-China tech war. Image: AFP The BIS move comes at a time when the US Department of Commerce, in concert with the US Trade Representative, is soliciting Asian counterparts to join the Indo-Pacific Economic Framework.
Yet US President Joe Biden’s “Made in America” initiative is concurrently aiming to increase the domestic production of semiconductors via the CHIPS and Science Act and the CHIPS for America Fund, and to re-shore other high-tech industries involving clean energy via the Inflation Reduction Act. This is all in the pursuit of US supremacy in emerging industries.
The BIS export controls have been met with disillusionment from allies, particularly as the measures are being imposed on them without clear incentives, while the US Department of Commerce is still approving most US tech exports to China.
Seoul has frowned upon US Secretary of Commerce Gina Raimondo’s diversion of a Taiwanese silicon wafer firm GlobalWafers’ investment bound for South Korea to Texas. For the United States, the restrictions are not a question of feasibility but are imperative to limiting the transfer of dual-use technology.
But for allies, the reality of “friend-shoring” — manufacturing and sourcing components and raw materials within a group of countries that have shared values — raises questions as to whether they can defend their key industries.
Plus,it certainly could be argued that chips are a matter of national security.
Another concern is Chinese sales to Iran, North Korea and Russia. Russia is getting its high tech through China who doesn’t care about the sanctions.
The US must convince Dutch company ASML to not sell chip manufacturing equipment to the Chinese. Until that happens, the chip embargo is meaningless.
The Semiconductor Summary: Who’s Building Chips Where?
A comprehensive look at the billions for new semiconductor production capacity in the U.S.
Agreed!
That is a far bigger danger.
But can you eat just one?🤪
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