- Surangana Tiwari and Jonathan Josephs
- BBC News
The United States has intensified its efforts and endeavors to impede China’s progress in the manufacture of electronic chips, which are an essential component of all electronic devices, such as smart phones, to weapons and military equipment.
In October, Washington announced some of the broadest export restrictions yet, with companies intending to export these chips to China required export licences. The restrictions included chips produced using US equipment or computer software, regardless of where in the world they were made.
The restrictions also prevent US citizens and green resident card holders from working for some Chinese chip companies. Green card holders are permanent residents of the United States and have the right to work in the country.
It cuts the way for China to access American capabilities, which will affect its ability to develop advanced semiconductors.
Why do the United States that?
Advanced chips are used to power supercomputers, artificial intelligence equipment, and military equipment.
The United States says China’s use of the technology poses a threat to its national security.
US Undersecretary of Commerce Alan Estevez announced the new restrictions, saying the purpose of the restrictions was to ensure the United States did everything it could to prevent China’s acquisition of “sensitive technologies with military applications.”
“The nature of the threat is always changing and we are updating our policies today to make sure we are addressing the challenges,” he said.
For its part, China has described the US restrictions as “technological terrorism”.
Some Asian chip-producing countries such as Taiwan, Singapore and South Korea have expressed concern about the repercussions of this bitter battle on the global supply chain.
Over the past week, we have witnessed three important developments in this conflict.
More Chinese companies on the Entity List
The Biden administration added 36 other Chinese companies, including the major chipmaker YMTC, to the “Entity List” to which Washington has banned exports without US government approval, which is not easy.
The new US restrictions have broad implications. Last week, UK-based computer chip maker Arm confirmed that it had stopped selling its most advanced designs to Chinese firms including tech giant Alibaba because of new controls by the US and UK.
The company said it was “committed to applying all applicable export laws and regulations in the countries in which it operates”.
China complains to the WTO
China has filed a complaint against the United States with the World Trade Organization over export controls on semiconductors and other related technology.
This is the first complaint that Beijing has filed against the United States with the World Trade Organization since President Joe Biden took office in early 2021.
In its complaint, China said the United States abused export controls to maintain its “leadership in science, technology, engineering and manufacturing sectors”.
She added that the US measures threaten “the stability of global industrial supply chains.”
The United States said in response that the trade body (the World Trade Organization) was “not the appropriate body” to address national security concerns.
“The national security interests of the United States require that we act aggressively to prevent access to advanced technologies,” said Thea Kindler, Assistant Secretary of Commerce for Export Management.
The complaint states that the United States has imposed restrictions on the export of nearly 2,800 Chinese goods, although only 1,800 of these goods are allowed under international trade rules.
It is reported that the United States has 60 days to try to resolve this issue, or China will be allowed to request a committee to consider your complaint.
Earlier this month, the World Trade Organization ruled that US steel and aluminum tariffs imposed by the United States under former President Donald Trump violated global trade rules.
Two-thirds of the goods that China sells to the United States are subject to tariffs.
The United States said it “strongly rejects” the ruling and has no intention of overturning the measures.
Talks with Japan and the Netherlands
Japan and the Netherlands are likely to impose export controls on China, which will limit the ability of Japanese and Dutch companies to sell advanced products to the Chinese market.
White House national security adviser Jake Sullivan said on Monday that the United States has been in talks with two major suppliers of chipmaking equipment about imposing controls on Beijing similar to those imposed by Washington.
“I’m not going to pre-empt any statements, I’ll just say we’re very pleased with the candor and the depth and intensity of the conversation,” Sullivan told reporters.
The US controls target not only companies that produce electronic chips but also manufacturers of chip-making equipment.
Large companies in Japan or the Netherlands could lose a large and profitable customer to their sophisticated machinery.
Peter Winink, CEO of Dutch chip production equipment maker ASML Holding NV, was asked if the Netherlands should restrict exports to China.
Winink replied that the Dutch government, in response to pressure from the United States, has banned his company from selling more advanced electronic chip printing machines to China since 2019.
He told Dutch media: “Maybe the United States thinks we should sit down at the table with them to discuss this issue. Our company made the required sacrifice.”
What lies ahead
Chip makers are also under pressure to make more advanced chips needed for new products.
For example, Apple’s new laptop will feature chips from industry-leading Taiwan Semiconductor Manufacturing on chips that are 3 nanometers (1 millimeter is equivalent to a million nanometers). For comparison, a human hair is roughly 50,000 to 100,000 nanometers thick.
Analysts say the US controls could put China behind other chip producers, while Beijing has said openly that it wants to prioritize semiconductor manufacturing and become an industry superpower.
The US has already largely cornered China’s chip industry, although the latest measures are not as comprehensive as those announced last October.