New US Maneuver on Chip: The trade war between the world’s two superpowers, the United States and China, is heating up. Most recently, the United States officially restricted semiconductor exports from US companies to Chinese companies. This policy was taken as an effort by the US to prevent its artificial technology from being us to advance China’s military power. According to the US government.
New US Maneuver on Chip Exports
semiconductor components export from US companies to China could be assembl there and used for Chinese military purposes. Hence. The US government restricts the export of semiconductors from US companies to China so that the technology is not used by the Chinese military.
If you look back. In recent years. The US government has been diligent in including the names of Chinese companies that are considered to have ties to China into the investment black list and the “Entity List”. That way. Many Chinese companies are barred from getting funding and supplies of components such as chips from US companies.
Some of the big names included in the US Entity List blacklist are drone manufacturers DJI, mobile phone vendors Huawei and ZTE, to China’s largest chipmaker Semiconductor Manufacturing International Corporation (SMIC). For example, since entering the Entity List, Huawei has lost access to a number of important US technology partners such as Google and Qualcomm. Now, Huawei can no longer use the Android operating system along with Google services and applications (Google Mobile Services/GMS). Huawei also can’t use 5G modems from Qualcomm.
So, what is the difference between the current restrictions on semiconductor exports and the previous ones
Impact of wider chip export restrictions
The difference lies in the subset of technologies that are restricted to export and the scope of the restrictions. The export restriction policy this time has a wider scope. Because, previously, export restrictions only targeted certain companies, individual companies, and a narrower subset of technology. With these semiconductor export restrictions, U.S. companies, including chipmakers, must obtain a license or permit from the U.S. Department of Commerce to export chips used in artificial intelligence (AI) computing and advanced supercomputers to all Chinese companies.
Because AI and supercomputers are important technologies for modern weapon systems. The intention is that the US government wants to prevent China from building up its military, developing new sophisticated weapons, and further enhancing its surveillance network that is already one of the most sophisticated in the world. “We believe certain advanced computing capabilities that rely on US chips, software, equipment and technology are fueling (China’s) military modernization, including the development of weapons of mass destruction,” a senior US administration official said.
Export restrictions to China this time also include restrictions on chip-making machines capable of making some of the most advanced numeric processing chips as well as computer memory and data storage chips. The new policy will also allow the US to block foreign-made chips manufactur with US technology from being us by Chinese companies. According to the US government, exporting semiconductors and chip-making machinery to China is tantamount to allowing China and its military access to the most advanced chips and chip-making equipment.
This is consider to pose a major national security risk for the US.
Today’s sophisticat chips are increasingly becoming a pillar of geopolitical power. This is because the chip is one of the most important components that power various devices including military systems and data processing capabilities that drive the modern economy.
Chip export restrictions make the semiconductor market sluggish
The Semiconductor Industry Association said it was assessing the impact of the new rules. However. As previously report. restriction on chip exports from the US to Chinese companies is said to be one of the main factors that will make the semiconductor market sluggish throughout 2023. Currently. World chip supply has returned to normal following the global chip shortage crisis due to the Covid-19 pandemic. Not only will it return to normal. Research firm IDC estimates that the chipset stock will be oversuppli in 2023.
This happens because of the massive capacity addition at the end of 2022. In the midst of abundant chip stocks, this export restriction has actually prevented US chip manufacturers from selling chips. made to a Chinese company, without permission from the US government. China is said to be the largest semiconductor market in the world. As a result of the export control of the Chinese company, the demand for chips is predict to decline. Causing the chip market to sluggish. New US Maneuver on Chip Exports