U.S. and China trade more blows in battle for semiconductor chip supremacy
U.S. and China trade more blows in battle for semiconductor chip supremacy
It’s been a busy week when it comes to U.S.-China trade policy — particularly in the important realm of semiconductors and the materials that go into the chips crucial for a lot of cutting-edge technology, like the latest AI.
Moves by both the U.S. and China this week mark flash points in a simmering conflict over who controls the world’s most powerful chips.
For the last few years, the Biden administration has been working to limit further advancement of China’s semiconductor industry. On Monday, the U.S. cracked down even further.
“President Biden tightened tech chip controls on China, basically trying to restrict China’s access or ability to produce higher-end AI chips, which are deemed of interest to various security interests,” said Cory Combs, an associate director at Trivium China, a political economy research firm.
The administration expanded the list of companies that are blocked from receiving exports of certain chip technology. The list includes not just companies in China but some Chinese-owned businesses in other countries, as well.
“And so as a means of retaliation, China has further clamped down on certain mineral products that are essential to those industries, basically showing that the U.S. that it also has leverage in this engagement,” Combs said.
On top of that, China is amping up the messaging war, according to Jacob Feldgoise, a data research analyst at Georgetown’s Center for Security and Emerging Technology.
A top Chinese industry association issued a warning saying “that U.S. chips are unreliable in what seems to be an effort to encourage Chinese companies to purchase domestic made Chinese chips,” he said.
Right now, this back and forth is mainly just giving headaches to the folks who manage chip supply chains. But the effects of this trade war could spread, per Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics.
“Our military could struggle to get some of the components that it’s taken for granted, being able to buy from lower costs from China,” he said.
And it could hit consumers too. “As U.S.-China, tensions escalate, we might see costs increase,” Chorzempa said. “And as firms have to duplicate their supply chains and build alternative networks of supplies, they’d either skirt the U.S. or China. And that all costs money.”
And this dispute is certain to carry over into the next administration as well.
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