In a move aimed at crippling China’s high-tech sectors, the Biden administration last Friday announced sweeping measures that effectively ban the export of advanced computer chips and equipment needed in their manufacture to Chinese companies.
While imposed on a “national security” basis, export controls will affect a wide range of business sectors in China that include artificial intelligence (AI), high-performance computing or supercomputers.
The recent export ban underscores US imperialism’s determination to weaken and eventually subjugate China, which in Washington is the main threat to its global hegemony. China, currently the world’s second largest economy and expected to overtake the United States by the end of the decade, is no longer simply a center for manufacturing low-cost goods. It threatens US dominance in high-tech fields where artificial intelligence and cutting-edge computing are essential.
Paul Triollo, technology expert at consultancy Albright Stonebridge, told financial times That the US actions were a “major turning point” in US-China relations. “The United States has essentially declared war on China’s ability to promote the country’s use of high-performance computing for economic and security gain,” he said.
The latest controls expand the measures the Trump administration has imposed on the Chinese high-tech company, Huawei, which has effectively ended its position as a leading manufacturer of mobile phones and networking equipment. The Huawei founder reportedly told employees that the company’s survival was at stake. The Biden administration is now seeking to wreak havoc on the high-tech sectors of the Chinese economy.
The controls are based on the “Foreign Direct Product Rule” that is far-reaching in scope. It effectively prohibits any US or non-US company from providing targeted Chinese entities with hardware or software whose supply chain contains any US technology. About 30 Chinese companies have been placed on a list of “unverified” companies, giving them 60 days to meet stringent US requirements. Failing that, they will be placed on an “entity list” that prevents US companies from providing them with technology without hard-to-obtain US licenses.
There has been a very rapid change in chip fabrication, as measured by the size and therefore the number of electronic components in a circuit that can be etched onto a silicon wafer. The size, measured in nanometers (nanometers) or one billionth of a meter, is close to molecular dimensions. Advanced chip manufacturing requires highly sophisticated equipment. Overwhelmingly, the most advanced 3nm and 4nm chips are produced by Taiwanese semiconductor manufacturer (TSCM), Intel and Samsung.
By banning the export of the most advanced lithography equipment needed for chip etching, US export controls seek not only to block access to the latest chips but also seek to hamper Chinese efforts to develop its chip manufacturing capacity.
The ban expands restrictions imposed in July that require major US tool makers — KLA Corp, Lam Research Corp and Applied Materials Inc — to end exporting equipment capable of making 14nm chips or smaller to wholly-owned enterprises in China.
Jim Lewis, a technology analyst at the US-based Center for Strategic and International Studies (CSIS), likened US controls to those in place at the height of the Cold War. “This will set the Chinese back for years,” he told Reuters. China won’t give up on the chip industry…but this will really slow it down [down]. “
The new controls also prohibit “American persons” – citizens and businesses – from providing direct or indirect support to Chinese companies involved in manufacturing advanced chips. An HR executive at a Chinese semiconductor factory told financial times. “We have [US passport holders] In our company, in some of the most important positions.”
The ban is likely to affect non-US companies. Washington has been lobbying Netherlands-based ASML, a supplier of Netherlands-based wafer equipment, to stop selling deep ultraviolet (DUV) lithography machines to China that could be used to make advanced wafers such as 5nm. The United States is also pressing Japan to prevent the export of similar equipment. The controls will affect foreign companies that operate chip manufacturing plants within China, such as SK Hynix, one of the major producers of memory chips in South Korea.
At the same time, the measures will greatly affect US companies, as the Chinese semiconductor market accounts for nearly a quarter of global demand. US equipment maker Applied Materials got 33 per cent of its sales from China last year and 31 per cent from its peer Lamm Research. Intel is expected to be hit hard, as many of the more advanced chips are used in Chinese supercomputers.
China reacted angrily to the new ban. “Out of the need to maintain its scientific and technological dominance, the United States is violating export control measures to maliciously ban and suppress Chinese enterprises,” Foreign Ministry spokeswoman Mao Ning told the media. “It will not only harm the legitimate rights and interests of Chinese companies, but also affect the interests of American companies.”
Article in Asia Times Earlier this month, he indicated that Chinese companies are developing alternatives to get around the already heavy US restrictions. She cited the case of one of China’s largest chip makers, Semiconductor Manufacturing International Corporation, which declared that it had “recently shocked the US by announcing that it had produced 7nm chips” despite being denied access to more advanced chipmaking equipment.
The fact that the US Department of Commerce has announced the latest extensive export controls in order to prevent Chinese military development underscores the fact that the US is preparing for war. As it seeks to undermine China’s technological advancement, the United States is engaged in strengthening its own supply chains in the event of a conflict.
The technology embargo comes on top of the massive trade tariffs imposed on Chinese goods by the Trump administration that Biden has maintained.
US actions designed to undermine the Chinese economy go hand in hand with the US military build-up across the region, along with military provocations in the South China Sea and Taiwan Strait near the Chinese mainland.
In the last century, the United States sparked a war in the Pacific with Japan by imposing an oil embargo in the 1930s aimed at stifling the Japanese economy. Likewise, the most recent US export controls on computer chips indicate the heightened tensions between the US and China and the advanced nature of US war preparations.