Chip Wars, China’s Goal Is to Cut Out the US

Tyler Mitchell By Tyler Mitchell Jun8,2024 #finance

The US is restricting China’s access to advanced microchips. The US will regret the move in one of two ways. China will become self-reliant or there will be a real war.

The Goal for China’s Chip Giant: Cut Out the U.S.

The Wall Street Journal reports The Goal for China’s Chip Giant: Cut Out the U.S.

At an industrial site with gray factory buildings surrounded by young trees, China’s chip champion is operating a new production line key to Chinese leader Xi Jinping’s goal to eliminate reliance on U.S. technology.

By today’s standards, the operations done here by Semiconductor Manufacturing International Corp. or SMIC, are retrograde, several generations behind the likes of industry leaders Taiwan Semiconductor Manufacturing Co., commonly known as TSMC, or Samsung Electronics.

But SMIC, at the company’s new Jingcheng facility on the industrial outskirts of Beijing, is aggressively incorporating homegrown semiconductor-production equipment into its manufacturing line. Meanwhile, it is cutting back on its longtime reliance on industry-leading American tools, a person familiar with the matter said.

The line represents one of China’s most advanced efforts to date to commercially create chips with domestic tools—a technological self-survival tactic that would help inoculate Beijing from U.S. sanctions.

It is a part of a broader campaign to eradicate American technology in China, dubbed “Delete A” or “Decouple From A,” which has accelerated in recent years as the world’s two biggest economies intensify their battle to dominate in next-generation technology.

“By blocking everything, you force the sleeping lion to wake up,” said Konrad Kwang-Leei Young, a former executive at TSMC who served as an independent SMIC board member until 2021, referring to the state of China’s semiconductor industry.

At Semicon, a chip-tool exhibition that took place in Shanghai in March, some exhibitors emphasized their homegrown offerings. One featured a sign that read: “High level of localization.”

Meanwhile, Chinese companies are stockpiling foreign equipment untouched by the Biden administration or other governments’ restrictions.

Applied Materials and Lam Research, both based in California, each derived roughly two-fifths of their total revenue from China in their most recent quarter. About half of ASML’s lithography-system sales came from China in the first three months of the year.

Consider a Reverse Title

Due to export bans by the US, China and the US now have the same goal.

The WSJ title is accurate. However, a reverse title is also true. The goal for the US is to Cut out China.

The US Threatens to Sanction Companies That Don’t Give a Damn

On April 23 2024, regarding China’s cooperation with Russia, I commented The US Threatens to Sanction Companies That Don’t Give a Damn

The Biden administration claims Chinese companies help Russia rebuild its war machine. Our sanction proposal counter is laughable. China’s counterthreat isn’t.

The US Can’t Have It Both Ways

The US has stopped Chinese auto and steel imports. It has sanctioned phone maker Huawei. It has restricted Chinese access to Nvidia chips.

Why is China supposed to care what the US thinks?

Computer Chip Sanctions Fail

On September 4, 2023, I noted US Sanctions Fail Again, China Now Produces Its Own Advanced Computer Chips

Trump and Biden both tried to cut off China’s supply of advanced microchips. The US wanted to knock Huawei out of the 5G market. Now, instead of China using US chips, it is producing its own chips.

China Bans iPhone Use for Government Officials

On September 7 2023, in response to US actions, I asked China Bans iPhone Use for Government Officials, Just a Start?

On February 18, 2024, I discussed How China Gets Around US Sanctions on Semiconductors

The US is far ahead of China on technology, but China is gaining ground faster than anyone thought.

The US wanted to restrict China’s access to 7nm chips but now it appears China is making its own 5bn chips, and the smaller the better.

When Trade Ends, Wars Start

One of the Three Reasons Japan Attacked Peal Harbor was the US cut off Japan’s access to oil and natural resources. War became inevitable. Japan chose to strike first.

The US and China are in a global trade war. And the EU is on the verge of joining that trade war, egged on by the US.

However, the end game is easy to spot. Either China will be successful at advanced chip production at a pace that satisfies China, or China will move to take Taiwan by force.

Tyler Mitchell

By Tyler Mitchell

Tyler is a renowned journalist with years of experience covering a wide range of topics including politics, entertainment, and technology. His insightful analysis and compelling storytelling have made him a trusted source for breaking news and expert commentary.

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