Will US chip controls work on China?

Analyst John Lee assessed the impact of US chip controls on China, noting the likelihood of a complete decoupling, especially in areas outside of high-end chips. Despite the restrictions, China has its own options, but the tides could turn anywhere in this "race to win the 21st century."

Despite the impact of US chip control on China, China's role in the global electronics sector and the emerging technology stacks built on it will not be easily invalidated. (pixabay)

Despite the impact of US chip control on China, China's role in the global electronics sector and the emerging technology stacks built on it will not be easily invalidated. (pixabay)
The extensive export controls imposed by the US. last October in China's semiconductor sector was a major escalation of U.S.-China trade tensions to date: it was the first shot of a real technology containment campaign.

The US government has decided that it must restrict China's access to the most fundamental technology of computing power, not only by curbing individual companies, but by targeting the entire Chinese economy. Washington has also decided that it cannot expect cooperation from third countries, but must act unilaterally, hoping that its allies and partners will follow suit.

More moves aimed at Chinese access to more technology are likely to follow than the US. fully committed to what President Biden called “a 21st century competition to win”.

According to Biden's national security adviser Jake Sullivan, the goal is no longer to keep China within just a couple of technological generations of the US. behind, but as wide as possible this gap. It is not just Chinese military capability that is the nominal justification for the new US controls. At stake are the global impacts of the industrial policy model driven by China’s technological advance.

The dominance of US companies and US-derived technology in parts of this value chain, in particular the manufacture of hardware and software tools, gives Washington the advantage to insulate China from foreign suppliers...

in Phoenix, Arizona, USA, December 6, 2022. (Caitlin O'Hara/Bloomberg)

As US Trade Representative Katherine Tai recently said in Washington these shocks are seen as a threat to the economic survival of a free society, requiring a paradigm shift in attitudes to global trade and its implications for national security.

closing right

For China, bottlenecks in the global semiconductor value chain leave few good options in the short term. The dominance of U.S. companies and U.S.-sourced technology in parts of this value chain, particularly equipment manufacturing and software tools, gives Washington the advantage to insulate China from foreign suppliers in this highly specialized industry. The world's big foundries, most critically Taiwan's TSMC, would not risk breaking US law to make high-end chips for Chinese customers.

China has renewed efforts to build "de-Americanized" factories (manufacturing plants), but these will still rely on foreign suppliers. Even if Japanese or European companies were willing to sell tools to Chinese customers, they would need to create many items independently to protect themselves from US extraterritorial jurisdiction and the "US person" provisions in the October export controls US semiconductor to continue selling to Chinese customers through shell companies or by offshoring their operations.

… it could be the best part of a decade before China fills the capacity gaps to produce more powerful computer processors on today’s scale.

Workers are seen working on the final assembly of the ASML TWINSCAN NXE:3400B semiconductor lithography equipment with the panels removed, in Veldhoven, The Netherlands, in this photo taken on April 4, 2019.

Mientras tanto, los esfuerzos de sustitución de importaciones de China en la amplia gama de bienes necesarios para la fabricación de semiconductores siguen siendo un camino largo y difícil. En el punto crítico de la fotolitografía, donde la empresa holandesa ASML tiene el monopolio mundial de la tecnología de punta, podría pasar una década antes de que China llene el vacío gracias a su capacidad para fabricar a escala los procesadores informáticos más potentes de la actualidad.
no sin opciones
Esto no significa que el papel de China en el sector electrónico mundial y la aglomeración de tecnología emergente construida sobre él estén ahora paralizados. El papel central de China en la fabricación, incluidas las nuevas tecnologías como los vehículos eléctricos, no se interrumpirá fácilmente.

Una serie de medidas separadas de Washington durante la última media década no ha impedido que los líderes de la industria extranjera den un doble golpe a China o desarrollen cadenas de suministro separadas para que China evada el control de los EE. UU. En la propia cadena de valor de los semiconductores, China ya tiene una presencia significativa que crea inercia frente a los esfuerzos por "reiniciar" o "amistar" la actividad en algunas áreas fuera de China continental.

En particular, la creciente participación de China en la fabricación de "punta de lanza" será difícil de replicar en otros lugares a corto plazo. Es posible que estas fábricas de generaciones anteriores no fabriquen procesadores o chips de memoria de última generación, pero fabrican los tipos de chips que enfrentaron escasez de suministro en 2020-2021, lo que atrajo la atención de los formuladores de políticas hacia la cadena de suministro global de semiconductores y su Enfocado en riesgos