Chips ahoy! US and China locked in self-destructive battle of trade restrictions
(2023/07/17)
- Reference: 1689614766
- News link: https://www.theregister.co.uk/2023/07/17/us_china_chip_wars/
- Source link:
The chip wars between the US and China continue apace amid warnings that both sides may be harming their own economy as much as the other, and tech companies are increasingly concerned about doing business within constantly shifting restrictions.
Last week it was reported that China's chip imports had dropped by nearly 20 percent during the first six months of 2023 compared to data from a year earlier.
The figures published by Beijing's General Administration of Customs show that US sanctions are having an impact as China's overall imports shrank by 0.1 percent during the same period, according to the [1]South China Morning Post .
[2]
China is moving to address the issue of the US blocking its access to advanced technology by stepping up efforts to develop its own. According to reports, local makers of chip manufacturing equipment in the country are seeing a massive hike in business after Washington clamped down on exports of equipment from other countries.
[3]
[4]
Two companies, Advanced Micro-Fabrication Equipment and Naura Technology Group, are predicting a doubling of profits, [5]Bloomberg reports, as they and others increase efforts to offer home-brewed alternatives to the high-tech chipmaking equipment previously imported from suppliers such as Applied Materials or ASML. These in turn are intended to let Chinese semiconductor companies manufacture the advanced chips the Chinese market demands.
ASML is itself facing further restrictions from the Dutch government, [6]Bloomberg said , as new export control rules are expected to bar the company from maintaining, repairing or providing spare parts for particular equipment without government approval. This could affect even those machines it has legitimately sold to Chinese customers in the past.
[7]
Meanwhile, US tech companies are said to be seeking urgent meetings with the Biden administration regarding Washington's policies on trade with China.
According to [8]Reuters , the chief executives of both Intel and Qualcomm will be visiting Washington this week to hold meetings with officials about export controls and other matters affecting their businesses. It cited unnamed sources familiar with the matter who said that other semiconductor CEOs are coming for similar meetings.
[9]German finance minister says nein to more Intel subsidy cash
[10]Former exec accused of trying to clone entire Samsung chip fab on Chinese soil
[11]EU greenlights billions for microelectronics under Chips Act
[12]Uncle Sam vows to Micron-manage China's memory chip ban
Many US chip companies obtain a substantial chunk of their revenue from sales to customers in China, and it is believed these meetings will be used by the CEOs to relay to government officials the impact restrictions are having, as well as the losses they may face from any further tightening of the rules.
Intel chief Pat Gelsinger has just returned from a trip to China – his second in three months – where he is [13]said to have visited the company's chip packaging and test plant in Chengdu as well as the headquarters of IT equipment supplier New H3C Group.
The latter was a joint venture part owned by HPE, but the US giant [14]announced its intention to sell its share earlier this year.
[15]
Intel and Nvidia are both said to be concerned that further restrictions on the export to China of advanced chips used for AI processing could hurt their businesses. Both have already gone to the length of producing modified versions of their products specifically for the Chinese market, with Nvidia offering the [16]A800 GPU and Intel the [17]Gaudi2 chip, but new US restrictions said to be in the pipeline could block even these lower performing products.
Perhaps ironically, White House National Security Adviser Jake Sullivan warned over the weekend that China would only harm itself with Beijing's [18]planned restrictions on the export of two key metals used in semiconductors.
In an interview broadcast on [19]CBS , Sullivan said China's restrictions on exports of gallium and germanium would be "self-defeating" because it would only spur other countries to find ways to reduce their dependency on China for supplies and increase the resilience of their own supply chains. ®
Get our [20]Tech Resources
[1] https://www.scmp.com/tech/tech-war/article/3227596/chinas-chip-imports-slump-first-half-us-sanctions-and-ongoing-tech-war-take-toll-trade
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.bloomberg.com/news/articles/2023-07-17/chinese-chip-gear-profits-soar-after-us-curbs-spur-local-buying
[6] https://www.bloomberg.com/news/articles/2023-07-14/asml-faces-tighter-restrictions-on-servicing-chip-gear-in-china
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.reuters.com/technology/us-chip-ceos-plan-washington-trip-talk-china-policy-sources-2023-07-14/
[9] https://www.theregister.com/2023/06/13/german_finance_minister_says_nein/
[10] https://www.theregister.com/2023/06/12/samsung_china_chip_fab_clone/
[11] https://www.theregister.com/2023/06/08/eu_greenlights_billions_for_microelectronics/
[12] https://www.theregister.com/2023/05/30/china_micron_ban_latest/
[13] https://www.scmp.com/tech/big-tech/article/3227718/intel-ceo-wraps-low-key-china-trip-us-chip-giant-taps-hot-chinese-demand-semiconductors
[14] https://www.theregister.com/2023/01/03/hpe_to_sell_remaining_share/
[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[16] https://www.theregister.com/2022/11/08/chipmakers_alter_products_china_ban/
[17] https://www.theregister.com/2023/07/13/intel_guadi_china/
[18] https://www.theregister.com/2023/07/03/china_semiconductor_export_restrictions/
[19] https://www.cbsnews.com/news/jake-sullivan-national-security-adviser-face-the-nation-transcript-07-16-2023/
[20] https://whitepapers.theregister.com/
Last week it was reported that China's chip imports had dropped by nearly 20 percent during the first six months of 2023 compared to data from a year earlier.
The figures published by Beijing's General Administration of Customs show that US sanctions are having an impact as China's overall imports shrank by 0.1 percent during the same period, according to the [1]South China Morning Post .
[2]
China is moving to address the issue of the US blocking its access to advanced technology by stepping up efforts to develop its own. According to reports, local makers of chip manufacturing equipment in the country are seeing a massive hike in business after Washington clamped down on exports of equipment from other countries.
[3]
[4]
Two companies, Advanced Micro-Fabrication Equipment and Naura Technology Group, are predicting a doubling of profits, [5]Bloomberg reports, as they and others increase efforts to offer home-brewed alternatives to the high-tech chipmaking equipment previously imported from suppliers such as Applied Materials or ASML. These in turn are intended to let Chinese semiconductor companies manufacture the advanced chips the Chinese market demands.
ASML is itself facing further restrictions from the Dutch government, [6]Bloomberg said , as new export control rules are expected to bar the company from maintaining, repairing or providing spare parts for particular equipment without government approval. This could affect even those machines it has legitimately sold to Chinese customers in the past.
[7]
Meanwhile, US tech companies are said to be seeking urgent meetings with the Biden administration regarding Washington's policies on trade with China.
According to [8]Reuters , the chief executives of both Intel and Qualcomm will be visiting Washington this week to hold meetings with officials about export controls and other matters affecting their businesses. It cited unnamed sources familiar with the matter who said that other semiconductor CEOs are coming for similar meetings.
[9]German finance minister says nein to more Intel subsidy cash
[10]Former exec accused of trying to clone entire Samsung chip fab on Chinese soil
[11]EU greenlights billions for microelectronics under Chips Act
[12]Uncle Sam vows to Micron-manage China's memory chip ban
Many US chip companies obtain a substantial chunk of their revenue from sales to customers in China, and it is believed these meetings will be used by the CEOs to relay to government officials the impact restrictions are having, as well as the losses they may face from any further tightening of the rules.
Intel chief Pat Gelsinger has just returned from a trip to China – his second in three months – where he is [13]said to have visited the company's chip packaging and test plant in Chengdu as well as the headquarters of IT equipment supplier New H3C Group.
The latter was a joint venture part owned by HPE, but the US giant [14]announced its intention to sell its share earlier this year.
[15]
Intel and Nvidia are both said to be concerned that further restrictions on the export to China of advanced chips used for AI processing could hurt their businesses. Both have already gone to the length of producing modified versions of their products specifically for the Chinese market, with Nvidia offering the [16]A800 GPU and Intel the [17]Gaudi2 chip, but new US restrictions said to be in the pipeline could block even these lower performing products.
Perhaps ironically, White House National Security Adviser Jake Sullivan warned over the weekend that China would only harm itself with Beijing's [18]planned restrictions on the export of two key metals used in semiconductors.
In an interview broadcast on [19]CBS , Sullivan said China's restrictions on exports of gallium and germanium would be "self-defeating" because it would only spur other countries to find ways to reduce their dependency on China for supplies and increase the resilience of their own supply chains. ®
Get our [20]Tech Resources
[1] https://www.scmp.com/tech/tech-war/article/3227596/chinas-chip-imports-slump-first-half-us-sanctions-and-ongoing-tech-war-take-toll-trade
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.bloomberg.com/news/articles/2023-07-17/chinese-chip-gear-profits-soar-after-us-curbs-spur-local-buying
[6] https://www.bloomberg.com/news/articles/2023-07-14/asml-faces-tighter-restrictions-on-servicing-chip-gear-in-china
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.reuters.com/technology/us-chip-ceos-plan-washington-trip-talk-china-policy-sources-2023-07-14/
[9] https://www.theregister.com/2023/06/13/german_finance_minister_says_nein/
[10] https://www.theregister.com/2023/06/12/samsung_china_chip_fab_clone/
[11] https://www.theregister.com/2023/06/08/eu_greenlights_billions_for_microelectronics/
[12] https://www.theregister.com/2023/05/30/china_micron_ban_latest/
[13] https://www.scmp.com/tech/big-tech/article/3227718/intel-ceo-wraps-low-key-china-trip-us-chip-giant-taps-hot-chinese-demand-semiconductors
[14] https://www.theregister.com/2023/01/03/hpe_to_sell_remaining_share/
[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZLW6C3@MRFec0upYotWHzQAAAQ0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[16] https://www.theregister.com/2022/11/08/chipmakers_alter_products_china_ban/
[17] https://www.theregister.com/2023/07/13/intel_guadi_china/
[18] https://www.theregister.com/2023/07/03/china_semiconductor_export_restrictions/
[19] https://www.cbsnews.com/news/jake-sullivan-national-security-adviser-face-the-nation-transcript-07-16-2023/
[20] https://whitepapers.theregister.com/
Re: Myopic strategy
Youngone
The people who run America can't control China and they hate that.
Military spending
Duncan Macdonald
There are too many US politicians that depend on "lobbying contributions" (aka bribes) from the defense industry. The US spends more on "defense" than the next 12 countries put together. If there US had no perceived conflict then the "defense" spending would drop which would make the executives and shareholders of the defense industry unhappy.
Russia's military power is a small shadow of what the USSR had at its peak and apart from its nukes has no real way to threaten the US. China is so far from the US (7000 miles coast to coast) that the logistics of one of them attacking the other is hopeless. China's navy is so small compared to the US navy that even it trying to invade Taiwan would be difficult and any more distant objectives would be impossible.
If the US reduced its military expenditure to what was actually needed for defense it could probably save over $400 billion per year - but the politicians would no longer get their bribes and the US unemployment would jump as the military would have fewer people and the defense industry would shed jobs.
China has so far made only token responses to the US trying to cripple its high tech industry - my belief is that China is playing the long game - expecting the US economy to collapse under the weight of its debts sometime in the coming decades (to see why - look at the US Debt Clock ( https://www.usdebtclock.org/ ) - the unfunded liabilities are currently over $192 trillion and rising by more than $1 million every 4 seconds and there is a lot of other bad news there).
Myopic strategy
Politicians and conflict pundits don't generally operate based on common sense - they tend to focus too much on prestige items and face and ignore anything else. What we know from the COVID experience is when deprived of the broad swath of Chinese manufacturing - everything from nuts and bolts all the way up to but but not including the highest tech - everything stops.
"A Chinese drone for hobbyists plays a crucial role in the Russia-Ukraine war", NPR DJI is selling massive numbers of drones to both sides in the Ukraine war. The US buys Chinese drones and sends them to Ukraine. Drones are going to be a hugely important feature in any future wars, yet China's manufacturing capacity for drone must be a few orders of magnitude higher than that of the rest of the world put together. And not only the drones, but also ALL the low to mid grade parts that go in them.
The US has limited number of high end drones, but once those get used up, has a very low manufacturing capacity to replace them. And not just drones, but also run of the mill munitions - several years of worth of US backup munition stockpiles have already been used up in 1.5 years in Ukraine.
Moreover, in order to expand manufacturing, you have to build plant, but its no surprise that many of the vital parts for building plant are now manufactured in China.
So, leaving aside the arguments over EXPORT constraints on goods to China - the elephant in the room is being totally ignored.