{"id":77086,"date":"2022-12-12T13:00:32","date_gmt":"2022-12-12T02:00:32","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=77086"},"modified":"2022-12-12T12:43:14","modified_gmt":"2022-12-12T01:43:14","slug":"washingtons-semiconductor-sanctions-wont-slow-chinas-military-build-up","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/washingtons-semiconductor-sanctions-wont-slow-chinas-military-build-up\/","title":{"rendered":"Washington\u2019s semiconductor sanctions won\u2019t slow China\u2019s military build-up"},"content":{"rendered":"
<\/figure>\n

In October, the US introduced\u00a0a ban<\/a>\u00a0on exports to China of cutting-edge semiconductor chips, the advanced equipment needed to manufacture them and semiconductor expertise. The export controls are Washington\u2019s most serious attempt to undermine China\u2019s military modernisation and the most damaging measures US President Joe Biden has taken against China.<\/p>\n

Advanced semiconductors\u00a0underpin everything<\/a>\u00a0from autonomous vehicles to hypersonic weapon systems. Chips are imperative to the defence industry and\u00a0technologies of the future<\/a>. By targeting this critical input, the Biden administration aims to freeze China\u2019s semiconductor suite at 2022 levels and impede its military development.<\/p>\n

China will probably struggle to maintain its rapid advances in artificial intelligence, quantum and cloud computing\u00a0without access<\/a>\u00a0to US technology and expertise. Chipmakers like the Semiconductor Manufacturing International Corporation\u2014China\u2019s largest logic chip producer\u2014will lose access to machine maintenance and equipment replacement under the new controls.<\/p>\n

US\u00a0chip equipment suppliers<\/a>\u00a0like Lam Research, Applied Materials and KLA Corporation have\u00a0suspended sales and services<\/a>\u00a0to Chinese chipmakers, while ASML Holding, a Netherlands-based supplier, told its US staff to\u00a0stop servicing Chinese customers<\/a>\u00a0until further notice.<\/p>\n

The new controls exploit China\u2019s weaknesses in developing talent and research. They require all US citizens, residents and green-card holders\u2014including hundreds of ethnic Chinese educated and trained in the US\u2014to seek permission from the US Department of Commerce to work in Chinese fabrication plants. Since such permission is unlikely to be granted, US citizens working at Chinese semiconductor companies will be forced to sacrifice their citizenship or their jobs. Most will have to give up their current jobs. Indeed, Yangtze Memory Technologies Corp has already asked core US staff to leave the company.<\/p>\n

Despite the bleak short-term outlook, it is wrong to assume that US controls will hobble China for years. In the case of nuclear weapons, significant resources were poured into acquiring bomb technology once political leaders decided that they were essential for national defence. That effort inevitably starved other sectors, but more often than not successfully delivered nuclear weapons programs.<\/p>\n

Now that advanced semiconductors are seen as essential to national defence, Beijing is adopting a \u2018whole of the nation\u2019 approach and investing national resources into the industry. Many engineers and computer scientists are likely to be assigned to semiconductor design and manufacture, assisted by espionage against US, South Korean, Taiwanese, Japanese and European chip firms.<\/p>\n

The export controls won\u2019t cripple the Chinese military. According to a recent RAND Corporation report<\/a>, China\u2019s military systems rely on older, less sophisticated chips made in China on which US export controls will have no effect. If China needs more advanced chips for AI-driven weapons systems, it can likely produce them, albeit at a very high cost. Many semiconductor industry experts agree that China has the technical capability to produce cutting-edge chips yet lacks the commercial capability to\u00a0scale up production<\/a>. This means that the US ban will have less effect on weapons systems, instead delaying the rollout of civilian applications such as autonomous vehicles.<\/p>\n

Nor will US semiconductor firms emerge from the sanctions unscathed, given that many have China as their largest market. China accounts for<\/a> 27%\u00a0of sales at Intel, 31% at Lam Research and 33% at Applied Materials. Both Applied Materials and Nvidia expect the new export controls to cut US$400 million (6% and 7%, respectively) from next quarter\u2019s sales. Lam Research\u2014one of Yangtze Memory Technologies Corp\u2019s largest suppliers\u2014expects the controls to cut a whopping US$2.5 billion (15%) from 2023 sales.<\/p>\n

These dramatic cuts come at a particularly\u00a0difficult time<\/a>\u00a0for the US semiconductor industry, which is experiencing falling revenue and increased input costs. By\u00a0one estimate<\/a>, the damage US sanctions inflict on research and development and capital investment in the Western semiconductor industry \u2018will exceed Washington\u2019s modest subsidies for the chip industry by a factor of five or more\u2019.<\/p>\n

Tit-for-tat retaliation<\/a>\u00a0against the US is not an option for China, given its heavy reliance on foreign technology. Any reciprocal measure would inflict more damage on China itself. Punishing US companies with big exposure in China\u2014like Nike or Apple\u2014would harm the Chinese labour market since those firms employ many Chinese citizens. Other foreign supply chains and Chinese businesses supplying Nike and Apple would also suffer.<\/p>\n

Imposing export controls on products China dominates, like rare earths or\u00a0pharmaceutical ingredients<\/a>, would accelerate the US movement to \u2018reshore\u2019, onshore and \u2018friend-shore\u2019 manufacturing of those products, as was the case with\u00a0Japan in 2012<\/a>.<\/p>\n

Instead of overt retaliation, China will probably seek alternatives to US chip technology. But since alternatives are\u00a0decades away<\/a>, intellectual property theft and the nationalisation of foreign semiconductor firms could spike.<\/p>\n

Whether US chip controls represent a stand-alone policy or foreshadow sanctions across a wider range of high-technology sectors is unclear. In the run-up to the 2024 US presidential election, many Republicans will call for harsher controls. At his recent meeting with Chinese President Xi Jinping at the G20 summit, Biden sought to tamp down US\u2013China hostilities. But unless he resists calls from the US \u2018China hawks\u2019, Biden could find himself dragged into a second cold war.<\/p>\n","protected":false},"excerpt":{"rendered":"

In October, the US introduced\u00a0a ban\u00a0on exports to China of cutting-edge semiconductor chips, the advanced equipment needed to manufacture them and semiconductor expertise. The export controls are Washington\u2019s most serious attempt to undermine China\u2019s military …<\/p>\n","protected":false},"author":1644,"featured_media":77089,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[52,55,3366,332],"class_list":["post-77086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-china","tag-military-build-up","tag-semiconductors","tag-technology"],"acf":[],"yoast_head":"\nWashington\u2019s semiconductor sanctions won\u2019t slow China\u2019s military build-up | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/washingtons-semiconductor-sanctions-wont-slow-chinas-military-build-up\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Washington\u2019s semiconductor sanctions won\u2019t slow China\u2019s military build-up | The Strategist\" \/>\n<meta property=\"og:description\" content=\"In October, the US introduced\u00a0a ban\u00a0on exports to China of cutting-edge semiconductor chips, the advanced equipment needed to manufacture them and semiconductor expertise. 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