The United States (US), just over a week ago, asked chipmaker Nvidia to restrict export of its cutting-edge artificial intelligence (AI) processors to China.
This is neither the beginning nor possibly the end of what seems to be a US-China tech war or, perhaps, a “chip cold war.”
In this article, we will unpack this development through the question-answer format.
Then, here are the questions to consider:
Are security concerns the main reason behind the US action, or is it more down to concerns of losing technological dominance to China?
While this is about data security that would impact the common person, Indian defence analyst Maroof Raza went a step further in writing about possible breaches in even the US and British security systems due to Chinese chips.
Writing for The Tribune, Raza brought up the shock propulsion failure of the US Navy’s guided missile destroyer, the USS Zumwalt — commissioned at a cost of $4.4 billion — on the Panama Canal in November 2016.
“A thorough investigation led the US to identify ‘Chinese Chips’ — microchips that were manufactured by the PLA — which the Americans had to buy in tens of thousands to cut manufacturing costs,” Raza wrote.
Intriguingly, the British naval destroyer HMS Duncan suffered a similar propulsion failure only two days after the incident with the US naval destroyer. There was apparently a Chinese chip connection here as well.
Like with most strategic news, we may never know the truth. But it is clear that the US has been concerned about chip security for a while. (More background here)
Is this the first time that the US is openly in competition with another country for technical dominance over semiconductors?
On the technological side of things, both in terms of overall market share as well as having the most advanced capabilities, the US has not shied away from openly calling China a threat.
A case in point: the title of the fact sheet published by the White House in connection with the Chips and Science Act includes the words “Counter China.”
However, China has not been the US’ only technological rival in the past. The US has previously squared off against Japan too. (The background for this rivalry as well as about American concerns of losing ground to China technologically can be found here on Swarajya.)
What are some examples of restrictions that the US has already imposed on Chinese companies or, more generally, in doing business with China?
Here are some summary reads or references that should give the reader an idea, although this list is not comprehensive.
– A May 2019 article provides a detailed history of how Chinese telecommunications equipment maker Huawei “became America’s tech enemy No. 1,” leading effectively to a ban.
– In December 2020, the US added China’s largest and the world’s fifth-largest foundry, Semiconductor Manufacturing International Corporation (SMIC), to its export blacklist. (More here)
– The US initially restricted the extreme ultraviolet (EUV)-based lithography equipment needed to make the most advanced (below 7 nm) chips. Later, the deep ultraviolet (DUV)-based lithography equipment needed for mature nodes met with similar fate. (Detailed report here)
– The Chips and Science Act has an interesting condition — Companies that receive the funding have to promise not to increase their production of advanced chips in China.
– On 12 August, the US Commerce Department put restrictions on electronic design automation (EDA) tools (see definition here). A detailed analysis on what was called the “next battle front in US-China chip war” can be found here.
– And now comes the “latest” restrictions on Nvidia.
How has China reacted to the restrictions over the years?
Some examples are as below, though these may not represent the latest status:
– ZTE, an associate of Huawei, is said to have resorted to “legal means to fight US restrictions,” at least according to China’s national English-language newspaper Global Times.
– Huawei has been considering building fabs.
– There have been reports on China’s efforts to make their own lithography equipment too.
Put simply, the US may end up only “slowing down” China’s progress in this chip cold war, not much more.
Arun Mampazhy has a BTech from IITM and MS from University of Maryland in semiconductor fabrication and over a decade of industry experience. His dreams of seeing a commercial fab takeoff in India has changed from black and white to colour over two decades. He can be reached via email nanoarun(at)gmail(dot)com or @nano_arun on twitter. Views expressed are personal.
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