US Intensifies Onslaught on the Chinese Technology Sector

15 Nov 2022 US Intensifies Onslaught on the Chinese Technology Sector
Talal Abu-Ghazaleh

Judging from the recent US action, it seems clear that weakening China is more important to the US than working with it. Actions from the US are aggressively targeting the Chinese electronics sector by denying it access to the valuable semiconductors it needs to produce the electronics it exports globally. The recently passed US CHIPS Act promoting US onshore chip production, the ‘Chip 4’ alliance designed to exclude China from the global semiconductor ecosystem, denying China access to EDA semiconductors design tools and stopping the export of modern chip devices manufactured by ASML Netherlands to China, are all steps designed to stagnate and derail the Chinese semiconductor sector. It seems though that the US is not content with this and wants to send China back to the Stone Age in a new raft of wide-reaching controls designed to completely freeze China’s semiconductor development and cut Chinese companies off from industry expertise.
Having access to modern chips is essential for any modern economy, particularly China as so much of its national production relies on this technology. This particularly is the case with advanced processors, which are needed, in broad range of sectors including AI, military and automotive. The actions forbid US companies and citizens from working with Chinese entities on advance semiconductor research, design or production. This is a damning move because many of the people that work in the industry are dual Chinese/American citizens that work in some of the most important positions in the industry.
This ‘cold war technology’  is intended to unhinge the Chinese electronics industry and put the US ahead in the semiconductor sector, something which it has left on the back burner for quite some time. It is only after the processor crisis we saw during the pandemic that the US seems to have woken up to the fragility of this sector and the compromising position it finds itself, with Taiwan dominating it internationally and China aspiring to reintegrate it as part of its homeland. 
In order to reassert its dominance and mend this broken wing, some would say that the US had no choice but to take such drastic moves to reestablish itself as world leader in processor manufacturing and block the development of China’s technology power by any means. The US is going back to its premise of staying a few generations ahead of its rivals and maintaining relative advantage over its competitors in key technologies which it has let slide over previous years.
This export control seems to be more expansive than those applied in the Cold War with Russia and China that were aimed at their military capability. Concerns are not only over China’s military modernization, rather that China is using this technology to monitor, track and surveil its own citizens. The US has said that it will protect US national security and foreign policy interest, while also sending a message that this is about values and not just technology.
The battle here is how you can fit smaller transistors onto chips that are measured in nanometers. The smaller the nanometer size, the more advanced the processor. Modern AI chips for example tend to fall in the 7 nanometer or less category. The US’s goal is to freeze Chinas ability to produce anything under 14 nanometers. 
As expected, the Chinese are not taking this sitting down, rather considering this action a serious threat. Chinas largest chipmaker Semiconductor Manufacturing International Corporation (SMIC) has made impressive strides in producing 7 nanometer processors using different production techniques. From this, it is clear that Chinese research and development can produce alternative ways of designing and producing advanced processors. This is the linchpin of the Chinese electronics industry, which it cannot afford to lose. Also, export controls on the whole have a habit of being leaky and it is possible that China may be able to get its hands on competitor technology through third party countries or industrial espionage. 
Who will win? Only time will tell. 
One thing that is clear is that the technology cold war is heating up. Niceties are being thrown out of the window as the US and China battle it out for pole position in the global technology sector.