The chip of discord – Newspaper Kommersant No. 188 (7389) of 10/11/2022

The Chinese authorities said that the United States violated market terms of trade by imposing new restrictions on the supply of high-tech chips and equipment for their production to China. Objections were also raised by the US authorities’ listing of 31 Chinese companies (including China’s largest chipmaker) as “untrustworthy in terms of supplying technological products.” Export restrictions were introduced by the United States against the backdrop of increased support for domestic producers – it has already been decided that more than $80 billion will be allocated for these purposes.

“China opposes new US restrictions on Chinese technology companies as the move grossly violates market rules and threatens the stability of global manufacturing supply chains,” the Chinese Ministry of Commerce said on Monday in response to the US Department of Commerce’s ban on high-tech exports to China. chips produced using American technology. The Chinese Foreign Ministry also expressed outrage, saying that the US is “abusing export controls to suppress Chinese companies while maintaining technological hegemony.”

The United States previously imposed export restrictions on the supply of chips and equipment for their production to China (in particular, this applies to chips for high-performance computing systems, supercomputers and artificial intelligence systems).

The US Department of Commerce indicated that such chips are important for achieving leadership in the field of AI, and they can also be used to “release advanced weapons, including mass destruction.”

In addition, the US agency has listed 31 companies from China (including a key Chinese chipmaker – YMTC) in the list of structures that are not credible in terms of the supply of technological products. The ministry explained that it was unable, for reasons beyond its control, to check the companies for good faith as the final recipient of high-tech exports. If it is not possible to carry out additional checks at the place of production, the companies will be included in the list of legal entities with which transactions should be limited.

The US Department of Commerce also announced that they had consulted on these issues with “closest associates.” However, it is not yet clear whether South Korean or Taiwanese manufacturers will fall under secondary sanctions if such chips are supplied to China (so far, the most advanced production facilities are located in these countries). ASML, a European manufacturer of equipment for the production of such products, said on Monday that it is only assessing the consequences of the new regulation. In China, meanwhile, they expect to strengthen cooperation with Korean chip manufacturers.

Note that the US intend to expand domestic chip production – a law to support the industry and its scientific research was adopted in August.

Now in the US, according to McKinsey, accounts for 12% of the global chip manufacturing market, in the 1990s this share was 30%. The adopted law provides for reducing dependence on the supply of key types of components, increasing competition with Chinese companies in the high-tech sector, as well as measures to protect the US market. Additional funding ($280 billion for ten years, of which $80 billion is for incentives and support for chip manufacturers) will be used to increase domestic production, as well as research in the field of quantum technologies, artificial intelligence, clean energy and nanotechnology.

Tatyana Edovina