US-China Chip War How The Technology dispute is playing out in 2023
The US is quickly increasing efforts to impede China’s progress in the field of semiconductors – essential on everything from mobile phones, to weapon of war.
On October 1, Washington declared some of its most expansive export controls ever and required licenses for firms that export chips to China employing US software or tools regardless of where they’re produced anywhere in the world.
The measures of Washington also prohibit US residents and holders of green cards from working for specific Chinese chip manufacturers. They are US permanent residents that have an entitlement to live and work within the US.
It’s cutting off a vital source that carries American professionals to China that will impact the growth of semiconductors with high quality.
What is it that makes it that the US taking this action?
Advanced chips create supercomputers and artificial Intelligence as well as military equipment.
The US declares that China’s use the technology could pose an imminent threat to its national security.
Alan Estevez, undersecretary at the US Commerce Department announced the rules, stating that his goal was to make sure that the US was doing all it could to keep “sensitive technologies that have use in military” from being purchased by China.
“The danger environment is constantly changing , and we’re changing our policies to ensure that we are addressing the issues,” he said.
However, China has called the control of “technology terrorists”.
Countries located in Asia which produce chips like Taiwan, Singapore and South Korea have raised questions over how this dispute is impacting the world supply chain.
There were three major changes in the chip battle in the last week.
More Chinese companies are on the “entity list’
The Biden administration has added 36 additional Chinese firms, including the major chip maker YMTC in the administration’s “entity listing”.
This means American businesses will require government permission to market specific technologies to them, and this permission can be difficult to get.
The US restrictions have wide-ranging implications. The the UK-based maker of computer chips Arm has confirmed that it is not selling its most innovative designs to Chinese companies like the tech giant Alibaba due to US as well as UK restrictions.
Arm stated that it was “committed to complying with the applicable laws and regulations governing exports in the countries in which it is based.”
China protests to WTO
China has filed a complaint against US through China’s World Trade Organization (WTO) concerning its export restrictions for semiconductors as well as other related technologies.
It is also the very first WTO case that Beijing has filed at the US since the US president Joe Biden took office in January 2021.
In its WTO submission, China alleged that the US has been sabotaging export controls to ensure “its leading position in the science, technology, manufacturing and engineering”.
It also said that US actions could threaten “the security of the worldwide industrial supply chains”.
The US declared in its reply that the trade organization was “not the proper forum” to resolve issues related to national security.
US The Assistant Secretary for Commerce to Export Administration Thea Kendler said “US national security concerns demand us to act swiftly in order to block access to the most advanced technologies.”
- WTO claims that Trump’s steel tariffs violated trade regulations
- What is the reason for an issue with chips?
The complaint states how the US has placed restrictions on exports of about 2,800 Chinese items, however only 1,800 of them were permitted under international trade regulations.
The United States has 60 days to to settle the issue. If it is not resolved, China will be allowed to ask for a panel of experts to consider the case.
In the last month in the month of April, earlier this month, the WTO decided it was not a violation of the WTO’s rules. US tariffs on aluminum and steel that were implemented on the US under the administration of former President Donald Trump violated global trade rules.
The majority of the goods China exports to US can be subjected to import tariffs.
The US stated that it “strongly opposes” the decision and does not intend on taking away the measures.
Discussions between Japan along with the Netherlands
Japan as well as the Netherlands may be able to put in place export restrictions on China which could limit the capacity for Japanese and Dutch firms to market modern items to Chinese market.
This morning, White House national security advisor Jake Sullivan said the US has held talks with two largest chip makers manufacturing equipment about the possibility of adopting similar US control measures regarding Beijing.
“I’m not trying to anticipate making any statements,” Mr Sullivan told reporters. “I would like to declare that we are extremely satisfied with the honesty as well as the substance and intenseness of the discussions.”