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30 Jan 2023

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US Escalates Battle that China Previously Called "Technological Terrorism"

The US government just announced that the Netherlands and Japan have agreed to restrict their exports of high-end chip manufacturing systems to China. No official announcement is planned by any of the governments about the agreement, although it has been widely reported and was expected.

The two countries joining the US in restricting the Chinese government's ability to buy high-end equipment is a second shoe dropping from a US policy announced in October 2022 by the Bureau of Industry and Standards within the US Department of Commerce. The US is focusing its initiative on China's potential military ability.

The nitty-gritty of international relations happens within bureaus within governmental cabinets; the ongoing chip-manufacturing conflict between the United States and China provides a great example of this.

To wit, the BIS stated in October that China's “ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors...are used by the PRC to produce advanced military systems including weapons of mass destruction; improve the speed and accuracy of its military decision making, planning, and logistics, as well as of its autonomous military systems; and commit human rights abuses.”

Great Computing Power Begets Great Concern
The tech industry has seen a sudden, dynamic spike in interest and development of generative AI, quantum computing, and GPU manufacturing, all of which work together to bring in a new era of much more cognizant computing and its potential for economic disruption, cybersnooping and attacks, and new generations of military weaponry.

Concerns about China by the US can also be viewed in the context of the Biden Administration's aggressive CHIPS and Science Act, announced in August 2022. This legislation specifically states its purpose is to “counter China,” and authorizes as much as $50 billion for domestic chip manufacture.

For its part, the Silicon Valley-based Semiconductor Industry Association, which focuses on supporting US chip manufacturing, has expressed concern about the US being too unilateral in its efforts.

It put out a statement last week warning of “unnecessarily harmful impacts of regulatory complexity, uncertainty, and burden in (the October BIS action) and future rules,” and urged the US government to seek input from others first, take a “plurilateral” approach and issue temporary licenses for multinational fabs operating in China. US companies Texas Instruments and Micron are in this group of companies, as is US ally South Korea's Samsung.

It's Far From Over
Even before the October 2022 announcements, a Chinese government official had accused the US of “technological terrorism” in a press conference. Zhao Lijian, a department director within China's Ministry of Foreign Affairs, said the US at the time was already exerting “coercive diplomacy by abusing state power and wielding technological hegemony.”

No doubt this conflict is far from over. Although the nitty-gritty will continue, the stakes are very high, and now higher with two strong US allies involved. Mitigating or resolving this conflict will require a level of high-level trust between the US and China's governments that does not exist today.

Photograph of Zhao Lijian from China News Service.

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