Global Courant
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It’s been a year since President Joe Biden put forward plans for the US to become a major power in the production of advanced computer chips. A total of NOK 550 billion will be distributed in aid and at least an equal amount in the form of tax breaks for companies moving production facilities to the US.
The final arrangement was announced on Friday. They will ban computer chip companies from expanding in China for 10 years if they receive support from the United States. The restrictions also apply to research and partnerships. Iran, Russia and North Korea are also on the list.
“These guidelines will safeguard our national security and help the United States stay ahead for decades to come,” Commerce Secretary Gina M. Raimondo said in a statement.
– I can’t afford to lose China
Over the past year, Asian companies, which make the bulk of computer chips and advanced electronics, have been asking the United States for answers about what they can and cannot sell to China. Many also have significant operations in China, producing products for the US market.
The article continues below the advertisementWhen the restrictions came into effect last year, Samsung and SK Hynix were producing up to 40 percent of advanced computer chips in factories in China, according to The Register. They have been granted several temporary exemptions from the US ban on keeping factories with production equipment running.
– It is a favorable decision that Samsung and SK Hynix can increase production of advanced semiconductors in China. Of South Korea’s total exports, semiconductors account for 20 percent and 60 percent of computer chip exports go to China. Neither South Korea nor South Korean companies can afford to lose China. This means that trade can at least be maintained, economics professor Kim Dae-jong of Sejong University told The Korea Times.
South Korean exports have fallen in the past eleven months and trade with China has plummeted. The US has overtaken China as the top market for South Korean exporters – for the first time in almost two decades.
Taiwanese and South Korean companies have large production facilities in China. These need to be modernized. American politicians have tried to gain a foothold for this. Under the new regulations, the US Department of Commerce will be able to oversee existing factories in China.
– My opinion is that they have struck a fair balance between being restrictive, but at the same time not being too strict on existing factories in China, says Chris Miller, author of the book “Chip War”, and associate professor of history at Tufts University, the New York Times.
World leader in 2035
In parallel, the country is making huge investments to develop and mass-produce advanced computer chips and components without relying on Western-controlled technology. China has also introduced restrictions on key raw materials.
Premier Li Qiang vowed this weekend to “increase support for modern industry.” He reiterated that China aims to become a leader in advanced manufacturing by 2035.
– China should strive to become more robust and secure industrial supply chains, be a leader in the integration of digital technology and economy, and promote the development of green industry, Li said, according to Xinhua news agency.
The article continues below the advertisementChina has made great progress, including in solar energy and electric cars. The EU launched an investigation into Chinese subsidies on imported electric cars in September.
– Heavily subsidized and cheap electric cars from China are flooding and destroying markets, European Commission President Ursula von der Leyen said.
China has responded with protests and warned that the investigation will impact trade between China and the EU.
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EU leaders will discuss China at a summit in early October. A report will be presented showing that the EU could become as dependent on lithium-ion batteries and fuel cells from China as it was on Russian gas, oil and coal before Ukraine’s invasion.
Uncertain about progress
China depends on production equipment from the Netherlands and Japan to mass produce advanced computer chips. The United States and American companies own some patents on this technology and have put their foot down for export to China.
– The next phase of modernization will be much more difficult than the previous round, which started in the 1980s, when the US and its allies were no longer willing to provide advanced technology, says researcher Deng Yuwen of the University of Nottingham, who has a long-time editor at one of the Communist Party newspapers, the South China Morning Post.
The technology giant Huawei has been subject to US sanctions for five years and has lost market positions in 5G development and smartphones. The company recently launched a new smartphone that could be a breakthrough for the production of advanced computer chips.
– Companies like Huawei have made some progress, but we don’t know exactly how far they’ve come. It is still too early to draw a definitive conclusion, Deng told the Hong Kong newspaper.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases via links that lead directly to our pages. Copying or other use of all or part of the contents may only be made with written permission or as permitted by law. For further conditions see here.
Steep fronts between the US and China – the technology war is escalating
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