Preparing for the US-China Chip War: How Global Chipmakers are Responding

Sun Tzu argued that small forces can be disproportionately effective in achieving great results. In “The Art of War,” he teaches commanders how to exploit an opponent’s weaknesses and destroy them before they lose too much power. By using small, calculated forces, a commander can achieve strategic wins without putting himself or his troops in harm’s way.

The United States is keen on maximizing its advantage in the development of artificial intelligence and machine learning technologies, but it appears that small actions may not be enough to keep up with China. In order to outstrip China, the United States needs to take a broader approach; actions such as funding research and development in related fields, investing in education initiatives, and working with other countries all play a critical role.

The recent deal between the United States and Japan as well as the Netherlands to restrict the export of semiconductor parts and chip-making technologies to China has thrown a huge cloud of uncertainty over the $600 billion global semiconductor industry. With orders from Chinese companies expected to fall by as much as 50% due to this new restriction, many multinationals are feeling alarmed about their future in the Chinese market. Although it is still unclear exactly how much of a dent these restrictions will make in China’s overall semiconductor ambitions, it is sure to have an impact on both global supply and demand for semiconductors.

The Chinese government’s restrictions on the export of semiconductors could have far-reaching implications for not just the global electronics industry, but also for major chipmakers who rely on China as one of their main markets. Nearly every major chipmaker has Chinese customers, so any restrictions placed on exports will have a considerable impact on their businesses.

Looking far into the future, Washington desires to choke Beijing’s access to AI technology while diversifying their sources of semiconductor. This is in line with President Trump’s AMERICA FIRST policies, which prioritize domestic production and innovation.

AI has the potential to drastically change many industries, from healthcare to transportation. However, some experts believe that the United States should make an aggressive move into AI in order to lead the way and ensure its dominance in this field.

The Japanese and Dutch deal could have a significant impact on China’s semiconductor business, as it limits the country’s ability to export advanced AI chips. This could limit China’s ability to develop its AI technology further, and give other countries in the region a competitive edge.

You can’t make pancakes without a pan

This makes it hard for Chinese companies to compete in the high-tech industry, and has led to their reliance on technology imports. This problem is likely to get worse as China’s economy continues to grow, because the country lacks the advanced manufacturing infrastructure that would allow it to produce these goods on a large scale.

In fact, more than half of all chips produced in the country are made by foreign companies, demonstrating just how important Taiwan’s chip industry has become. To stay ahead of the competition, Taiwanese manufacturers have turned to overseas suppliers for key components and equipment, including Taiwan’s top chip maker TSMC. In 2017 alone, these imports amounted to US$36 billion – a figure that is sure to increase as Taiwanese companies face greater pressure to adopt innovative technologies.

Global semiconductor companies have come to rely on Chinese manufacturers for the machines that help make their high-end chips. SMIC in particular, relies heavily on the global industry for its machines. This reliance has helped keep costs low and has made SMIC a major player in the semiconductor market.

The extreme ultraviolet lithography machines are capable of printing patterns as small as one atom thick. This technology is used to create high-end logic and memory chips, which are essential for technological innovations. The deep ultraviolet lithography machines are even more advanced and can print patterns as small as a few femtometers. This technology is used in the manufacturing of sophisticated optics and radiation protection devices.

Initially, the U.S. export bans to China only affected EUV machines, used for the most advanced process nodes, such as 3 nm, 5 nm, and 7 nm. However, in June 2018 the U.S. announced that it would also impose a ban on exports of 14nm and 10nm equipment to China as part of its trade war with Beijing. This move has caused some manufacturers to shift their focus towards 6nm and 8nm technology nodes and away from EUV machines altogether. As a result, the market share held by EUV machines has decreased

The United States has been trying to slow down the Chinese advance in AI, machine learning and other cutting-edge technologies by creating smaller process nodes. This is so that their technology becomes more power-efficient, which will ultimately give American companies an edge over their Chinese counterparts.

The January agreement targets older DUV machines that could let Chinese manufacturers make 14 nm chips, as well as 18 nm DRAM chips and NAND flash chips with more than 128 layers. These ultra-small chip sizes are commonly used in automobiles, industrial equipment and home appliances. This agreement furthers the global war on technology protections by promoting the use of tamper-resistant features in these popular devices.

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Zara Khan

Zara Khan is a seasoned investigative journalist with a focus on social justice issues. She has won numerous awards for her groundbreaking reporting and has a reputation for fearlessly exposing wrongdoing.

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