China’s chip companies are supposedly chill with sanctions… at least that’s how they’re behaving. But the government of China is not too happy.
Reuters reports that despite a third round of US export restrictions, China’s semiconductor industry says it’ll be business as usual thanks to stockpiles.
The latest US sanctions, announced yesterday, add 140 Chinese companies to the ban list. This prevents them from importing 24 kinds of chip manufacturing tools and high-bandwidth memory (HBM), a crucial component for AI-optimized GPUs such as Nvidia’s B200.
However, in the long term, the ban on chipmaking tools will likely have more impact. Given that semiconductors made by Nvidia, AMD, Intel, and others are at least partially off-limits, China would need to make its competing chips if it wants to keep up technologically with the US and its allies. Previous rounds of export controls already blocked China’s access to cutting-edge equipment like ASML’s extreme ultraviolet (EUV) lithography machines, and the latest restrictions could make it even more challenging for the Chinese chip industry to acquire less advanced tools.
Chinese chip companies are apparently already ready for sanctions and have stockpiles of necessary components and there is also domestic companies that can now manufacture those components themselves. Which is good for them I guess… not so great for the United States.
But in response to the United States’ sanction China has imposed export controls on antimony, gallium, and germanium. Which is unfortunate because China is responsible for about 98% of global gallium production, and China produces around 60% of the world’s germanium, and China accounted for approximately 48% of the world’s antimony production.
So that’s not good at all but should have been expected by the Biden Administration. If the Biden Administration went into these sanctions without a plan for the restriction of raw materials then wow that is quite an oversight. I have no idea how the United States is supposed to meet its need for gallium for example. At 98% of world production, China has a lock on it.
The entire point of these sanctions is to retard China’s tech industry. It’s all about tech nationalism. It’s about the United States and China both working to separate their semiconductor ecosystems from each other because of the need for national security.
Separating ecosystems is a good thing. The United States and Europe cannot be dependent on Taiwan for its semiconductors and China for its finished electronics. We just can’t. Not only is Taiwan prone to earthquakes, it’s under constant threat from China. And China itself is a totalitarian state that is straight out of George Orwell’s 1984. We should not be supporting China in any way.
The risk to the supply of electronics and semiconductors to the United States is massive. Taiwan is responsible for some 40% of global fab capacity and China is responsible for approximately 32% of all electronics coming into the United States. A war over Taiwan would be devastating to the US economy and people. We can’t let that happen.
At the end of the day both Chinese companies shrugging off sanctions and China restricting exports should have been expected. Let’s hope the Biden Administration did its job and planned for this.