The U.S.’ headaches over China’s chips
The U.S.’ headaches over China’s chips
China’s semi-conductor manufacturer SMIC made a technological breakthrough achieving 7nm (nanometer) production capabilities. This breakthrough makes SMIC the third chipmaker worldwide in the 7nm spectrum. Geo-politically, this achievement is a highly sensitive matter, which doesn’t make the U.S. happy about it. Earlier, the U.S. introduced a ban on Dutch (!) ASML company, prohibiting it to sell lithography machines to China’s SMIC, attempting to ensure U.S.’s technological supremacy, and to dampen China’s ambitions in the chipmaking industry.
The ban extends beyond the global market leader ASML to other toolmakers as well, prohibiting the selling of chipmaking equipment for mass-production to China’s chipmakers, with SMIC being its most prominent representative. Such highly specialised tools coming from western companies are necessary for any chipmaker to achieve a lower production spectrum, such as the 7nm.
Background:
With the recently passed CHIPS Act worth $52 billion, the U.S. is striving to ensure independence from Asian semiconductor suppliers, seeking to develop and boost domestic manufacturing. Currently, Taiwan and South Korea are U.S.’s leading microchip suppliers. Similarly, the EU is working on its own industrial and digital sovereignty, by proposing its own Chips Act, with an already announced semiconductor factory in the southeast of France. Another microchips production facility by US chipmaker Intel is planned in Germany’s Magdeburg city, eyeing a production start in 2027.
Access to semiconductors is of great economic and geo-political importance. Since the Covid breakout disrupted the supply chains, there is a serious worldwide microchip shortage, highlighting the USA’s and EU’s great dependence on Asian suppliers. For microchips production, China, Taiwan, and South Korea use western technology, such as ASML’s machines. But the broad sanctions that the U.S. imposed on China, which started even before Covid, and this year’s sanctions on Russia, are cutting off both countries’ access to the specialised tools, thus impacting their production capabilities.
Semiconductors are used almost everywhere, like in household appliances, transportation, computer hardware and telecommunications, as well as in modern weapons and missiles.