Chips, this seemingly insignificant little thing, are the core elements of scientific and technological development in today's world. Without chips, there would be no smartphones, computers, the Internet, artificial intelligence, cloud computing and all other high-tech products and services. The importance of chips is self-evident, but the production of chips is not easy, requiring high investment, complex technology and sophisticated equipment. At present, the global chip industry chain has a clear division of labor, the United States leads the design and manufacturing, Japan and the Netherlands master key equipment, and China is the largest market and consumer.
However, recently some media exposed a shocking news: there is an agreement between the United States, Japan and the Netherlands on chip export restrictions, aimed at curbing the development of China's chip industry. This news has aroused strong concern and opposition from the Chinese government and all sectors of society. At the World Trade Organization's (WTO) Council on Trade in Goods, China asked the three member states to clarify whether the agreement exists and, if so, whether WTO members should be notified and reviewed by WTO members. China believes that the agreement violates the WTO principle of openness and transparency, undermines the authority and effectiveness of WTO rules, and calls on the WTO to strengthen supervision over these measures.
So, is this agreement true or false? If true, how much impact will it have on China's chip industry? How can China respond to this challenge? This article will analyze from the following aspects.
First, what is the chip export restriction agreement?
According to media reports, the agreement between the United States, Japan and the Netherlands on chip export restrictions was reached at the end of 2022, and there is no official information yet. The agreement involves 23 semiconductor manufacturing equipment that is necessary to produce advanced chips. Under the agreement, the three countries will conduct a rigorous review of exports of these devices to China and may refuse or delay shipments. The agreement aims to prevent China from acquiring the most advanced chip technology and weaken China's competitiveness in the global chip market.
The agreement is considered part of the US-led Western countries' science and technology strategy toward China. The United States has long imposed Section 301 tariffs on certain goods from China in the name of national security and imposed export control measures on China. The United States sees China as its biggest strategic competitor and seeks to undermine China's innovation capabilities and competitive advantages in the field of science and technology. Japan and the Netherlands are allies of the United States and the world's most important suppliers of semiconductor equipment, sharing common interests and goals with the United States. Through this agreement, the three countries tried to form a semiconductor technology blockade alliance against China.
Second, how much impact will the chip export restriction agreement have on China's chip industry?
If the chip export restriction agreement really exists and is implemented, it will cause a certain degree of impact and challenge to China's chip industry. According to the "2023-2028 China Integrated Circuit (IC) Industry Market Outlook and Investment Strategic Planning Analysis Report" by the Prospective Industry Research Institute, China's integrated circuit industry is mainly divided into three links: design, manufacturing, packaging and testing, of which manufacturing is the most core and key link, and it is also the link that relies the most on imported equipment.
According to the Zhihu column "Analysis of the Status Quo of China's Chip Industry", at present, only the United States, Japan and the Netherlands can produce advanced semiconductor manufacturing equipment, and the market share of these equipment is highly concentrated. Among them, ASML in the Netherlands has a monopoly on the market of extreme ultraviolet lithography machines (EUV), which are necessary to produce chips below 7 nanometers. Applied Materials and Lam Research in the United States account for nearly half of the etching and chemical vapor deposition (CVD) markets, respectively. Japan has strong competitiveness in the field of wafer cutting machines, wafer cleaning machines and other equipment.
It can be seen that if the United States, Japan and the Netherlands implement a chip export restriction agreement on China, it will seriously affect the ability of Chinese chip manufacturers to obtain advanced equipment, thereby limiting the improvement of China's chip manufacturing level, resulting in China's chip industry in a disadvantageous position in the global market. At the same time, because China is the world's largest chip consumer, if the supply chain is disrupted, it will affect the demand and use of chips in all walks of life in China, and then affect China's economic and social development.
How should China respond to the challenges of chip export restriction agreements?
In the face of possible chip export restriction agreements, China cannot sit still, but must actively respond and defuse. Specifically, it can be carried out from the following aspects:
First, strengthen the protection of their legitimate rights and interests in multilateral trade institutions such as the WTO. China has already filed a request at the WTO for the United States, Japan and the Netherlands to clarify whether there is a chip export restriction agreement, pointing out that the agreement violates the basic principles and rules of the WTO and harms the legitimate rights and interests of China and other member countries. China should actively use the WTO and other multilateral trade institutions to safeguard its position and reputation in the global semiconductor market, win the support and understanding of more countries, and oppose the unfair trade practices of the United States, Japan and the Netherlands.
Second, increase investment and support in the chip industry. The chip industry is a capital-intensive, technology-intensive and long-term industry, which requires continuous investment and support to achieve breakthroughs and development. The government work report proposed that it is necessary to accelerate the construction of innovation platforms such as the National Integrated Circuit Industry Innovation Center and the National New Display Device Innovation Center, and strengthen the research and development and industrialization of key common technologies. China should increase financial support, tax incentives, financial services and other policies and measures for the chip industry, encourage private capital to participate in chip industry investment, and promote the coordinated development of the upstream and downstream of the chip industry chain.
Third, strengthen independent innovation and international cooperation in the field of chips. The chip field is a highly globalized field, no country can be completely self-sufficient, and no country can completely block other countries. China should adhere to independent innovation as the lead, continuously improve the technical level and product quality of chip design, manufacturing, packaging and testing, narrow the gap with the international advanced level, and form an independent and controllable chip technology system and industrial ecology. At the same time, China should also actively carry out cooperation and exchanges with other countries and regions, participate in the formulation of international standards, and promote the common development and progress of the chip industry.
In short, the chip export restriction agreement is a trade protectionist measure adopted by the United States, Japan and the Netherlands in response to the development of China's chip industry, aiming to curb China's rise in the field of science and technology. This agreement will cause a certain degree of impact and challenge to China's chip industry, but it will also inspire China's chip industry to work harder to catch up and surpass. In the face of possible chip export restriction agreements, China should respond and resolve from the aspects of safeguarding its own rights and interests, increasing investment support, strengthening independent innovation and international cooperation, and unswervingly taking the road of independent research and development to achieve self-reliance and self-improvement in science and technology.