【Rider Island Press】
The increasingly extreme regulation of Chinese chips in the United States has caused a backlash in the industry. According to foreign media reports, on July 17, executives of US chip giants such as Intel, Qualcomm and Nvidia met with Biden government officials to oppose tightening export controls on chips and semiconductor manufacturing equipment to China.
Previously, an in-depth report in the New York Times disclosed a lot of major information about chip regulation, such as the fundamental intention of the United States to manipulate chip regulation, the timeline of chip blockade action against China, and the strategic consideration of US politicians to use Taiwan as a "pawn", etc., the report said that the US chip blockade of China is tantamount to a war, and believes that US chip regulation of China is likely to stimulate the long-term growth of China's chip industry, and chip regulation is only delaying time.
Xia Ke Island compiled the important information of the article, let's look at it together -
(Source: New York Times website)
One
On October 7, 2022, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) issued a new semiconductor export control regulation (the "New Regulation"). The 139-page document, riddled with cumbersome bureaucratic jargon and technical details, amounts to a declaration of war against China.
Gregory Allen, director of the Wadwani Center for Artificial Intelligence and Advanced Technologies at the Center for Strategic and International Studies in Washington, said that 2022 has two dates that will be remembered by history, one is February 24, the escalation of the Russian-Ukrainian conflict, and the other is October 7.
BIS is small, employing about 350 agents and officials who collectively monitor trillions of dollars' worth of transactions going on around the world. It has a vast trade blacklist — the Entity List, numerous pre-existing multilateral export control agreements, and ongoing actions against Russia and China.
During the Cold War, the United States had the strictest export controls on the Soviet bloc, when BIS processed about 100,000 export licenses per year; In the 90s, the average number of BIS processing permits per year dropped to 10,000. Today, that number has grown back to 40,000 and counting.
In recent years, chips have become the focus of BIS's work. Chips are the lifeblood of the modern economy, the brains of all electronic devices and systems, from iPhones to drivers, data centers to credit cards. Semiconductors are also driving innovative technologies such as quantum computing and artificial intelligence. OpenAI's training on ChatGPT, for example, is performed on 10,000 state-of-the-art chips.
The new U.S. rules are intended to weaken China's ability to produce or even buy high-end chips. "The United States wants to influence China's AI industry, and regulating semiconductors is a means to achieve this." "The new policy is that not only will we not allow China to make any technological progress, we will also actively reverse their current level of technology," Allen said. ”
Muse, senior semiconductor analyst at EvercoreISI, a U.S. investment bank, put it bluntly: "If you had told me these rules five years ago, I would have told you that it was an act of war — we must be at war." ”
If these U.S. controls are successful, they could affect the progress of a generation in China; If it fails, it can produce surprisingly counterproductive results. This outcome could affect the U.S.-China rivalry for decades to come and the future of the global order.
On October 7, 2022, the Bureau of Industry and Security of the U.S. Department of Commerce issued new regulations on semiconductor export controls. Source: U.S. Department of Commerce website
Two
"No technology in the history of human civilization can match the astonishing improvement in computing power." Chris Miller, author of The Chip Wars, writes that if planes were improved at the same speed as chips, they would now fly several times faster than the speed of light.
The fabs responsible for semiconductor manufacturing are the most expensive in the world, carrying out the most complex manufacturing ever. At the same time, the chip industry is a global, interdependent network with extremely long and complex supply chains. This industry nature makes chip production highly vulnerable to the export control regulations being implemented by the Biden administration.
In this industry, only a handful of companies can compete at the cutting edge, conducting research that costs billions of dollars and decades. By pinching the bottleneck in the industry, the Biden administration is trying to prevent China from mastering the future of chip technology, which will have an impact far beyond military competition and threaten China's economic growth and technological progress.
"We've said that China shouldn't make progress in some key technology areas." Emily Kirkress, a senior fellow at the Center for a New American Security and a former U.S. trade official, said, "These areas happen to be the drivers of future economic growth and development." ”
Jack Dongara, director of the Innovation Computing Lab at the University of Tennessee, believes that people with the best supercomputers can do cutting-edge scientific research. According to the lab, as of June, China held 134 seats in the top 500 global supercomputers, and the United States accounted for 150. However, nearly all of the chips that power China's most advanced programs and institutions are inextricably linked to U.S. technology.
"The whole industry can only function if the U.S. is involved." "In every cutting-edge device, there are American tools, American design software, and American intellectual property," Miller said. ”
Since 2019, the United States has begun to have full control over the global semiconductor market. At the time, the Trump administration added Huawei to the Entity List, after which the United States found its dominance in the semiconductor supply chain to be a powerful lever that had not yet been exploited:
3 US-based companies dominate the chip design software market, which is used to configure billions of transistors for new chips; The market for advanced chipmaking tools is similarly concentrated, with only a handful of companies that can effectively monopolize important machines or processes, almost all of them American or dependent on American components. Every step of the supply chain runs through the United States, its allies, or Taiwan, all in the U.S.-dominated chip ecosystem.
In May 2020, the Trump administration further tightened its policies, subjecting Huawei to the "Foreign Direct Product Rule." This is a comprehensive practice of "extraterritoriality": even if a commodity is manufactured and shipped outside the United States, has never entered the U.S. border, and its final product does not contain U.S.-origin components or technology, it can still be considered a U.S. product.
This rule makes all semiconductors in the world subject to U.S. law, because all chip foundries in the world use U.S. equipment to some extent, even if you have only one U.S. device in your foundry, the wafers on the entire production line are tied to the United States.
Huawei is sanctioned by the United States. Source: Reference message
Three
"The Trump administration is targeting businesses, and the Biden administration is targeting industries." Allen said the impact of the new rules on the semiconductor supply chain is unprecedented: China cannot only import the most advanced chips, but also cannot obtain the investment needed to develop advanced semiconductors and supercomputers on its own, or even obtain U.S.-origin components, technology and software that can be used to produce semiconductor manufacturing equipment.
"It's a 'one-pot end' strategy." Under the new rules, Wolf, a former BIS official, all "U.S. persons" (including businesses, individuals, green card holders, permanent residents) are restricted from engaging in any activity that supports the production of advanced semiconductors in China, including repairing Chinese fab equipment, providing advice, and even authorizing deliveries to Chinese semiconductor manufacturing companies.
Such actions are a "diplomatic gamble". If Japan, the Netherlands and other places continue to sell to China, the controls will be basically useless. But at the end of January this year, the Biden administration reached an agreement with Japan and the Netherlands to implement similar controls; Taiwan also signed the agreement.
The United States' control of Taiwan is strategic: Taiwan accounts for 2/3 of the world's annual semiconductor production, of which 90% are the most advanced semiconductors; TSMC is the most valuable listed company in Asia and the world's most advanced semiconductor manufacturer, accounting for 1/3 of the total global chip foundry manufacturing market. Therefore, for the United States, Taiwan, which plays a key role in global chip manufacturing, is indispensable.
Strategically, U.S. policymakers view U.S. dependence on Taiwan as an "unacceptable risk." They have been pushing TSMC to build more fabs in the United States and bring more semiconductor manufacturing closer to the U.S. shores.
In order to ensure that the control measures are effective, the US industry must at least in the short term take the "self-destructive 800" measure to cut off a part of the lucrative Chinese market. For China, the battle for technological autonomy may bring unprecedented challenges.
Jason Masini, former deputy director of the White House Office of Science and Technology Policy, said: "It's easy for political leaders or business executives to think that with enough money and technical staff, they can solve this problem, but extremely complex scientific problems and global supply chains are difficult to port. In a way, that is to replicate the entire human civilization. ”
But if any country can meet such a challenge, it is probably China. While export controls will deal a major blow to China's advanced chipmaking capabilities for the foreseeable future, they could ultimately spur long-term growth. If a large portion of China's $400 billion in annual chip imports is diverted domestically, its domestic chip companies may eventually catch up.
Taking Huawei as an example, although its profits in 2022 have fallen sharply, its revenue has increased slightly, and the Harmony operating system developed by Huawei has more than 330 million installed units. Without U.S. chips and technology, Huawei was forced to redesign and manufacture all of its flagships to ensure they did not contain American components. At present, Huawei is still one of the largest enterprises in the world in R&D investment, and it is single-handedly driving the development of the entire domestic supply chain in China.
Huawei recently claimed a major breakthrough in electronic design software for the production of advanced semiconductors, although there is still a large gap compared with the United States, which has further positioned Huawei ahead of other Chinese companies. If Huawei succeeds, Huawei may break through U.S. sanctions and be stronger and more resilient than ever before.
Ultimately, controls cannot contain China once and for all, they are a delaying tactic designed to give the United States and its allies time to expand their leadership in key technologies. Matt Axelrod, assistant secretary of commerce in charge of export enforcement, said: "Our goal is to stop as much as we can. ”
Source/The New York Times
Edit/point So, Ayanami