Straight News: Mr. Chen, is the US announcement of the extension of tariff exemptions for hundreds of Chinese goods a prelude to the Sino-US trade friction? Will China and the United States reconcile?
Special Commentator Chen Bing: The China-US trade friction has not turned the page, and the two sides are still dominated by competition. We're going to look at what the Chinese goods that the U.S. has extended its tariff exclusions for, including industrial parts such as pumps and motors, some auto parts and chemicals, bicycles and vacuum cleaners, and medical products such as masks, examination gloves, and hand wipes related to COVID prevention. Compared with chips and computers, these products are low-end products and will not affect the US strategy of containing China, so the exemption period has been extended from December 31 this year to May 31 next year. China's Ministry of Finance also previously announced the extension of tariff exemptions for some U.S. imports. This kind of situation of you extending and I will also extend shows that the Sino-US trade friction is still continuing, but some goods are temporarily exempt from tariffs, and they may have to be increased after expiration. The United States does not directly cancel the tariff valve for these low-end products, it is still there and will be activated at any time, which shows that China and the United States are still dominated by competition. If we look at the restrictions imposed by the United States on high-end products, such as setting new restrictions on the export of high-end chips and chip production equipment to China in the name of "national security", and mobilizing the Netherlands, Japan, South Korea, and other countries to jointly impose restrictions on China, all of them show that the economic, trade, and technological competition between China and the United States is still fierce and far from the level of reconciliation. The economic, trade, and technological competition between China and the United States is likely to continue for several years, and now both sides are exempting some tariffs, but they are only maintaining a minimum of trade exchanges, or reducing risks.
Straight News: Micron Technology of the United States and Fujian Jinhua of China ended a six-year dispute and reached a global settlement agreement, which is regarded as a "blockbuster reconciliation" between Chinese and American semiconductor giants, what do you think?
Special Commentator Chen Bing: The reconciliation between Micron Technology and Fujian Jinhua is a good example of coordination and conflict between Chinese and American companies, which is welcome. But to say that it is a "blockbuster reconciliation" may be an exaggeration. What can be called a major reconciliation of semiconductors? That is, the United States will no longer impose restrictions on the export of chips and chip technology and equipment to China, at least it will not interfere in the import and export of chips and technology between other countries and China. Some industry insiders know that because Micron Technology filed an intellectual property lawsuit against Fujian Jinhua in 2016, the U.S. Department of Justice included Fujian Jinhua in the "Entity List" in 2018 and imposed export controls on it, resulting in Fujian Jinhua investing $6 billion in the construction of plant and equipment, which was forced to stop before opening and lost the opportunity to develop in the field of memory chips. Otherwise, the current world memory chip field, after Samsung, Hynix, and Micron, may have the name of Fujian Jinhua, after all, China has a vast market.
Straight News: Why does Micron Technology want to reconcile with Fujian Jinhua after 6 years? Does it mean that the chip competition between China and the United States is changing?
Special commentator Chen Bing: The reconciliation between Micron Technology and Fujian Jinhua is itself the result of changes in the chip competition between China and the United States. First of all, one of the protagonists that led to the inability of Fujian Jinhua to start work was Micron Technology, and Micron was the driving force behind the US government's suppression of China's memory chip industry. In May this year, China imposed sanctions on Micron in accordance with the Cybersecurity Law, not allowing domestic critical information infrastructure operators to continue to purchase Micron products. Micron's performance has declined since the beginning of last year, and it is deeply in the red, and the revenue from Chinese mainland accounts for 14% of the total revenue, which is a large enough share. In addition to increasing investment of 4.3 billion yuan in Xi'an, it has reconciled with Fujian Jinhua in order to continue to develop in the Chinese market. Secondly, Fujian Jinhua is currently a chip foundry, and the chip technology is relatively backward, it is said that it is about three generations behind Samsung, and it is not a challenge to advanced memory chips. Again, this is perhaps the most worthy of observation, that is, the chip ban imposed by American chip companies on the US government has reached the point where it is unbearable, forcing American companies to make breakthroughs and see tricks to dismantle. In order to circumvent the U.S. chip ban and not lose the Chinese market, American companies, including Nvidia, have carried out "special supply policies" for the Chinese market. However, the US government's stricter ban is coming again, and the "special products" for the Chinese market will be restricted, which can only be "shrunk" again. Asking a company to develop different products will increase the cost, and the inability to provide the most advanced chips will make buyers lose interest. Micron's willingness to reconcile with Fujian Jinhua may be to exchange technology for the market, and it is also a choice that has to be made after the "special supply policy" is difficult to continue.
Finally, the chip ban in the United States has led to a boom in chip research and development in China, and the popularity and financial resources are concentrated in this field. Moreover, China has the key raw materials for manufacturing chips, and American companies will only feel the strong pressure from Chinese chip companies in the next few years. Therefore, for American chip companies, it is better to be good in the Chinese market. The reconciliation between Micron Technology and Fujian Jinhua may be based on such considerations.
Author丨Chen Bing, special commentator of Shenzhen Satellite TV's "Live Hong Kong, Macao and Taiwan".
Editor丨Duan Xiaoqing, editor-in-chief of Shenzhen Satellite TV Direct News
Typesetting丨Chen Pianpian, Shenzhen Satellite TV direct news editor