China and the U.S. are Changing the World of the Semiconductor Industry

I am pleased to share with you selected articles from my works and analyses on China and the United States Relationship in the area of High Tech and more recently in the Semiconductor industry.

I worked extensively in China and on China Development since my graduate studies in France within one of the most prestigious universities in France: Institute d’Etudes Politiques de Grenoble – SciencePo at the University of the Alps, Grenoble, France.

Here below is an extract of my research on China Telecom and High Tech development in the late nineties that was published in London in 2001.

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Attention professionals interested in the U.S. and China relations in the field of high tech! I have published several insightful articles that you won’t want to miss with the few of them I have included in the present articles as support of my analysis and demonstration.

So, gain valuable knowledge on this topic and stay up-to-date by checking out my recent publications.

Check it out and let me know your thoughts on the following Article presenting the reasons and the results expected from decisions taken by the authorities of Washington and Beijing as an exchange of restrictions on economic and industrial sectors that are related to or supplying the semiconductor industry.

Based on previous articles written and published by Said El Mansour Cherkaoui, the present analysis shed light on the most recent events and interactions between the U.S. and China that culminated even in the decision of China to impose Export Controls and restrictions on minerals and primary resources that are effectively essential to the production of many communication and high tech products.

An equivocal tension continued to rise between the United States and China since the mid-nineties, It has been evolving from espionage and diverting business and documents to the ban of Huawei and other Chinese companies.

Is this Global Huawei or China Global Way?

 Said El Mansour Cherkaoui  June 11, 2019 – US and Huawei Update on US – China High Tech Adversity Semiconductor Hurdle in US-China Relation March 30, 2023  Said El… Read More

The United States and China frictions and rivalries were even called during the Trump administration, Tech War.

The U.S. administration has encouraged European and Allied countries not to use the technology proposed by Huawei as the 5G and other related products supplied by Chinese firms are considered connected to the military and the Chinese government while operating within the communication and high-tech industries.

More details are in the articles quoted and in the following lines of this analysis. 

United States of America and China: High-Stakes Tech War Game

 Said El Mansour Cherkaoui  October 10, 2022 – Tech War – US-China Proxy Tech Conflict More US semiconductor restrictions loom for China. The United States government is… Read More

First Point:

– Nothing Stops Progress and China Chip-Maker SMIC is Copying Nike: Just Do It and Keep Doing it and building it, they will come

Semiconductor Manufacturing International Corp (SMIC), China’s largest chip maker, has started construction of its new 12-inch wafer fab in Tianjin, even as the northern city remains under a partial lockdown to battle the latest wave of COVID-19 infections.

The project, with a total investment of US$7.5 billion, began construction last Saturday, according to a report by Tianjin Daily, the city’s official newspaper. Tianjin has been under partial lockdown to combat COVID-19 since late August.

SMIC said on August 27 that it had entered into a cooperation framework agreement with two local government authorities in the Xiqing district to build the new fab.

The latest coronavirus outbreak is believed to have started at a football game in the city, where two-thirds of participating players were infected, according to local authorities. Up to 252 cases of the Omicron variant of the virus have been traced to a shopping center in the Xiqing district, marking the largest transmission chain during the latest wave.

The Biden administration contemplates a Huawei-caliber ban on China’s access to technology that fuels its supercomputing, data center, and AI industrialization. The sweeping export ban will include all global companies that procure US technology, software, or equipment in their semiconductors.

Chinese entities potentially affected by this ban will go beyond surveillance and military operations affecting companies such as Alibaba, traffic control terminals, and universities that use supercomputers.

Second Point:

China’s warning to the U.S. and Europe, You cannot touch our Sensitive Primary Resources without a License

No more Gloves in China – U.S. High Tech and Semiconductor Commercial Sparring

China says it will impose export restrictions in August on two minerals — gallium and germanium — and over a dozen related materials widely used in the production of semiconductors, solar cells, electric vehicles, and other high-tech industries. The move could potentially cause more disruption to global supply chains,” coming after the U.S. and Europe restricted chip exports to China.

  • China makes up 60% of the world’s germanium and 80% of gallium, according to the Critical Raw Materials Alliance.
  • Exporters of these materials will need to apply for “special permission” to ship them out.
  • Treasury Secretary Janet Yellen is heading to China this week to meet with senior officials.

Third Point:

The U.S. and Europe are Consolidating the Limitation on Transfer of Advanced Technology

China is seeking the right to choose who can access its raw material that is necessary for the high-tech industry

The protection of national interest and national security is moving from Semiconductor friction to raw material preservation and restriction.

China Facing U.S. Tech Restrictions

 Said El Mansour Cherkaoui  September 18, 2022 – Editor Desk – Said El Mansour Cherkaoui – September 18, 2022 Synopsis: Growth is a concept defended by the international Western economic… Read More

U.S. National Security and Foreign Investment in the Intelligence of Technology

 Said El Mansour Cherkaoui  September 16, 2022 – September 15, 2022 “This Executive Order (E.O. or the Order) is the first E.O. since CFIUS was established in 1975… Read More

The U.S. last October [2022] imposed some of the most stringent curbs yet on chips and chip-making equipment, requiring chip companies to seek licenses from the Commerce Department to sell some of their most advanced products to Chinese customers — underneath its 139 pages of dense bureaucratic jargon and minute technical detail — amounted to a declaration of economic war on China.

The BIS cited China’s use of advanced semiconductors in their military as a main reason for the new export bans. Semiconductor chips have become central to the Bureau’s work.

The magnitude of the act was made all the more remarkable by the relative obscurity of its source. One of 13 bureaus within the Department of Commerce, the smallest federal department by funding, B.I.S. is tiny: Its budget for 2022 was just over $140 million, about one-eighth the cost of a single Patriot air-defense missile battery. The bureau employs approximately 350 agents and officers, who collectively monitor trillions of dollars worth of transactions taking place all around the world.

The US is rapidly ramping up efforts to try to hobble China’s progress in the semiconductor industry – vital for everything from smartphones to weapons of war. Chips are the lifeblood of the modern economy, and the brains of every electronic device and system, from iPhones to toasters, data centers to credit cards. A new car might have more than a thousand chips, each one managing a different facet of the vehicle’s operation. Semiconductors are also the driving force behind the innovations poised to revolutionize life over the next century, like quantum computing and artificial intelligence. OpenAI’s ChatGPT, for example, was reportedly trained on 10,000 of the most advanced chips currently available.

In October, Washington announced some of the broadest export controls yet – requiring licenses for companies exporting chips to China using US tools or software, no matter where they’re made in the world.

Washington’s measures also prevent US citizens and green card holders from working for certain Chinese chip companies. Green card holders are US permanent residents who have the right to work in the country.

It is cutting off a key pipeline of American talent to China which will affect the development of high-end semiconductors.

In August 2022, President Joe Biden signed the $280 billion CHIPS and Science Act into law. Now, the Commerce Department, led by Secretary Gina Raimondo, is responsible for distributing billions in federal funds with the goal of making the U.S. a global leader in semiconductor production.

Earlier this year, the department released rules for chipmakers to access the funding. Guardrails include requiring companies seeking $150 million or more to ensure affordable child care for workers; a preference for companies that will refrain from stock buybacks; and barring companies receiving funding from making new high-tech investments in China.

“Marketplace” host Kai Ryssdal spoke with Raimondo at the Commerce building in Washington, D.C. The following is an edited transcript of their conversation. 

Additional Articles Written by saidcherkaoui@triconsultingkyoto.com

Semiconductor Conducting the New US-China Relationship

 Said El Mansour Cherkaoui  June 29, 2023 – Publications on Semiconducteur Conducting the New US-China Relation by Said El Mansour Cherkaoui – Said Cherkaoui – Said El Mansour… Read More

Semiconductor Hurdle in US-China Relation

 Said El Mansour Cherkaoui  March 30, 2023 – Editor Desk – September 18, 2022 saidcherkaoui@triconsultingkyoto.com – https://triconsultingkyoto.com USA and China: Tech War Game Without Warranty Synopsis: Growth is a concept defended… Read More

Competitive Advantage and Strong Position in the Supply of Strategic Raw Materials

China Issued Export License and Controls of the Final Destination and Users

China is by far the world’s biggest gallium producer and a leading global producer and exporter of germanium, according to the U.S. Geological Survey.

Gallium and germanium will be subject to export controls starting August 1 “to protect national security and interests,” China’s Ministry of Commerce said in a statement Monday, July 3, 2023

The ongoing Chip War has taken a new turn as China has decided to impose export control on two metalloids, gallium, and germanium, which are crucial for semiconductor manufacturing.

Exporters of these raw materials will need to apply for “special permission from the state” to ship them out of the country, the statement said.

The measure is the latest development in the global battle to control chipmaking technology, which is vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing.

Beijing’s move comes just days after the Dutch government announced new restrictions on exports of some semiconductor equipment, drawing an angry response from Beijing, according to Reuters. The new rules mean that ASML (ASML), Europe’s largest tech firm, will need to apply for export licenses for products used to make microchips.

Japan and the United States have also taken steps to limit Chinese companies’ access to chips and chipmaking equipment. Italy last month imposed several curbs on Pirelli’s biggest shareholder, Sinochem, to block the Chinese government’s access to sensitive chip technology.

This decision comes in response to Japan banning 23 categories of chip-making materials from export to China in the past few months. The Dutch government is also planning to increase the export ban on lithography machines, which will make it impossible for China to produce chips below 28NMs domestically.

It is worth noting that China is home to 80-85% of the world’s known gallium reserves, making this response a logical one. As for germanium, the US owns the largest deposits worldwide, while China comes in second, with 41% of the known deposits. However, the US has been protecting its germanium as a critical material for national defense and stopped mining it since 1984.

China’s announcement of the new export curbs comes on the eve of a visit by US Treasury Secretary Janet Yellen to Beijing from July 6 to July 9. Yellen will meet with senior Communist Party officials, according to a statement from the Treasury.

Today 9/1/2023, the U.S. Department of Commerce celebrates the anniversary of the CHIPS & Science Act which is a vital part of President Biden’s national strategy of Investment and technological development … the rest can be viewed in the following video:

More Readings on China – U.S. Semiconductor Industry by Said El Mansour Cherkaoui

US – China: High Tech Competition and Geo-Political Antagonism

 Said El Mansour Cherkaoui  December 19, 2022 – On a diplomatic trip to Taiwan as tensions with #Beijing are at their highest, US Speaker of the House of… Read More

U.S Economy: Trends and Variations

stock exchange board

 Said El Mansour Cherkaoui  November 23, 2022 – The U.S. has technically been out of money since it hit the debt ceiling on Jan. 19. So what happens… Read More

Bibliographical Sources on US-China Dispute in Semiconductor Industry

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