USA and China towards an exacerbation of the chip war
Don't be under any illusions. Who thinks that the phone call on Tuesday 2 April between Joe Biden and Xi Jinping has suddenly solved all the problems in relationships between United States and China he is very wrong. Indeed, beyond the divergent positions on various international dossiers, we can already glimpse a new chapter on the horizon in the commercial and technological war that has involved the two powers for several years now. The key word is once again: microchip.
The United States is drawing up a list of Chinese chip factories advanced who were prevented from receiving key tools. And the list could be made known in the next two months, with an almost obvious tightening of anti-Chinese measures. In 2022, the Commerce Department has already barred US companies to ship equipment to Chinese factories that produce advanced chips, but the new step will make it easier to locate them. Beijing is obviously not happy. A spokesperson for the Chinese embassy in Washington said the United States should “stop overextending the concept of national security and abusing state power to suppress Chinese companies.”
It's not over. In fact, the United States is also asking allied and partner countries to prevent the companies nationals to provide assistance to Chinese customers on certain tools, especially the most advanced ones, for chip production. The rules that remain in force in other countries such as the Netherlands, Japan and South Korea do not yet provide the same level of restrictions already introduced in the USA.
These are not three countries like others, but three crucial hubs for the production of microchips. South Korea is second only to Taiwan in the manufacturing and assembly sector, but the giant Samsung produces some of the most advanced chips in the world. The Netherlands, on the other hand, has a sort of monopoly regarding ultraviolet lithography, one of the crucial steps for the creation of semiconductors. American officials want South Korea to limit the flow of high-end memory and logic chip-making equipment and technologies to China.
The pressure on the allies and the Chinese retaliation
Washington is now asking the governments of these countries to follow its measures in all respects, while encountering some resistance. There South Korea has so far been rather timid, because it fears the potential sanctions that export controls could unleash from Beijing on national giants such as Samsung and SK Hynix that still operate in China, which remains Seoul's main trading partner.
Mark Rutte, Dutch Prime Minister, heard directly from Xi last week, when he was on a trip to Beijing. “The Chinese people also have legitimate development rights, and no force can stop the pace of China's scientific and technological progress” said Xi. In January, the Netherlands blocked ASML, the giant that dominates advanced ultraviolet lithography machinery, from exporting to China some of its deep ultraviolet lithography systems, used to make slightly less expensive chips. advanced.
Beijing criticized the Dutch government's move, urging the Netherlands to “uphold an objective and fair position and market principles” and to “protect the shared interests” of the two countries and their companies. “Create scientific and technological barriers and disrupt industrial and supply chains it will only lead to divisions and clashes“, Xi told Rutte.
But on the other hand the American pressure continues and soon i Netherlands, like Japan and South Korea, they may be forced to give in. From the phone call with Biden it is clear that China will react. “If the United States is willing to carry out mutually beneficial cooperation and share the dividends of China's development, China's door will always be open; if the United States insists on suppressing China's high-tech development and depriving China of its legitimate right to development, we will not stand by and watch.”
Translation: there will be retaliation. The rare earths and mineral resources in which China is very rich immediately come to mind, fundamental not only for the production of chips but also for the production of electric vehicles. Getting stuck in the middle of the dispute risks ending up there the European Unionwith a “risk reduction” strategy which for Beijing is a sort of “disguised decoupling”.
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