The Biden Administration is rushing through its last remaining weeks in the White House to tie up all possible ends before Donald Trump’s return to the US presidency. The most important is to guarantee Ukraine a solid position in the event of future negotiations with Russia, however, another of the ties that most worries Biden was woven by Trump himself in 2018. It is the trade war with China, since the The Democratic government has sought to strengthen Beijing’s access to the materials needed to make advanced semiconductors. However, the results are not as expected. Thus, Beijing has increased the volume of chip imports in the first eleven months of the year.
Between January and November 2024, China imported 501.47 billion chipsa year-on-year increase of 14.8%. Specifically, imports from mainland China, excluding special administrative regions such as Macau or Hong Kong, amounted to $349 billion, a year-on-year increase of 10.5%. This confirms Chinese expertise in overcoming the obstacles set by the White House, which even announced this year an increase in tariffs from 25% to 50% by 2025.
Therefore, Beijing has managed to increase imports of semiconductors in a year in which Washington has redoubled efforts to limit chip sales to Chinathrough new limitations on high-bandwidth processors as well as key technology made in the Netherlands.
ASML is located in the Netherlands, a company that manufactures lithography machines necessary for the development of cutting-edge semiconductors, and holds 82.9% of the international lithographic market. Amsterdam agreed to work on a plan to hinder China’s access to the technological development of chips, after the US threatened veiledly to impose unilateral measures on those allied countries that do not align with its protectionist policy towards China.
Specifically, Washington proposed in a veiled manner the application of the FDPR rule (Foreign Direct Product Rule, in Spanish), which gives the White House the possibility of vetoing the sale of any product that may contain the smallest piece of origin. in the US, including those manufactured abroad. This harsh tone was used by the Biden Administration in conversations with South Korea, one of the world’s leading chip manufacturers and owner of 60% of chip memory globally.
However, Seoul’s response was different, as it asked some kind of “carrot” to undertake a movement that goes against its interests, since China concentrates almost half of South Korean semiconductor exports. So much so that, in the first half of 2024, Samsung and SK Hynx sales to China increased by 82% and 122% respectively.
With all these strokes, the chromatic composition of the painting seems to evoke a movement already executed by China last year. In September 2023, sanctions were activated on the sale of ASML extreme ultraviolet lithography machines to China. Well, between January and August 2023, China imported a volume of chip manufacturing machines of Dutch origin worth $3.2 billion: 96.1% more than in the same period in 2022, when the value was 1.7 billion dollars.
On the other hand, China has also managed to increase chip exports between January and November of this year. Thus, semiconductor sales increased to reach a value of 144.7 billion dollars, a year-on-year increase of 18.8%.
Thus, between January and November, Beijing appears to have taken advantage of its ability to evade sanctions from the United States and its allies with the aim of gathering the technology necessary for the development of chips. China has proven to have numerous ways to circumvent these obstacles, benefiting from the black market in semiconductors that has emerged from these restrictions, and has used them to equip itself well before Donald Trump comes to power.
The tycoon’s return may take the trade war down a rockier path, given Trump’s exaggerated commitment to tariff pressure. The Biden Administration has so far opted for a dual strategy of tariffs and coordination with its allies to hinder China in the chip market, a plan that can be replaced, directly, by a unilateral tariff cannon.
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