The US-China chip struggle continues to be escalating

This story first appeared in China Report, MIT Technology Review’s e-newsletter about know-how developments in China. Sign up to obtain it in your inbox each Tuesday.

The temperature of the US-China tech battle simply retains rising.

Last week, the Chinese Ministry of Commerce introduced a brand new export license system for gallium and germanium, two parts which can be used to make pc chips, fiber optics, photo voltaic cells, and different tech units.

Most specialists see the transfer as China’s most important retaliation towards the West’s semiconductor tech blockade, which expanded dramatically final October when the US restricted the export to China of probably the most cutting-edge chips and the tools able to making them. 

Earlier this yr, China responded by placing Raytheon and Lockheed Martin on an inventory of unreliable entities and banned home corporations from shopping for chips from the American firm Micron. Yet none of those strikes might rival the worldwide influence of the gallium/germanium export management. By placing a chokehold on these two uncooked supplies, China is signaling that it, in flip, could cause ache for the Western tech system and push different nations to rethink the curbs they placed on China.

But as I reported yesterday, China’s new export controls could not have a lot long-term influence. “Export management is just not as efficient if the applied sciences can be found in different markets,” Sarah Bauerle Danzman, an affiliate professor of worldwide research at Indiana University Bloomington, advised me. Since the know-how to provide gallium and germanium could be very mature, it gained’t be too onerous for mines in different nations to ramp up their manufacturing, though it should take time, funding, coverage incentives, and possibly technological enchancment to make the method extra environmentally pleasant.

So what occurs now? Half of 2023 is now behind us, and despite the fact that there have been just a few diplomatic occasions exhibiting the US-China relationship warming up, like journeys to China made by US officers Antony Blinken and Janet Yellen, the tensions on the technological entrance are solely getting worse.

When the US instituted its chip-related export restrictions in October, it wasn’t clear how a lot of an influence they’d have, as a result of the US doesn’t management the whole thing of the semiconductor provide chain. Analysts said one of many largest excellent questions was the extent to which the US might persuade its allies to affix the blockade. 

Now the US has managed to get the important thing gamers on board. In May, Japan introduced that it’s limiting the export of 23 kinds of tools utilized in quite a lot of chipmaking processes. It even went additional than the unique US guidelines. The US restricted the export of instruments for making probably the most cutting-edge chips—these of the 14-nanometer era and below. Japan’s restrictions prolong to older, less-advanced chip generations (all the best way to the 45-nanometer degree), which has the Chinese semiconductor industry worried that manufacturing of fundamental chips utilized in on a regular basis merchandise, like automobiles, can even be affected.

At the top of June, the Netherlands adopted swimsuit and introduced that it’ll restrict the export to China of deep ultraviolet (DUV) lithography machines used to sample chips. That’s additionally an escalation of the earlier guidelines, which since 2019 had solely restricted export of probably the most superior excessive ultraviolet (EUV) lithography machines.

These increasing restrictions probably prompted China to take a web page from its enemies’ playbook by instituting the controls on gallium and germanium. 

Yellen’s go to final week reveals that this back-and-forth retaliation between China and the US-led bloc is just not ending anytime quickly. Both Yellen and the Chinese leaders expressed their concern on the assembly concerning the different facet’s export controls, but neither mentioned something about backing down. 

If extra aggressive actions are taken quickly, we might even see the tech struggle increase out of the semiconductor discipline to contain issues like battery applied sciences. As I defined in my piece on Monday, that’s the place China would have a bigger benefit.

Do you imagine the technological tensions between the US and China will worsen from right here? Let me know your ideas at [email protected].

Catch up with China

1. Tesla is shedding some battery manufacturing employees in China because of the cutthroat electric-vehicle worth competitors within the nation. (Bloomberg $)

2. China’s high EV maker, BYD, is constructing three new factories in Brazil to make batteries, EVs, and hybrid automobiles. They will likely be constructed on the location of an previous Ford plant. (Quartz)

3. Shenzhen, the town typically seen because the Silicon Valley of China, is going through inhabitants decline for the primary time in many years. (Nikkei Asia $)

4. Five folks have been arrested by the Hong Kong police for involvement in creating an internet buying app to map out native companies that assist the pro-democracy motion. (Hong Kong Free Press)

5. There’s now an official app for studying find out how to do journalism in China—with on-line programs taught concerning the Marxist view of journalism, why the party wants to manage the press, and find out how to be an “influencer-style journalist.” (China Media Project)

6. During her go to, Yellen sat down for dinner with six feminine Chinese economists. Then they have been known as traitors on-line. (Bloomberg $)

7. A brand new examine says a quickly rising variety of scientists of Chinese descent have left the US since 2018, the yr the US Department of Justice launched its “China Initiative.” (Inside Higher Ed). An investigation of the initiative by MIT Technology Review printed in late 2021 confirmed it had shifted its focus from financial espionage to “analysis integrity.” The initiative was formally shut down in 2022.

8. Threads, the brand new Twitter competitor launched by Meta, hit the highest 5 on Apple’s China app retailer despite the fact that Chinese customers need to entry the platform with a VPN. (TechCrunch)

Lost in translation

On July 5, the well-known Hong Kong singer CoCo Lee died by suicide after having battled melancholy for a number of years. The tragic incident once more highlighted the significance of melancholy remedy, which is commonly inaccessible in China. As the Chinese publication Xin Kuai Bao reported, fewer than 10% of sufferers recognized with melancholy in China have acquired any form of medical remedy. 

But lately, as a number of patents for standard Western brand-name melancholy medicine have expired, Chinese pharmaceutical corporations have ramped up their manufacturing of native generic alternate options. There’s additionally a fierce race to invent home-grown therapies. Last November, the primary domestically designed melancholy drug was authorized on the market in China, marking a brand new period for the business. There are 17 extra home therapies in trials proper now.

One thing more

Every time high-profile US guests come to China, Chinese social media all the time fixates on one factor: what they ate. Apparently, Janet Yellen is a fan of the wild mushrooms from China’s southwest border, which her group ordered 4 occasions in a single dinner. The particular mushroom, known as Jian Shou Qing in China, can be identified for having psychedelic results if not cooked correctly. Now the restaurant is cashing in by providing Yellen’s dinner decisions as a set, branded the “God of Money” menu, according to Quartz.