In Its Tech War With America, China Brings Out The Big Guns

In the technological battle between America and China, the Western power has recently been more aggressive. Last year, President Joe Biden's administration severely restricted Chinese AI firms' access to American technology. America has also convinced its allies to follow suit. On June 30, under pressure from the White House, the Netherlands announced it would limit the sale of some chip-making equipment to China: ASML , the Dutch maker of the world's most advanced lithography machines, will now only sell to customers Chinese at low prices. . . It manufactures advanced chip drilling machines. The Wall Street Journal reported on July 4 that the US government is preparing to restrict China's use of US cloud computing services, allowing Chinese AI companies to bypass previous US sanctions by using the processors cutting-edge cloud service provider on their own chips. . by themselves.

So far, Chinese Communist authorities have responded to this deluge of nonsense with a relatively weak address: In May, they banned some Chinese companies from using Micron memory chips in Idaho. But on July 3, it pulled out an even bigger gun and announced it would limit the export of gallium and germanium, two metals used in cutting-edge semiconductors.

The new export controls will go into effect on August 1. Unlike the micron ban, which has little impact on the revenues of US chip makers, the restrictions on chip sales could extend to the global chip industry. China supplies about 80% of the world's gallium and germanium. According to investment bank Jefferies, America can buy up to 50% of its germanium from China.

A blanket ban could affect the production of a wide range of existing products, including chips, displays, fiber optic devices and solar panels. It can also hinder the development of next generation technologies. Chipmakers hope to gradually replace the silicon used in most processors with gallium nitride or silicon carbide, which can withstand higher pressures. Gallium and germanium may also be useful in electric cars, nuclear power plants, and other devices, including weapons.

China's decision comes at a delicate moment in Sino-US relations. Despite the related technological maneuvers, both sides have also spoken of a stabilization of their relationship in recent months. US Treasury Secretary Janet Yellen was expected to be in Beijing for interviews at the time of publication. The visit follows a meeting of Chinese and US trade ministers in Washington in May, as well as US Secretary of State Antony Blinken's visit to China in late June, where he had a brief meeting with Chinese leader Xi Jinping and others. high-level officials. Officials.

Chinese hawks in Washington might argue that China's bite is weaker than its bark. Like some US restrictions, the new Chinese rules will require exporters to obtain government permits and export licenses. The Chinese government can help them generously: after all, a blanket ban would hurt Chinese exporters who sell so much germanium and gallium to American customers. But Mr. Biden must make no mistake. China is showing that it will not back down and can fight back. Expect more balance towards each other. ■

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