US-China ‘Chip Cold War’ – Exploring Four Key Questions as the Battlefront Expands
Just over a week ago, the United States (US) asked chipmaker Nvidia to deliver its cutting-edge artificial intelligence (AI) processors to China.
This is neither the start nor perhaps the end of what appears to be a US-China tech war or, perhaps, a “chip cold war”.
In this article, we will unpack this development through the question-answer format.
Those new to the world of semiconductors, chips and supply chain puzzles can watch (first 10 minutes) and (first four minutes) a video for a quick overview.
Then, here are the questions to consider:
Are security concerns the main reason for the US action, or is it rather the fear of losing technological dominance to China?
In 2018, a said Chinese spy chips came from US companies like Amazon and Apple. The companies had vehemently denied the claim.
While it is data security that would impact the ordinary person, Indian defense analyst Maroof Raza went further, writing about possible breaches of US and UK security systems due to Chinese chips.
for The TribuneRaza referred to the shock propulsion failure of the US Navy’s guided-missile destroyer, USS Zumwalt – commissioned at a cost of $4.4 billion – in the Panama Canal in November 2016.
“A thorough investigation led the United States to identify ‘Chinese chips’ – microchips made by the PLA – which Americans had to buy in the tens of thousands to reduce manufacturing costs,” Raza wrote.
Curiously, the British naval destroyer HMS Duncan suffered a similar propulsion failure only two days after the incident with the American naval destroyer. There was apparently a Chinese chip connection here too.
As with most strategic news, we may never know the truth. But it’s clear that the United States has been concerned about chip security for some time. (more background)
Is this the first time the United States has openly competed with another country for technical dominance in semiconductors?
Technologically, both in terms of overall market share and most advanced capabilities, the United States has not been shy about openly labeling China a threat.
An example: the title of the White House issued under the Chips and Science Act includes the words “Counter China”.
However, China hasn’t been America’s only technological rival in the past. The United States has also faced Japan before. (The background to this rivalry as well as US concerns about losing technological ground to China can be found .)
What are some examples of restrictions that the United States has already imposed on Chinese companies or, more generally, to do business with China?
Here are some basic readings or references that should give the reader an idea, although this list is not exhaustive.
– A month from May 2019 provides a detailed history of how Chinese telecommunications equipment maker Huawei “became America’s No. 1 tech enemy,” effectively leading to a ban.
– In December 2020, the United States added China’s largest foundry and the world’s fifth largest, Semiconductor Manufacturing International Corporation (SMIC), to its export blacklist. (After )
– The United States initially limited the extreme ultraviolet (EUV)-based lithography equipment needed to make the most advanced chips (below 7nm). Later, the deep ultraviolet (DUV) based lithography equipment needed for mature nodes met the same fate. (Detailed report )
– Chip law and science matters — Companies that receive the funding must promise not to increase production of advanced chips in China.
– On August 12, the US Department of Commerce implemented restrictions on Electronic Design Automation (EDA) tools (see definition). A detailed analysis of what has been called the “next battlefront in the US-China chip war” can be found.
– And now come the “final” restrictions on Nvidia.
How has China reacted to restrictions over the years?
Some examples are as below, although these may not represent the latest status:
– ZTE, a Huawei associate, reportedly resorted to “legal means to fight against US restrictions”, at least according to the Chinese national English-language newspaper .
– Huawei has built fabs.
– SMIC and would have even made a 7nm (how they did it is explained).
– China reportedly has its own “government-sponsored EDA tools” ().
– There have been efforts by China to manufacture its own lithography equipment as well.
– Even on the graphics processing unit (GPU) front, there are reports like and that China could catch up quickly.
Analyzes like and hint at the possibility of a global resurgence of China to achieve greater chip self-sufficiency.
Put simply, the US could end up “slowing down” China’s progress in this chip cold war, not much more.