US-China ‘chip war’ intensifies

While closely monitoring the evolution of chip technologies, which hold a very important place for the economic power, security and competitiveness of countries, the tension between the US and China continues to increase.

While China aspires to be the major player in semiconductor technology and chip production, the US seeks to maintain its technological superiority and pioneer the chip war by hindering China’s economic and technological development.

In the chip and semiconductor industry, which reached a volume of $555 billion in 2021, the market is expected to surpass $1 trillion by the 2030s. So while chip wars are critical in terms of international trade, technology transfer and global competition, also have strategic importance in terms of economic growth, employment and security of countries.

Focusing on the semiconductor industry for many years, China aims to play a major role in 10 technology-intensive strategic sectors with its “Made in China 2025” plan in 2025.

According to said program, the administration of Beijing; it aims to become self-sufficient at a rate of 40 percent by 2020 and 70 percent by 2025 in the production of materials and parts important to aviation, space, and information technologies.

The chip war between the US and China has become more prominent since 2018. With the trade war launched by former US President Donald Trump against China in 2018, the competition between the two countries in the chip industry and semiconductor technologies has increased even more.

US BRINGS RESTRICTIONS ON CHINA

In 2019, the US imposed restrictions on targeting the Chinese tech giant Huawei. Saying Huawei poses a national security risk, the US administration has imposed sanctions on the company.

With the “Chip and Science Act”, which was adopted in August 2022 and includes comprehensive sanctions against China, the US aimed to connect the world’s semiconductor industry with its economic strategy. Announcing that they will comply with US law, the Taiwanese companies said they will comply with US export controls.

Taiwan’s leader Tsai Ing-wen said in a statement that the Chinese threat would unite other democracies by saying “democracy chip” when talking about chips. China, which sees Taiwan as its territory, reacted to this situation.

While Taiwan makes more than two-thirds of microchips, Taiwan Semiconductor Manufacturing Company (TSMC) is also the “world’s largest manufacturer” with a 56 percent share of global production.

RESTRICTIONS TRANSFERRED TO THE WTO

Due to US export controls and sectoral restrictions, China’s chip imports and exports decreased per unit, while they increased in monetary value due to the increase in chip prices.

China launched a dispute process at the World Trade Organization (WTO) at the end of 2022 over measures initiated by the United States to limit chip exports.

In a statement on the subject, China’s Ministry of Commerce said that “necessary legal steps have been taken under the WTO to raise our concerns and defend our legitimate interests,” while stating that the restrictions imposed by states States “threaten the stability of global industry supply chains.”

THE WAR OF USA AND CHINA LEAKS TO EUROPE

The United States imposed restrictions on technology exports to China in October 2022. The US reached an agreement with Japan and European countries to extend the embargo. The Netherlands and Japan have restricted sales of chipmaking equipment to China.

After the ‘chip war’ between the US and China spilled over into Europe, two deals in Europe were cancelled. The first of these was the cancellation of the sale of Dortmund-based chipmaker Elmos to China. The ministry claimed that China’s takeover of the chip factory could endanger public order and security in Germany.

The government told Netherlands-based Nexperia, owned by China’s Wingtech, to sell at least 86 percent of its stake in UK-based Newport Wafer Fab a year after it took over. factory control.

FOCUS WITH SOUTH KOREA VS CHINA

In the face of the long and escalating chip war and sanctions imposed on China, China made the decision earlier this week to unleash the war. China has banned Micron, the largest memory company in the US, from selling memory chips to China’s domestic industries.

After this decision, which increased long-standing tension between China and the US, shares of companies that could benefit from the decision rose, while China’s cybersecurity regulatory agency made statements about the decision.

In the institution’s statement, it was noted that Micron, the largest US memory chip maker, failed to pass the network security review. Following the decision, it was announced that it will impose a barrier to the main infrastructure operators that buy the company.

In a story published in the Financial Times before the ban decision was made, if China blocked Micron; It has been said that it has requested that its Korean rivals Samsung and SK Hynix not replace it.

South Korean Finance Minister Choo Kyung-ho, for his part, said in a statement in early May, following his visit to the United States, that they would work harder to establish a stronger alliance with the United States in the industry. of the chips .

NVIADA CEO WARNS: RISK OF GREAT DAMAGE

The CEO of Nvidia, the world’s most valuable semiconductor company, has warned that the US tech industry risks “enormous damage” from the escalating chip war between Washington and Beijing.

Making a statement a few days before Chinese authorities banned the Micron from the US, Nvidia CEO Jensen Huang said: “If we are deprived of the Chinese market, we have no other chance for it. There is no other China, there is only one China,” he said.

Huang told Britain’s Financial Times newspaper that the US tech industry risks “enormous damage” from escalating tensions between Washington and Beijing.