The Hague is hard at work on new trade rules that will further limit the export of chip technology to China. The rules could align with US efforts to lock China out of certain technologies. While it doesn’t sound voluntary, thinks Paul Verhagen, an expert in the field of high-tech competition at the Center for Strategic Studies in The Hague.
“It probably means you’re veering for Americans and you’re actually being forced into this conflict between China and the United States,” Verhagen said. ‘So we are no longer allowed to sell ASML machines in China. This means less revenue for ASML, less research and development for ASML and much more dependence on the US.’
Crude as that sounds, Verhagen argues that it’s the “harsh reality” from a geopolitical point of view. “In geopolitics you really only have the United States, and they’ve been applying these sanctions since 2018,” he continues. “They are the superpower and if they decide something needs to be done, it can be done for good or for evil. This is still a bit tame, but if they really want to, the Americans can destroy the entire supply chain.”
Cooperation
Verhagen points out that the decision was most likely made jointly with ASML. ASML and the US are not strategic rivals. Together they want to counter the adversary, in this case China,’ says Verhagen. “It’s difficult for ASML not to sell products in China, because a large part of their revenue comes from there. So Americans now have to find a way to fill this gap.”
He also believes that the deal also includes ASML being able to supply more to the US. “For example, there are new TSMC facilities under construction in Arizona, which will no doubt include ASML machines. So that supply chain is now being moved from Asia to the US. ASML machines are needed for that, so they might have gotten something out of it.’
Effect
Looking at the effect of the trade ban, Verhagen can conclude that China is indeed suffering a lot. “China’s economy is largely set up to integrate into the global economy and produce things cheaply,” he continues. ‘If they no longer get advanced Western technology, they have to develop it themselves. It’s not easy, because it requires resources, money and knowledge. And that knowledge is mainly in the West. Of course, there are many PhD students and students in China, but they ultimately go through Western educational institutions. So it’s quite difficult.’
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
