Economic self-sufficiency was echoing messages during China’s two-session events. In particular, China insists on being self-sufficient in the production of microchips.
It is part of new digital geopolitics with US export restrictions on chips and technologies for thier produciton.
Chinese vice-premier Liu He recently announced the ‘China Chip Act’plans to boost the local chip industry via both state and market power for growth.
US Secretary of Commerce Gina Raimondo and Minister of Commerce and Industry for Government of India Piyush Goyal signed a Memorandum of Understanding on Semiconductor Supply Chain and Innovation Partnership.
The memorandum is intended to establish a collaborative mechanism between the two governments on semiconductor supply chain resiliency and diversification. It is further aimed at facilitating commercial opportunities and the development of semiconductor innovation ecosystems. Cooperation is also envisioned on matters related to research and development, and talent and skills development.
The Netherlands announced it would require licenses to export technologies, including Deep Ultra Violet (DUV) immersion lithography and deposition, produced by Dutch microchip equipment maker ASML.
ASML produces lithography machines that use lasers to print minuscule patterns on silicon as part of the manufacturing process of microchips.
According to Dutch Trade Minister Liesje Schreinemacher, this measure has been taken on national and international security grounds.
However, it is not a completely new development. Back in 2019, ASML stopped exporting to China the latest technology. US-China relations have already been impacted due to the restrictions imposed by the US on semiconductor exports from China, which the Netherlands’ decision will further exacerbate.
T-Head, the chip unit of Alibaba Group Holding, is investing in RISC-V chips to become self-sufficient in the semiconductor space due to US sanctions.
Alipay, a payment service under affiliate Ant Group, and T-Head are jointly developing RISC-V chips to enable secure payment functions on wearable devices.
T-Head has launched an initiative to encourage 150,000 developers to learn about and gain credentials on the open-source chip design architecture.
China is pushing RISC-V as a means of reducing dependence on foreign technologies. T-Head has already launched eight RISC-V processors and is bringing commercial applications into both consumer and industrial fields.
Issues with high costs and algorithm compatibility remain challenges for adopters of the architecture.
Figures from the Semiconductor Industry Association (SIA) show a further decline in the value of the global semiconductor industry, whose sales in January 2023 amounted to US$41.3 billion, down 5.2% from US$43.6 billion in December 2022 and down 18.5% from US$50.7 billion in January 2022. These figures are based on data collected by the World Semiconductor Trade Statistics (WSTS) organisation.
China’s sector shed 31.6% of its value in year-to-year sales (when comparing January 2022 to January 2023). Sales also decreased in the Americas by 12.4%, while in Asia Pacific (excluding China and Japan) they went down by 19.5%. Chip markets in Europe and Japan kept expanding by 0.7% and 0.9% respectively, in year-to-year sales.
‘Despite record-high sales in 2022, the global semiconductor market cooled considerably during the second half of the year, and that trend continued during the first month of 2023,’ said John Neuffer, SIA president and CEO. He further added: ‘The semiconductor market remains strong due to the ever-increasing role of chips in powering the critical technologies of today and tomorrow.’
Japan and the Netherlands have reportedly joined the USA in the attempt to limit China’s access to minerals used to create advanced computer chips.
The deal represents a significant victory for Washington in its campaign to halt China’s emergence as a technological giant. It is predicted that Dutch ASML, one of the few companies worldwide capable of producing the printers needed to manufacture high-end semiconductors, will significantly reduce some of its advanced microchip printing equipment sales. The same limitations are presumably in place in Japan for companies like Nikon that make DUV equipment.
The US Department of Commerce’s Bureau of Industry and Security (BIS) announced new restrictions on the export of advanced US technologies to Chinese entities. The Bureau added 36 new entities to the Entity List, meaning that they will be subject to strict licence requirements significantly restricting their access to commodities, software, and technologies subject to the US Export Administration regulations. Among these 36 entities, 35 are primarily located in China and 1 in Japan (but it is a subsidiary to a Chinese entity). The US government argues that these entities were found ‘to be acting contrary to the national security or foreign policy interests of the United States)’ for the following reasons:
In a second rule issued on the same day, BIS:
Commenting on the two rules, the Chinese government expressed opposition to the addition of the 36 entities to the export controls list, noting that it ‘will take necessary measures to firmly safeguard the legitimate rights and interests of Chinese companies and institutions’. At the same time, it welcomed the removal of the 25 entities from the unverified list.
The third ministerial meeting of the EU-US Trade and Technology Council (TTC) was held on 5 December 2022 in Washington, DC, USA. During the meeting, the two parties:
These and other commitments and initiatives are outlined in the joint statement issued at the end of the meeting.
The US Department of State and the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions against the global Russian military supply chain.
The Russian-based company Milandr is a manufacturer of integrated microcircuits. Milandr produces microelectronic products for Moscow’s military research and weapons.
Milandr set up subsidiary companies in Armenia, Switzerland, and Taiwan. Employees of the company control those subsidiaries directly or indirectly, to expand the integrated microelectronic business or purchase microelectronic components from other Asian companies.
All the properties belonging to those entities on the sanction list in the US are blocked and need to be reported to OFAC. The purpose of the imposed sanctions is to prevent the Russian government from using these technologies to produce weapons to invade Ukraine and other countries.
The Biden administration published a set of export controls regarding advanced computing and semiconductor manufacturing items, aiming to restrict China’s access to the most advanced chip technology. The export controls prevent US firms from selling advanced chips to China or providing Chinese firms with tools for making their own advanced chips. They also prevent firms from other countries from doing the same, if those chips or tools were made with US-made technologies. The rules also prohibit US citizens from participating in or facilitating activities, that encourage the development or manufacture of specific integrated circuits (ICs) at Chinese fabrication facilities. The rules are strongly opposed by China and should be immediately abolished, the commerce ministry said in a statement. They also added that this decision by the USA not only hurts Chinese companies, but also the commercial interests of US exporters.
