You may have missed this highly informative podcast on China’s New Strategy for Waging the Microchip Tech War, part of the Truth of The Matter series by America’s CSIS – Center for Strategic and International Studies.
The report’s author, Gregory C. Allen, Director, Wadhwani Center for AI and Advanced Technologies, provided insightful analysis, opening the debate with this, “There are two dates that are very likely to echo in the history of international relations” – February 24th when Russia invaded Ukraine, and October 7th export controls policy….when the United States really started exploiting it’s dominance of semiconductor technology chokepoints to start squeezing China’s semiconductor industry.”
According to the CSIS, while most Americans are likely only faintly aware of the October 7 policy and its significance, the date marked the beginning of a new era in U.S.-China relations and, with it, international politics.
U.S. secretary of state Antony Blinken nearly said as much in a speech delivered only 10 days after the new policy was enacted. “We are at an inflection point,” Blinken said. “The post-Cold War world has come to an end, and there is an intense competition underway to shape what comes next. And at the heart of that competition is technology.”
In many ways, the October 7 policy was narrowly targeted. It only restricted exports of certain types of advanced computer chips for AI applications and the diverse set of technologies needed to design and manufacture AI chips. However, the implementation approach and underlying logic of the new regulations marked a major reversal of 25 years of U.S. trade and technology policy toward China in at least three ways.
First, rather than restricting exports of advanced semiconductor technology to China based on whether the exports were related to military end uses or to prohibited end users, the new policy restricted them on a geographic basis for China as a whole.
Second, previous U.S. export controls were designed to allow China to progress technologically but to restrict the pace so that the United States and its allies retained a durable lead. The new policy, by contrast, actively degrades the peak technological capability of China’s semiconductor industry. Leading Chinese semiconductor firms such as Biren, YMTC, SMIC, and SMEE have all been set back years.
Third, to the extent possible, the policy seeks to prevent China from ever again reaching certain advanced performance thresholds in semiconductor technology. Rather than revising the performance thresholds upward every few years, as had been done in the past, the Biden administration intends to hold those benchmarks constant, meaning that the gap in performance will grow over time as the world advances and China remains stuck behind.
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