GT Voice: US Cannot Afford to Engage in a 'Chip War' Against China

By Global Times

Aug 14, 2022 10:03 PM

It is disturbing for global supply chains to see the US apply increasing administrative intervention in normal market competition when it comes to advanced technology areas such as semiconductors. 

The US announced new export controls on four emerging and foundational technologies that support the production of advanced semiconductors and gas turbine engine, according to an interim final rule released on Friday by the US Commerce Department's Bureau of Industry and Security (BIS).

While the BIS didn't name China directly, observers generally believe that the move is mainly aimed at further decoupling semiconductor supply chains of China and the US, marking the first semiconductor-related move after US President Joe Biden signed the CHIPS Act into law.

For the CHIPS Act and US-promoted "chip alliance," they are all about boosting the US chip manufacturing capabilities while politicizing the semiconductor industry to exclude China from the global industrial chain.

No one can ignore the strong intention the US is now showing to wage a "chip war" against China, especially after Washington threw a set of punches designed to strangle China's technological development. 

The semiconductor industry has become a recent focus of the China-US geopolitical competition, which is provoked by the US. But the coercive approach of forcing companies or economies to take sides between China and the US is problematic and poses a serious threat to the security of the global supply chain. This is because chips are the product of global collaboration, and the formation and development of the semiconductor industrial chain is the result of the interaction based on market rule.

If the US is intended to decouple itself from China in a "chip war," it will have to rope in other allies to form a technological iron curtain that effectively end up splitting the current global supply chain into two. Yet, it is highly questionable whether the US has the ability to pull the whole world into its "chip war." In fact, even the long-brewing CHIPS Act has faced questions on its effectiveness and sustainability, not to mention other export control measures.

More importantly, the US may want to curb the development of China's semiconductor sector by imposing various restrictions, but this may only lead to more supply chain disruptions. As the US becomes increasingly accustomed to abusing various export controls and restrictions, it is actually sabotaging its own supply chain by inviting more risks.

If Washington is determined to keep the so-called "chip war" going, it must be ready for China to fight back.

China uses a large number of chips to manufacture end products like electronics and auto parts, and a large amount of the final products are exported to the rest of the world, including the US. If the US continues its suppression on the supplies of semiconductor-related products and technologies to China, it may eventually contribute to disruption in the manufacturing sector, which will not only affect China but also weigh down the US supply chain. 

Given the scale and capacity of Chinese manufacturing, there is no other country that can replace China's role, which is why a decoupling from China for US semiconductor supply chain is impossible.