21 March 2024

Geopolitical power is now seen to flow from the pins of microchips

Nitin Pai

The US is going after the Chinese semiconductor industry with a ferocity that has very few precedents. Driven by a national security doctrine aimed at denying China the ability to exploit American technology to threaten America’s interests, Washington has been tightening the screws on its own industry and that of its allies since the summer of 2022. In addition to export restrictions and employment controls, the US government has been pushing Taiwan, the Netherlands, Japan, South Korea and Germany to squeeze the sale of manufacturing equipment, critical parts, raw materials and ongoing service contracts with mainland Chinese companies. Wang Yi, China’s foreign minister recently called the sanctions “reaching bewildering levels of unfathomable absurdity."

No one likes the prospect of cutting themselves off from the Chinese market - which used to purchase half the world's chip output - and Washington's policy is unpopular, painful and costly.

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