, pub-5806618978131291, DIRECT, f08c47fec0942fa0 Will the chip ban release water to Taiwanese and Korean companies? Expert: U.S. blockade of China's technology has not been loosened - Mediumpublisher

Will the chip ban release water to Taiwanese and Korean companies? Expert: U.S. blockade of China’s technology has not been loosened

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By nwzdt

In order to balance the interests of its allies, the United States has lenient the implementation of technology control measures against China to those high-end chip manufacturers in South Korea and Taiwan that are closely connected with the Chinese market, allowing them to continue their business in China. The continuation of the exemption license for allied companies is seen by the outside world as a clever move by the United States in its supply chain layout strategy of “not decoupling” and “removing risks” with China. However, some critics believe that this will weaken the United States’ containment of China’s advanced semiconductor industry. effort. At the same time, under China’s retaliatory sales ban for foreign chip companies, including Micron, the situation in the Chinese market has become complicated and difficult.

Taiwanese and South Korean companies benefit from the exemption of the US export ban to temporarily loosen the ties for allied technology companies?

The United States is making subtle adjustments to its “stuck neck” strategy for the development of China’s semiconductor industry. The Wall Street Journal recently reported that the Biden administration plans to continue allowing South Korean and Taiwanese chipmakers to maintain and expand advanced chip production in China.

The U.S. Department of Commerce issued an export ban on October 7 last year, restricting international semiconductor companies using U.S. technology or U.S. equipment from selling high-end chip products and chip manufacturing equipment to China, but some U.S. and Asian companies obtained a one-year exemption license at that time .

The Wall Street Journal reported that Alan Estevez, the U.S. Department of Commerce’s undersecretary for industry and security, was quoted as saying at an industry event this month that the U.S. government plans to “Extending this exemption will benefit South Korea’s Samsung and Taiwan’s TSMC.

Experts pointed out that the United States once again extended the exemption of export and investment restrictions on Taiwan and South Korea chip companies to China, which does not mean that the United States has loosened its containment of China’s advanced semiconductor strategy.

Paul Triolo, senior vice president for China and technology policy at the Albright Stone Group, told VOA via email: “The U.S. government is not relaxing export controls. But trying to balance the Oct. 7 controls, especially because of the needs of multinational semiconductor companies that have invested a lot of sunk capital in their Chinese facilities.”

The United States rallies its allies and partners in Asia and Europe to limit China’s access to strategically important foreign advanced technologies. U.S. Secretary of State Blinken, who just finished his visit to China, reiterated at a press conference in Beijing that the U.S. and Western allies have set the tone for relations with China in terms of industrial chains and technology, that is, they will not seek decoupling from China, but they must “de-risk” and protect American key technologies.

Some U.S. allies face a dilemma under U.S. chip sanctions. South Korean government officials and companies hope that the long-term policy of the United States on China’s chip industry will be clearer. This is not only on the exemption period of the Ministry of Commerce’s export control ban, but also on the subsidy issue of the “Chip Act” in the United States. Foreign companies are also weighing The trade-off between doing business in China and investing in the United States.

The U.S. “Chip Act” provides tens of billions of dollars in financial subsidies to attract multinational semiconductor companies to build factories in the United States, but at the same time stipulates that companies receiving U.S. subsidies cannot invest in advanced-process chips in China within ten years.

Critics: Ban waivers make U.S. government look weak

Some critics are dissatisfied with the repeated extensions of the Biden administration’s waivers. U.S. Senator Marco Rubio (Marco Rubio) sent a letter to U.S. Secretary of Commerce Raimondo on May 30, asking the administration to strengthen control measures for technology exports, including chips. “Companies are trying to weaken and circumvent the export controls of the relevant regulations,” he said.

“You can’t control technology when two big corporations can do whatever they want … you look weak,” Derek Scissors, a senior fellow at the American Enterprise Institute (AEI), told the Wall Street Journal.

Stephen Ezell, vice president for global innovation policy research at the Information Technology and Innovation Foundation, told VOA via email that while the Biden administration is understandably considering The interests of allies in the Asia-Pacific region with large-scale investments in China, but the United States needs to ensure that the intellectual property rights of these chip products will not fall into Chinese hands.

“The U.S. must work with these companies and their governments to secure these final production facilities that produce final products, not conduits for the transfer of technical skills and intellectual property to Chinese entities in the semiconductor industry,” he said.

“Furthermore, rather than permanently renewing these waivers, the administration should review and extend them intermittently,” he said.

Sanctions work? China’s AI development is threatened by “stuck neck”

In the face of the chip ban in the United States, China’s proud artificial intelligence (AI) industry has also aroused the vigilance of the government and the industry because of “hard to find a chip”.

The rise of the AI ​​robot ChatGPT has led to the development of the “Large Language Model” (LLM). High-end GPUs are the key equipment required for the development of this technology. This field is currently dominated by the US company Nvidia.

The “Economic Daily” sponsored by the State Council of China published an article on June 13 warning that China’s AI high-end computing power chip technology supported by GPU and other acceleration chip construction is facing the risk of “stuck neck”. The article said: “To create a good industrial ecology of artificial intelligence large models, efforts should be made to solve the problems faced by the development of large artificial intelligence models in my country, such as uncontrollable high-end computing power technology, few large-scale high-quality data sets, weak algorithm reliability and interpretability, etc. key problem.”

On June 17, Wei Shaojun, a tenured professor at the School of Integrated Circuits of Tsinghua University in China, warned in a speech about the overall strength of China’s chips, saying that the situation of Chinese semiconductor companies is “not as good as imagined.”

Chinese media quoted Wei Shaojun as saying: “China’s demand has increased significantly in the past ten years, but its dependence on foreign countries is very strong; from the perspective of chip manufacturing, in the past few years, the industry’s average annual compound growth rate has been very high. The contribution is provided by foreign-funded enterprises in China.”

He also pointed out a set of data: the total market value of 135 semiconductor companies with a full industrial chain listed on China’s Science and Technology Innovation Board and ChiNext in April this year was only RMB 3,082.5 billion. It’s the truth.”

“We are still in the low-end development.” He said.

At the same time, in terms of value, China’s domestic chips accounted for 41.4% of the domestic market demand in 2022 from 13.% in 2013, which is still far from the domestic market demand.

Reuters reported that amid the shortage of high-end chips, a piece of Nvidia A100 graphics processing unit (GPU) has skyrocketed from the ordinary retail price of US$10,000 to US$20,000 in the underground trading market in Shenzhen.

The U.S. Department of Commerce’s ban prohibits Nvidia from exporting A100 and H100 chip products to China, aiming to slow down China’s development of artificial intelligence and supercomputing technology.

Why do U.S. companies invest more in China in the face of sanctions ?

While the high-end semiconductor technology market is facing a “chip shortage”, China has implemented retaliatory control measures against low-tech foreign memory chip companies, making Micron and other companies face difficulties in their deployment in China.

As a retaliation for US chip export controls, the Cyberspace Administration of China announced at the end of March that it would conduct a security review of the products of the US memory chip giant Micron (Micron), and made a judgment on May 21 that its products had “serious hidden dangers of network security issues”. , which affected sales of the company’s memory storage products in China.

Even with the Beijing ban, Micron announced on June 15 that it will expand its investment in China, investing more than 4.3 billion yuan in its packaging and testing plant in Xi’an.

The company’s WeChat official account announced that the new plant will introduce a new production line for the manufacture of products such as mobile DRAM (dynamic random access memory), NAND (flash memory) and SSD (solid state drive) to strengthen the existing packaging of the Xi’an plant and testing capabilities. The company said it has been preparing for the project for some time and has already started the qualification work for the production of mobile DRAM in Xi’an.

Douglas Fuller, associate professor of the Department of International Economics, Government and Business at Copenhagen Business School, told VOA that Micron’s expansion in China does not mean that foreign chip companies have regained confidence in the Chinese market.

He told VOA via email: “The assembly and testing part of chip manufacturing is labor-intensive, so there are many inland areas in China where wages are lower. Micron wants to please the Chinese government and needs to be in one of the low-wage areas.” Assemble and test, so the investment makes sense in PR and financial terms.

Because Micron failed to pass the security review of the Cyberspace Administration of China, operators of “critical information infrastructure” were prohibited from purchasing Micron’s products.

On the 16th, Micron responded for the first time to the impact of the Chinese government’s partial sales ban. In a filing with the U.S. Securities and Exchange Commission (SEC), Micron disclosed that half of its revenue from China-based customers would be at risk. According to the document statistics, customer revenue headquartered in mainland China and Hong Kong accounted for 25% of Micron’s total revenue, which means that Micron’s low-double-digit percentage (low-double-digit percentage) total revenue will be affected.

Micron’s business in China faces uncertainties due to the lack of transparency in China’s Cyberspace Administration of China’s censorship mechanism, Triolo said.

“Micron is in a very difficult and complicated position, as the full scope of the restrictions requested by the Cyberspace Administration of China following a cybersecurity review is unclear. Many Chinese companies are also starting to worry about continuing to include Micron products in their supply due to the lack of clarity,” he said. long-term effects of the chain.”

He believes that Micron will maintain its engagement with China and continue to consider expanding its presence as part of its global business. “U.S. officials will continue to raise the Micron case with Chinese officials through talks, but until the regulator, the Cyberspace Administration of China, clarifies why Micron failed a cybersecurity review and which products and customers were targeted for restrictions, Micron and the U.S. It’s hard for the government.”