The United States announced sanctions to deny China access to pioneering chips that China does not yet have the capacity to design and manufacture. This marks the beginning of a new phase of the integrated circuit or “silicon chip” war.
These US sanctions prohibit the sale of the new generation of chips to China. The ban forbids any US firm or people relying on US technology to sell or license software, equipment or technologies that will be needed by China to build capacity in the area of integrated chips.
Additionally, it prohibits US citizens and even those holding green cards from working for or with any Chinese entities in a large number of technology areas. This category of sanctions also applies to US affiliates and their firms. This means that these companies are somehow dependent on American technology.
This makes it difficult for companies like TSMC (Taiwan) or Samsung (South Korea) to sell the latest generation of chips to China or even help in this area.
This is a blow to China. In fact, China had the concept of leaping from America in many areas of technology and taking an edge over the West. This would deal a major blow to China’s ambitions in AI research as well as 5G and blockchain technology, without access to the latest generation of chips.
It is not that China had not imagined such an incident. However, China did think that they still have a few more years to prepare and build their capabilities in this area. China is spending huge amounts of money in technology research directed at making itself less dependent on the West.
While TSMC is the acknowledged leader in 3-nm processes, Samsung and Intel are building on their capabilities. All the three firms are also now working on the 2 nm process.
In contrast, Chinese chip manufacturing capabilities are several generations behind.
Much of China’s current technological capabilities were built by people who went to the United States, studied at the best engineering colleges there and worked with major Western technology companies before coming back home. Many of these entrepreneurs are Chinese by birth but have since acquired US citizenship. These restrictions will force them to choose a side.
Additionally, many engineers at Chinese technology companies rely on key areas of people holding US citizenship or green cards. Most of China’s current capabilities are based on imitations of Western designs and technologies. China has been emphasizing technology R&D in its universities and institutes of technology for some time now, but it still lags behind US and European research in many areas. That doesn’t mean they can’t catch up – just that the current restrictions will make it harder and increase the time required.
Most of the European countries and Australia as well as Japan and Korea are largely supporting the US. However they are building their capabilities. Many relied on Taiwan, such as Japan and various European countries, for the manufacture of the chips. But they are also trying to build their capabilities.
As a major economy, India is taking small steps in chip manufacturing. The schemes launched so far by the Vedanta-Foxconn partnership are at the lower end of the chip technology spectrum. Our journey in the field of chip manufacturing will begin with a 28nm chipset. The Indian Prime Minister has prioritized manufacturing in-house chip capabilities.