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It appears that the combination of the CHIPS & Science Act, the sweeping crackdown on semiconductor and chip-making equipment sales, and the National Security Strategy represents the most forceful effort by any American administration to counter China’s growing global, technological projection of power. This is a far more aggressive and strategic effort than President Trump’s tariff war. And it is far more comprehensive than anything the Americans tried against Japan at the high water mark of those concerns in the late 1980s. But will it work? I made these comments yesterday on Sinocism, the daily briefing created by Bill Bishop. It is followed by many top China-watchers. Here are some of the issues I raised and the responses I received from viewers. From me: –Can the Department of Commerce and other U.S. government entities gear up the necessary experise and staffing levels to pull this off? Can the U.S. government foster greater inter-agency collaboration in pursuit of these goals? –Will the U.S. private sector cooperate? The Center for Security and Emerging Technologies has reported that Applied Materials and other U.S. companies have set up shop in places such as Singapore so they can make gear that has no Amercan-sourced parts and continue selling to the PRC. –Will other key players among the techno-democracies go along or are they offended that the Americans have taken such unilateral action? One interesting twist is that maybe some of them are relieved the Americans have taken these steps. They can claim they had no choice but to comply.
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Writes Political Europe7 hr ago·edited 7 hr ago
China has already been tripling down on their local industry for years, with limited success. YMTC is doing a good job with 3D NAND memory chips. Apple recently added it to its list of suppliers. But progress on advanced products is stalling since SMIC said it produced a 7nm chip back in mid 2021. Experts are sceptical that they can manufacture this model at scale. China may be a decade away, if not more, from replicating TSMC’s 2 nanometer products. Add to this dependency on electronic design automation tools or extreme ultraviolet lithography tools, stuff from Japan and the Netherlands. Frankly it’s not certain they can pull this off.
These restrictions put pressure on China at the high end of the economic spectrum, forcing the country to divert ressources into a technology race it most likely can’t win, instead of attending to its fundamentals. Meaning healthcare, public welfare and a broader social security net. So turns out China is also pressed on the low end of the economic spectrum.
The PLA has less incentives not to bomb the crap out of TSMC’s factories in the event of a campaign over the island. No reason to keep the thing running if you won’t get a piece of it. If Biden cornered them this way, he must be confident (1) the US can prevent Chinese air superiority above Taiwan or (2) they can replicate TSMC’s work somewhere else.
Oct 14
China could impose a rare earth permanent magnet embargo on US and US-companies. You can’t even begin to imagine the enormity of the impact.
Regarding this, all measures taken in the US so far are hapless and ineffective, also because certain US commercial companies are grossly misleading the administration.
Writes Political Europe8 hr ago
I’m not convinced a rare earth embargo is on the ballot. We’ve heard of this Arlésienne maybe six or seven times since the trade war. It always failed to materialize. And it backfired the last time they tried this on Japan. But 2010 was a different world. Rare Earth Observer reports that deliveries of F-35 fifth-generation fighters stopped because Honeywell’s supplied it with magnets from China. The Bidden-Harris plans to secure rare earth follow an overarching strategy, so there’s an implicit recognition that things could go wrong on this front.
Writes Clyde’s NewsletterOct 14
The Commerce Department, NSC, DOD, CIA, and State should be able to do the job. The more difficult question is the private sector. A significant portion of it such as Apple has effectively been taken hostage. Fortunately, Apple does not make serious equipment. As you say, some are relieved, but the Feds may have to remind some corporations that they are chartered in the United States and thereby granted limited liability which is what makes it possible for them to be in business in the first place. And they need to understand that the U.S. gives them that gift because it expects them to do good things, FIRST for America and then for others. The Feds might have to set an example of two.