To advance new technologies, China relies on imports of modern microchips. But the US is creating a bottleneck for its sanctions. Taiwan also played a role in this.
For months, the U.S. has tried to prevent China from importing and producing the most advanced microchips through sanctions. These are needed, for example, for the development of artificial intelligence, space travel, and the military. The Netherlands and Japan have also joined the list of sanctions.
However, China is not yet able to produce high-tech microchips itself, so it relies on chips and machines from abroad. How serious is the impact of sanctions on China? What role does the democratically governed island of Taiwan play?
Chip prices have doubled
“Please fasten your seat belts,” the on-board computer said. The car drives completely autonomously in normal city traffic without a driver—only an attendant in the driver’s seat can intervene in an emergency. This has been allowed for almost a year on some roads in Shenzhen, a tech metropolis in southern China. Known by some as “China’s Silicon Valley,” the metropolis of 12 million is home to many of China’s largest high-tech companies, including Huawei, Tencent and ZTE.
Palm trees and skyscrapers characterize the highly modern Nanshan cityscape. The windows on the highest floors are brightly lit, even late at night. Because the employees of some 4,000 high-tech start-ups don’t sleep. They develop, research, experiment and produce – just like the employees of Elephant Robotics, the Chinese robotics company founded seven years ago. The start-up is experimenting with artificial intelligence, sometimes using computer chips from abroad.
A robotic arm the size of a child’s arm sorts colorful wooden cubes into containers. The robot can distinguish between red wooden cubes and green cubes on command. Regarding the U.S. measures, Lisa Qiu, head of the startup’s overseas market, said: “In the past, international sanctions had some impact on us. Especially when the microchip sanctions started, the price of chips doubled several times. , So our economy at that time It’s very stressful.”
High-performance chips shouldn’t end up in the military
The U.S. government has imposed new export restrictions following rounds of sanctions since October last year. These are designed to prevent the PRC from importing and producing the latest high-tech microchips. The Netherlands, which owns ASML, a company that manufactures chip production machines, has also joined the sanction. Japan was recently added.
“I think the main purpose is to make sure that China doesn’t use these special chips a lot for artificial intelligence, especially military artificial intelligence,” Antonia Hmaidi explained. At the Merics China Research Institute in Berlin, she conducts research on China’s chip industry and artificial intelligence.
The People’s Republic of China itself is not yet capable of producing tiny high-performance chips smaller than 7nm. According to international experts, one of China’s biggest challenges will be replacing manufacturing machinery from abroad. Because without these systems, chip production would not be possible.
Having a hard time catching up with the West?
However, according to Hmadidi, China is not completely in trouble. “You can do almost anything with an old chip that you can do with a new one.” That requires more power, more resources and more money. But she is confident that Chinese industry will find a way to deal with the sanctions.
Also, one person cannot control all the chips in this world. “If we’re talking about 1,000 or 10,000 chips, a Chinese company with an international presence can always get something out of it,” the expert said. In case of doubt, the shipment will go through three countries.
Chinese experts such as Xing Yuqing, who is currently conducting research at the Japanese GRIPS Research Institute in Tokyo, believe that China will be able to produce high-performance chips by itself in the future. “Sanctions will force Chinese companies to do their own research, forcing them to invest more time and money,” the economics professor said. Still, international observers question China’s ability to catch up as the competition develops.
no interest in military confrontation
90% of the most advanced microchips are manufactured in Taiwan. China considers the country its own territory and has repeatedly threatened the democratically run island with military force. Hmaidi, an expert at the Chinese research institute Merics, estimated that high-performance chips in particular could protect Taiwan from military confrontation to a certain extent. Blocking supply chains around the Taiwan Strait affects everyone economically, including the United States, which supports Taiwan militarily.
Moreover, according to Ahmadi, neither China nor the United States is ready for a military conflict: “It is still in the vital interest of both sides that neither side wants to go to war now.” Both sides believe that they still need to greatly improve their military equipment to Make sure they can win a war.
However, an incident in early June showed just how tense the situation was. A Chinese warship rams a U.S. destroyer in the Taiwan Strait. Observers warn that such incidents are becoming more frequent and could lead to unexpected escalations.