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Chinese chips will keep powering your everyday life

Editorial Board by Editorial Board
January 4, 2023
in Tech News
Reading Time: 2 mins read
0


To give you a brief overview, many experts told me that the already stressed global chip supply chain will be even more challenged by geopolitics in 2023..

For much of 2022, the US began taking steps to freeze China out of the industry, even forming an alliance with the Netherlands and Japan to restrict chip exports to the country. The measures have pushed the once market-driven business to draw up contingency plans to survive the Cold War environment, such as diversifying the Chinese supply chain and building factories elsewhere. We may see more similar plans announced next year. And at the same time, punitive U.S. government restrictions will begin to kick in and industrial subsidies will begin to be handed out to domestic chipmakers, meaning new companies may end up on top while others may be penalized for selling still in china

To learn more about how the US, China, Taiwan and Europe may navigate the industry this year, read the full article here.

But I also want to highlight something that didn’t make it into the story: a rather unintended result of chip technology lock-in. Although the high-end sector of China’s chip industry suffers, the country can play a larger role in manufacturing older-generation chips that are still widely used in everyday life.

This may seem counterintuitive. Weren’t last year’s US restrictions meant to seriously hurt China’s semiconductor industry?

Yes, but the US government has wanted to limit the impact to advanced chips. For example, in the area of ​​logic chips, those that perform tasks, rather than store data, US rules only limit China’s ability to produce chips with nodes of 14 nanometers or larger, which is basically the technology of chip manufacturing introduced in the last eight years. The restrictions do not apply to the production of chips with older technologies.

The consideration here is that older chips are widely used in electronics, cars and other ordinary objects. If the US were to impose such a broad restriction that it would destroy China’s entire electronics manufacturing industry, it would surely rattle the Chinese government enough to retaliate in ways that would hurt the US. “If you want to piss someone off, push them into a corner and don’t let them out. Then they’ll come and punch you really hard,” says Woz Ahmed, a UK-based consultant and former chip industry executive .

Instead, the idea is to inflict pain only in selective areas, such as the most advanced technologies that can power China’s supercomputers, artificial intelligence and advanced weapons.



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