Saturday, May 25, 2024

US prepares to put China’s tech industry in chokehold: Report

Must read

The U.S. is set to roll out the measures to chokehold China’s semiconductor industry as the battle over technology supremacy between Washington and Beijing intensifies, according to Bloomberg.

“The Biden administration is considering blacklisting a number of Chinese semiconductor firms linked to Huawei Technologies Co. after the telecom giant notched a significant technological breakthrough last year,” Bloomberg reported on Wednesday. The news outlet cited sources familiar with the discussions. Newsweek has been unable to verify the Bloomberg report.

This action could escalate the ongoing U.S. efforts to limit Beijing’s aspirations in artificial intelligence and semiconductor development, adding pressure to a Chinese flagship enterprise that has shown progress, despite existing sanctions.

Huawei last year launched a 7-nanometer (nm) processor. It was developed by Chinese chipmaker Semiconductor Manufacturing International Corporation for Huawei’s new phone Mate 60 Pro. Experts have speculated if SMIC violated the U.S. export curbs to make the 7nm chip. Newsweek contacted China’s Embassy in Washington D.C. and Huawei for comment.

Huawei’s feat at deploying SMIC’s chip surprised many in Washington, underscoring the company’s resilience against sanctions. This advancement is seen as a direct challenge to U.S. efforts to curb the technological ascendancy of Chinese firms in critical sectors. The Chinese entities, either acquired or built by Huawei, will be affected by the U.S. move to chokehold China’s semiconductor progress.

“Potentially yes. We will have to assess,” said U.S. Under Secretary of Commerce for Industry and Security Alan Estevez. He was asked if SMIC broke U.S. export rules to produce the sophisticated chip, per Reuters on Thursday.

“The companies that could be blacklisted include chipmakers Qingdao Si’En, SwaySure, and Shenzhen Pensun Technology Co., or PST, the people said, asking not to be named because they weren’t authorized to discuss non-public information. Biden officials are also weighing sanctions on China’s leading memory chipmaker, ChangXin Memory Technologies Inc,” Bloomberg reported.

These firms were identified in a presentation by the Semiconductor Industry Association, based in Washington, as directly assisting Huawei in furthering domestic semiconductors by acquiring restricted U.S. technology, according to Bloomberg.

U.S. President Joe Biden gives a speech at Intel Ocotillo Campus on March 20, 2024, in Chandler, Arizona. The U.S. is preparing to choke China’s semiconductor industry with a slew of measures.

Rebecca Noble/Getty Images News/iStock

Meanwhile, the Joe Biden administration is further boosting the U.S. domestic semiconductor industry by investing in a new Intel Corporation plant in Arizona. On Wednesday, President Biden awarded Intel $8.5 billion in grants as part of the CHIPS Act. CHIPS stands for “Creating Helpful Incentives to Produce Semiconductors”.

The U.S. CHIPS and Science Act 2022 will seek to tackle the shortage of semiconductors by boosting domestic production with a $52 billion investment in government subsidies. The Biden administration is seeking to reduce dependence on China and Taiwan; geopolitical concerns such as the Ukraine-Russia war have weighed heavily on the chip supply chain.

“It’s going to transform the semiconductor industry,” Biden said on Wednesday at the Intel campus in Chandler, Arizona.

“Where the hell is it written saying that we’re not going to be the manufacturing capital of the world again?” Biden added.

China’s Ministry of Commerce has reacted sharply to the Biden administration’s plans to choke the Chinese semiconductor industry.

“For some time, the United States has generalized the concept of national security, abused export controls and other measures, and artificially separated the global semiconductor industry chain,” the Ministry of Commerce spokesperson He Yadong said in a statement on Thursday.

“The United States provides huge subsidies and tax incentives to the local chip industry, and some terms force companies to abandon China for the United States.

“This is obviously discriminatory, seriously violates market laws and international economic and trade rules, and will distort the global semiconductor industry chain,” He added.