It’s always better in geopolitics to move in packs—and the U.S. just picked up some welcome company in its aggressive assault on China’s tech industry.
Bloomberg reported Monday that Japan and the Netherlands have agreed in principle to join the U.S. in placing chip-related export controls on China, further restricting the communist republic's ability to obtain cutting-edge semiconductors.
The news comes two months after President Joe Biden’s administration banned American companies from selling many types of advanced chips to organizations in China and blocked the global export of chips made with U.S. equipment. With Japan and the Netherlands now on board, all three of the world’s primary producers of chipmaking machinery have now taken aim at China.
The Biden administration hopes the export controls will further hobble China’s development of advanced artificial intelligence, computing, and weapons technology. China’s semiconductor industry already lags many years behind the Western world and some of its democratic neighbors in Asia, though President Xi Jinping has pledged tens of billions of dollars in government aid to prop up its domestic chip sector.
“There’s no way China can build a leading-edge industry on their own. No chance,” Sanford C. Bernstein analyst Stacy Rasgon told Bloomberg.
For U.S. officials, bringing Japan into the fold is something of a mini-coup.
As the Japan Times reported last month, the island nation’s chip equipment and machinery industry will feel a decent amount of pain from losing one of its primary customers. China accounted for about 40% of Japan’s $24 billion in chip manufacturing equipment exports last year.
Japanese officials also faced last-minute lobbying from executives at two of the country’s largest tech giants, Sony and NEC, who argued that the impact of chip exports has been overblown.
Sony Chief Technology Officer Hiroaki Kitano told the Financial Times that he was “not sure what kind of long-term impact” the export bans can have on China’s artificial intelligence aims. NEC’s chief executive, Takayuki Morita, argued the controls might temporarily slow the republic’s technological progress, but the “overall trend will not change.”
“It’s not possible to ignore China’s competitiveness in technology, and it will become one of the forces (to reckon with) in the long run,” Morita said, according to the Financial Times.
With the Japanese and Dutch in tow, however, the Chinese will be virtually self-reliant on advanced chipmaking for years to come. While the U.S. export controls choked off vast swaths of the semiconductor sector, Chinese officials could have taken the next several years to re-engineer their foreign supply chains, primarily relying on the two U.S. allies for equipment.
“U.S. technology is irreplaceable over the near and medium term, so the immediate consequences of this policy are essentially guaranteed to be disastrous for China,” Gregory C. Allen, director of the Artificial Intelligence Governance Project and a senior fellow at the Center for Strategic & International Studies, wrote in Time last month. “However, if China succeeds in persuading U.S. allies to assist China by developing and providing alternatives to key pieces of U.S. technology, then the long-term outcomes of this policy could be disastrous for U.S. national security and economic competitiveness.”
China, meanwhile, has proven particularly inept at competing on the global semiconductor stage.
As Bloomberg reported in August, the upper echelons of China’s government “are angry at how tens of billions of dollars funneled into the industry over the past decade haven’t produced the sorts of breakthroughs that emerged from previous national-level scientific endeavors.” Those struggles likely will be exacerbated by an exodus of Taiwanese semiconductor experts, who will be less likely to venture across the Taiwan Strait to assist a nation with substandard equipment and technology.
China’s political leadership remains a wildcard in its escalating tech cold war with the U.S. and American allies. Xi has huffed and puffed about chip export controls, but he’s yet to take decisive retaliatory action.
If Xi does strike back, the U.S. can now feel more comfortable in its strength through numbers.
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Jacob Carpenter
