US escalates tech war on China, more restrictions could be on the way
Washington might introduce new bans on America's leading tech companies, such as Nvidia and AMD, from exporting chips to China.
The United States is considering introducing more restrictions on chip exports to China, claiming concerns over the possibility of its use in the military and cyber industry, The Wall Street Journal reported on Tuesday.
The US Commerce Department could make the announcment as early as July, the newspaper said citing sources informed on the matter.
American giant IT companies, such as Nvidia and Advanced Micro Devices (AMD) among other chipmakers, will be prohibited from exporting semiconductor technologies to China and other countries deemed by the US as "security threats".
According to the news outlet, the ban could also include providing cloud services to Chinese companies, which US President Joe Biden's administration claimed that the firms used to circumvent export curbs.
But Washington's tech war against China could end up backfiring and fuel the Chinese drive to independently develop their own IT hardware and solutions, while US companies would have been deprived of large profits from the largest chip market in the world.
In May, WSJ reported that American sanctions on Chinese IT businesses have caused them to expand research to build artificial intelligence (AI) without relying on cutting-edge US semiconductors.
According to the report, Chinese firms searched for strategies that might enable them to employ fewer or less powerful chips to achieve high-level AI performance.
US curbs on semiconductor exports to China or taking part in joint tech projects with Chinese IT firms did not go without criticism by chipmakers who expressed skepticism over the strategic efficiency of these policies.
The CEO of ASML Holding NV, a Dutch chipmaker that has a monopoly over extreme ultraviolet (EUV) lithography machines that manufacture the chips, stated in January that the US-led export restrictions against Beijing could lead China to develop its own domestic chipmaking technology, ditching the reliance on imports.
"If they cannot get those machines, they will develop them themselves. That will take time, but ultimately they will get there,” Peter Wennink explained.
“The laws of physics in China are the same as here,” he added.
“The more you put them under pressure, the more likely it is that they will double up their efforts” in developing lithography machines that can directly compete with those of ASML, he noted.
Some American firms have even chosen to remain in the Chinese market despite growing pressure from Washington to cut all tech ties with the Asian giant.
US memory-chip pioneer firm Micron announced earlier this month plans to increase investment in its China-based factory by over half a billion dollars.
Micron's decision came shortly after China banned critical infrastructure operators from buying the firm's products in response to Washington's tech-trade hostility against Beijing.
China's decision then aimed to ensure "the cybersecurity of products and threats to the security of the country's key information infrastructure," Chinese Foreign Ministry Spokesperson Mao Ning said then.
“This investment demonstrates Micron’s unwavering commitment to its China business and team,” said the firm's chief executive Sanjay Mehrotra then.
The company's announcment came despite a ban issued by Biden's administration on US tech companies that receive governmentally-funded awards for building “advanced technology facilities” in China for 10 years.