Chinese Microchip Development Triggers U.S. Response, Highlights Ongoing Trade Tensions
The U.S. and China battle over microchip dominance. (Forbes)
Secretary of Commerce Gina Raimondo downplayed a new chip innovation by Huawei, a Chinese firm, proclaiming on April 22 that the U.S. has “out-innovated China,” and is still years ahead of China in semiconductor technology.
This latest development comes alongside the CHIPS and Science Act, signed into law by President Biden in August 2023. This act aims to bolster domestic chip production in the U.S., lessening reliance on foreign manufacturers and potentially giving the US an edge in the ongoing tech rivalry.
The U.S. continues to ramp up pressure on China's technological advancements with stricter regulations on chip exports. In October 2023, the Biden administration implemented an update to export control rules, further restricting the sale of advanced chips used in artificial intelligence (AI) and the equipment needed to manufacture them. This move targets not only the most powerful chips but also aims to close loopholes identified in previous restrictions enacted in 2022.
The U.S. government justifies these actions as necessary to national security, claiming they prevent China from acquiring or developing its own high-end chips. China, however, views these restrictions as a politically motivated attempt to hinder its technological growth and disrupt global supply chains.
Additionally, by shifting supply chains, the U.S. is hedging against a potential Chinese invasion of Taiwan. In 2022, President Biden even said that the U.S. would come to Taiwan’s aid if China invaded the island.
The emergence of Huawei's domestically produced chip could significantly impact the global tech landscape. If the chip proves competitive with those manufactured by U.S. giants, it could disrupt established trade patterns. As semiconductor and AI technologies continue to develop in the coming years, Chinese-American relations will continue to develop, with the potential for increasing tensions over Taiwan’s governance.