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The impact of the U.S. restrictions on the export of semiconductor technology to China could be enormous. Experts say many Western suppliers of chip tech to the Chinese have already started severing business ties. The chip sanctions are part of the Biden administration’s attempts to kneecap Chinese military tech development. Straight Arrow News contributor Peter Zeihan says the U.S. ban on semiconductor tech puts the squeeze on China and is a potential death knell for much of its technological gains.
Excerpted from Peter’s Oct. 17 “Zeihan on Geopolitics” newsletter:
The Biden administration’s moves against China’s semiconductor industry are continuing to have serious consequences, including the largely universal resignation of American citizens working in the Chinese chip industry. China will rapidly find itself unable to fill in several critical gaps in terms of skilled workers, design work, technological inputs, etc. What are Beijing’s options? With Europe and Japan largely on board with US action–not many. South Korea and Taiwan could address some needs, but far from all. China’s future will likely be one where it sources inputs on the grey market–buying components or pulling chips from third-party devices and attempting to insert them in products and industries they were not designed for. It’s going to be a time-consuming, ugly, imperfect process, with serious implications for high level computing, China’s emerging defense platforms, telecommunications, and more.
The Chinese have proven incapable of the last 25 years of advancing sufficiently technologically in terms of the intellectual heft that’s required to operate this industry, beyond being able to simply operate the facilities that make the low-end chips. And even that had to be managed by …foreigners. So there is no indigenous capacity here to pick this up and move on. And since the United States has basically corralled the Japanese and the Dutch, two very pro-American countries from a strategic sense, to join in this ban, really all that’s left is potentially Korea and Taiwan. And even if they were fully on board — which they’re not — that is not enough to carry all the water that needs to be carried.
