Connect with us

International Circuit

Chip dilemma will buy Beijing precious time

America’s chip war against China will make only partial inroads in 2023. After unveiling sweeping new export restrictions in October, Washington appears to have successfully lobbied friendly governments including Japan and the Netherlands to join. A full anti-China alignment, however, will be tricky while global semiconductors demand slows.

The latest U.S. trade rules effectively make ultra-high-performance microprocessors used in supercomputers off limits to Chinese buyers; as are software and equipment required to make semiconductors above certain technological thresholds, including high-end memory chips from China’s YMTC.

The move has prompted Apple to freeze plans to buy components from YMTC, Nikkei reported. Yet, most of the chips made in and shipped to China are less advanced technologies unaffected by the restrictions. This blunts the hit for both Chinese and American companies. Last year, Chinese imports of integrated circuits and related equipment topped $466 billion.

The outlook for China-dependent players in South Korea, Japan and the Netherlands is more uncertain. Memory giants Samsung Electronics and SK Hynix have factories inside the People’s Republic and won’t be able to maintain them without a U.S. licence. Both have secured a one-year waiver from the restrictions, but what happens afterwards is unclear.

For ASML, which has a monopoly in advanced chipmaking equipment, the picture is similarly hazy. The company had already stopped exporting its most cutting-edge machines to China. But Washington policymakers are pressuring their Dutch and Japanese counterparts to also ban less sophisticated tools from ASML and Japanese peers. Both governments have agreed in principle to adopt “at least some” of the U.S restrictions, Bloomberg reported on Dec. 12. But the devil is in the details. Dutch Trade Minister Liesje Schreinemacher already said in November her government “will not copy the American measures one-to-one”.

Curbs would be painful for the Veldhoven-based company: 2.7 billion euros, or 15% of total revenue, came from the People’s Republic in 2021. Rival Nikon made sales of over 153 billion yen ($1.1 billion) in China, some 28% of total.

Slowing demand is another worry: Total chip sales will shrink 4% to $557 billion in 2023, a sharp reversal from the 26% growth in 2021, according to World Semiconductor Trade Statistics.

That will probably make companies wary of quickly and fully embracing Washington’s requests. The hesitancy will play in China’s favour. It will buy it time to stockpile on foreign components and tools and help President Xi Jinping court trade partners. As Beijing knows, wars are seldom fought and won unilaterally.

Japan and the Netherlands have agreed “in principle” to join the United States in tightening export controls for advanced chip-making equipment to China, Bloomberg reported on Dec. 12, citing people familiar with the matter.

The two governments are likely to announce in coming weeks they will adopt “at least some” of Washington’s restrictions, the report added.

In November, Dutch Trade Minister Liesje Schreinemacher confirmed the Netherlands was in talks with the U.S. government about new export restrictions. In an interview with local newspaper NRC, she said her government would likely introduce new export controls, but that it would “not copy the American measures one-to-one”. Reuters

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2022 Communications Today

error: Content is protected !!