The United States, led by semiconductor manufacturing giants such as Intel, Nvidia, Qualcomm, AMD, and Micron, dominates the global market for the most advanced “chips”. These are used in the production of computer equipment that utilizes 3-nanometer technology, an essential element in the ongoing digitization of the global economy.
On the other hand, Chinese companies like Huawei and SMIC are planning to manufacture 5-nanometer semiconductors this year. Though these are not as advanced as their American counterparts, they still represent a significant step in China’s technological progress.
This rapid advancement suggests that the technological gap between the US and China is closing. It also implies that US manufacturers are aware that their Chinese competitors may catch up to them within the next five years.
Huawei’s flagship processor, the “AI Ascend920”, is capable of being used in the production of 3rd Generation nanometers. This technology was previously exclusive to American companies, particularly Nvidia, a leader in AI-powered “chips”.
The cost structure between US and Chinese chip producers reveals the technological gap, with Chinese chips being 40-50% more expensive than those produced in the US.
The Biden administration’s restrictions on technology transfer have inadvertently accelerated the production of advanced “chips” in China, despite the aim to hinder the country’s global competition.
Ironically, American companies now predict that China may become the leader in chip technology and innovation within five years.
This shift can be attributed to the inherently cooperative nature of high tech in the 21st-century global capitalism. The Biden administration’s policies have disrupted this cooperation.
This is a classic example of the law of unintended consequences, where actions intended to produce a specific result end up having unforeseen effects.
China is the world’s largest market for semiconductors or “chips”, importing more than $400 billion worth each year. This is due in large part to the country’s highly digitized economy, with over 1.1 billion internet users.
The driving force behind China’s economy is not investment or workforce growth, but the relentless competition among its domestic producers.
The US policy aimed at slowing down China’s technological development has, ironically, provided a significant incentive for China in this critical area.
The realization of one’s deepest dreams can sometimes turn into a nightmare, as is the case with the US’s policy towards China.
The top three nanotechnology companies in the US have expressed their opposition to President Biden’s policy, arguing that it harms American companies by preventing them from participating in the world’s largest chip market.
This policy also hinders the establishment of new chip plants in the US, contradicting the objectives of the “Chips and Science Act”, which was passed in August 2022 and includes $200 billion in subsidies.
Despite the current economic boom, the US’s lack of long-term strategic vision is a significant weakness. This issue can be attributed to President Biden and represents a considerable hurdle in the global race for leadership in chip and AI technology.
The US’s self-imposed “black hole” in politics, which absorbs energy without creating it, is a major obstacle in its competition with China in 21st-century world politics.
