ARGUMENT: CHINA CHIP BANThe Right Time for Chip Export Controls
On Oct. 7, the U.S.-China tech competition heated up dramatically when the Biden administration imposed wide-ranging semiconductor-related export controls on China. Martijn Rasser and Kevin Wolf write that “There is no crystal ball that can divine the outcome, given how unprecedented and wide ranging these actions are.” They add: “The Biden administration made the right call by acting now, particularly if it is successful at getting allied cooperation on the essence of the rules soon.”
On Oct. 7, the U.S.-China tech competition heated up dramatically when the Biden administration imposed wide-ranging semiconductor-related export controls on China. While there has been plenty of discussion of the extraordinary scope and scale of the controls, less attention has been paid to their timing.
Why did the Biden administration choose to impose these controls now? And why did the Biden team act when it did? Did the United States squander future leverage over China’s artificial intelligence (AI) and weapons development efforts? What was the trade-off considered between acting unilaterally now and spending more time to get allies on board?
Martijn Rasser and Kevin Wolf write on Lawfare that “The question of “Why now?” is an important one, because it has direct bearing on whether these policies will be both effective (that is, by preventing the items and services from going to China) and not counterproductive (that is, by not helping foreign competitors of U.S. companies affected).”
The Department of Commerce’s Bureau of Industry and Security (BIS) published a rulewith five main parts.
· The first part banned any entity or individual from supplying leading-edge graphics processing units (GPUs)—a type of integrated circuit that accelerates the creation of images—and electronics containing them to any other entity or individual in China. “Because all semiconductor fabrication facilities use at least some U.S.-made equipment, every such GPU on the planet is now subject to U.S. controls,” Rasser and Wolf note.
· The second part of the rule pertains to semiconductor manufacturing equipment that is specific to producing advanced node logic semiconductors. These export controls primarily restrict U.S. companies—specifically Applied Materials and Lam Research—from shipping certain types of production equipment to China.
· The third part of the rule tackles the support and tacit knowledge needed to produce and develop advanced node logic and memory chips in China by barring U.S. persons from providing services without a license, such as maintenance and upgrades to equipment already in place in China. This further strains China’s chip-making capacity because the need for after-sales support and servicing of advanced tools is high. (Cont.)
