The US-China Chip War: Can Unprecedented Sanctions Crush China's Semiconductor Industry?

The US-China Chip War: Can Unprecedented Sanctions Crush China's Semiconductor Industry?The US technological blockade against China is escalating, with recently imposed unprecedentedly harsh sanctions targeting the Chinese semiconductor industry with the aim of crippling it. This move has garnered global attention, and its success or failure will have profound implications for the global technological landscape

The US-China Chip War: Can Unprecedented Sanctions Crush China's Semiconductor Industry?

The US technological blockade against China is escalating, with recently imposed unprecedentedly harsh sanctions targeting the Chinese semiconductor industry with the aim of crippling it. This move has garnered global attention, and its success or failure will have profound implications for the global technological landscape. This is not the first US technological offensive against China; prior pressure on ASML (the Dutch lithography equipment manufacturer) and sanctions against Chinese companies foreshadowed America's determination to curb China's technological advancement.

US Secretary of Commerce Gina Raimondo publicly stated that these are the most stringent controls the US has ever imposed on China, aiming to weaken China's ability to manufacture advanced chips for military use. This statement clearly reveals the US objective: to curb China's military and technological rise by restricting its access to key technologies. However, the success of this strategy remains questionable.

Previous US actions, such as pressuring the Dutch government last September to impose chip sanctions on China, and blocking ASML's delivery of advanced lithography machines to China earlier this year, point to the core of the US technological blockade strategy controlling the supply of crucial equipment and technologies. ASML, the world's leading lithography machine manufacturer, holds core technologies in chip manufacturing. By pressuring the Netherlands, the US effectively limited China's access to cutting-edge lithography machines, indirectly hindering the development of its chip industry.

However, following the recent round of US sanctions, ASML has adopted a relatively cautious stance. ASML claims to be assessing the impact of the new regulations but expects no effect on its overall expectations for global semiconductor demand. This suggests that even if the US attempts to suppress the Chinese semiconductor industry, the global semiconductor industry will continue to thrive, and China may already possess a certain degree of self-sufficiency.

ASML's statement is not without foundation. China's semiconductor industry, after years of development under high pressure, has continuously improved its technological level and supply chain independence. The long-standing US suppression of Chinese semiconductors has ironically spurred domestic innovation and technological breakthroughs. The success of Huawei's 5G phones serves as a prime example, demonstrating significant progress in technological independence and the ability to launch internationally competitive products despite severe sanctions.

Another major flaw in the US technological blockade is its negative impact on the global economy. The semiconductor industry is highly globalized, and unilateral US sanctions severely disrupt the global semiconductor industry landscape and impact the security and stability of international industrial and supply chains. This action not only harms China's interests but also affects companies in other countries and regions, potentially backfiring on the US itself.

Facing US sanctions, China has not responded passively but has implemented active countermeasures. The Chinese Ministry of Commerce announced restrictions on the export of certain dual-use items to US military users or for military purposes, and also banned the export of gallium, germanium, antimony, and super-hard material related dual-use items to the US. This move directly targets US vulnerabilities.

Gallium, germanium, and antimony are key raw materials for the semiconductor industry and also crucial for military production. The US is heavily reliant on imports for these materials, with China being the major supplier. Statistics show that in 2020, global gallium production was only 300 tons, with China accounting for 96%. Without Chinese supplies, the US would face severe material shortages, impacting its semiconductor industry and military production. The situation is similar for germanium and antimony, where US dependence on China is high. Disruptions to these material supplies would significantly reduce US production efficiency, potentially leading to production halts.

Establishing domestic mining and refining capabilities for these materials would be a lengthy process for the US, taking years to achieve. China's countermeasures are justifiable and a strong rebuttal to US unilateralism. The US attempt to suppress China through sanctions has backfired.

In conclusion, whether the unprecedented US sanctions will successfully cripple China's semiconductor industry remains uncertain. While the sanctions have undoubtedly impacted the Chinese semiconductor industry, this hasn't altered China's continued growth trajectory in the sector. Technological breakthroughs under pressure and effective countermeasures demonstrate that the US strategy of using unilateral sanctions to curb China's technological development may not achieve its intended results. Instead, this action could severely damage the global economy and supply chains, ultimately backfiring on the US. Globalized industrial chain cooperation cannot be easily disrupted or controlled by a single nation.

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