Under the U.S.-China trade war, the U.S. government does not want the continued development of Chinese science and technology, especially the technology industries that affect many advanced applications. However, the United States cannot completely curb it. One of the main reasons is that many chip companies find it difficult to give up the Chinese market.
According to The New York Times, in May 2023, semiconductor manufacturer Micron Technologies suffered a blow in the trade war because the Chinese government issued a ban claiming that Micron’s semiconductor chips did not pass through the Internet. Security review prohibits purchases by some Chinese companies that handle critical information. Micron noted that this could affect about one-eighth of global revenue.
In June, Micron announced that it would invest an additional US$600 million in its existing chip packaging factory in Xi’an, and posted on social media: “This investment project reflects Micron’s unswerving commitment to China’s business and team. promise.”
By November, China’s Commerce Minister Wang Wentao told Micron CEO Sanjay Mehrotra that Beijing welcomed Micron to deepen its business in China. “Reuters” (Reuters) analyzed that this move shows that China’s attitude towards Micron has become more enthusiastic, and the confrontation between China and the United States seems to be easing.
The rift between the United States and China is growing day by day, and semiconductors have become the frontline of technology competition!Gallium and germanium are one of China’s biggest bargaining chips
As relations between the United States and China deteriorate, almost semiconductor companies around the world feel a dilemma. Especially as the United States and China implement new restrictions and punitive measures, the semiconductor industry has become the front line of technology competition between Washington and Beijing.
U.S. officials said that U.S. products are used in China’s military and surveillance, which runs counter to national security interests. Therefore, they have imposed increasingly stringent restrictions on the export of chips and chip manufacturing equipment to China. And provide incentives (such as tax credits) to chip manufacturers that expand new business in the United States.
However, China is not willing to suffer silently, and instead wants to sanction the United States and Europe in the same way. A recent EU study shows that key raw materials for manufacturing chips are part of the increasingly fierce global battle for technological supremacy, and China is the largest exporter of “gallium” and “germanium”. Among them, gallium production accounts for more than 95% of the world, and germanium production accounts for more than 67% of the world. China occupies a leading position in the world in terms of reserves and production.
“CNBC” pointed out that China’s Ministry of Commerce is restricting the export of these two raw materials in order to warn Europe and the United States not to continue to escalate the trade war. The new rules, imposed on national security grounds, require exporters from August to obtain an export license for certain gallium and germanium compounds, specifying the importer, end user and method of use. At the end of November, China’s Ministry of Commerce approved some license applications from companies that meet the regulations.
A recent report by global political risk consulting firm Eurasia Group pointed out that although China’s move lacks an outright ban on specific countries or end users, it may have a limited impact on global supply. But its purpose is to remind the United States, Japan, the Netherlands and other countries that China has retaliatory options to prevent China from obtaining high-end semiconductor chips and related equipment and impose further restrictions.
China’s manufacturing and consumption ratio is high, and the semiconductor industry cannot easily cut off its connection with China.
For the semiconductor industry, it is not easy to circumvent US export restrictions by building new factories and other methods. Firstly, it takes several years to build a new factory; secondly, it is more realistic that many companies have certain investments and sales in the United States and China.
China is not only the main market for chips, but also the location of many factories. It produces a large number of consumer electronic products that require chips every year, including smartphones, home appliances, cars, laptops, etc. Not only are they exported to all over the world, but many are also supplied locally. market.
Overall, China accounts for about one-third of global semiconductor consumption. For some chip manufacturers, the Chinese market accounts for as much as 60 to 70 percent of total revenue. In addition, although some manufacturers’ chips are manufactured in the United States, they still need to be sent to China for assembly or testing. It is conceivable that in this war of mutual sanctions and competition between the United States and China, almost all relevant industries have been affected.
As technological competition between the two sides continues to intensify, various relevant restrictive measures may continue for some time or even intensify. In the face of rising geopolitical risks, how companies respond to achieve the best balance between national security and company shareholder rights will be a major test.
(This article is written by Manager Monthly Reprinted with permission; source of first image:Motherboard photo created by rawpixel.com – www.freepik.com）
2023-12-09 02:32:58
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