It’s A Silicon Showdown Between China And The West

It’s A Silicon Showdown Between China And The West
Daniel Johnston

3 months ago2 mins

What’s going on here?

China’s been importing more chipmaking equipment than ever, in a bid to outsmart Western restrictions.

What does this mean?

By now it’s old news that the US is trying to put a damper on China’s tech ascent – working hand-in-hand with allies like the Netherlands and Japan to clamp down on the country’s ability to import key chipmaking equipment. And that game plan means that Chinese buyers of some key tools will have to apply for licenses in order to get their hands on the coveted tech goods. But China’s been taking steps to act before those restrictions come in: in short, it’s started stocking up. The numbers don’t lie: official customs data shows that the country’s imports of chip production tools shot up a chunky 70% in June and July from the same period last year, hitting a new record high.

Chip factories worldwide

Why should I care?

Zooming in: Rearguard and advance guard.

The split of unrestricted versus soon-to-be-restricted tools in China’s import haul isn’t clear, but it’s probably a decent mix of both. And that makes sense: by ramping up imports of unrestricted tools, China can double down on producing older chips, which are its mainstay and crucial for sectors like EVs and green tech. On the flip side, by hoarding the restricted tools before the ban kicks in, China’s buying time to either develop some equipment itself or, more realistically, to try and find alternative suppliers.

The bigger picture: Chip on their shoulder.

The US government might see these restrictions as necessary, but it’s American chip companies that’ll truly feel the pinch. See, China, whatever its issues, is a behemoth in the chip market – and much of that juicy business will be off-limits for US firms. Nvidia, the AI superstar, hammered this point home recently, warning about a “permanent loss” for US chipmakers in one of the world’s biggest markets.



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