China's semiconductor surge defies US sanctions
Despite American sanctions, the Chinese semiconductor industry is thriving. Market giants Huawei and SMIC have joined forces to produce, among other things, phone chips—processors smaller than the sanctions specify. They utilize shell companies set up by Chinese firms, reports "Puls Biznesu".
10:16 AM EST, November 19, 2024
For several years, US-China relations have been tense, partly due to the trade war over semiconductor technology, commonly known as chips. Refrigerators, cars, smartphones, tablets, ballistic missiles, drones, and artificial intelligence are just a few examples of their applications, notes "Puls Biznesu".
The newspaper also reminds readers that in October 2022, the administration of President Joe Biden imposed sanctions on the Chinese semiconductor industry. This occurred a few weeks before ChatGPT was launched. The largest companies from the US, the Netherlands, and Japan were banned from exporting equipment necessary for producing high-end processors (smaller than 4 x 10-7 inches), which are essential for developing technologies such as artificial intelligence.
Additionally, the US government is concerned about national security due to China's expansion in the semiconductor sector. Advanced processors are crucial for the development of weapon systems, exascale supercomputers (next-generation computers capable of performing one trillion calculations per second), as well as surveillance applications and weapons of mass destruction, highlights "Puls Biznesu".
Experts quoted by the newspaper suggest that at first glance, the sanctions are failing. The United States intended to limit China's production capabilities, yet the largest Chinese semiconductor producer, SMIC, is capable of mass-producing technology at 3 x 10-7 inches, and next year at 2 x 10-7 inches. Experts also note a revival of Huawei, which was heavily targeted during the first wave of sanctions imposed by the Donald Trump administration in 2018.
Huawei and SMIC have joined forces and started producing phone chips and AI accelerators (processors designed for fast artificial intelligence and machine learning applications). Additionally, China has begun producing exascale supercomputers, which the Americans intended to block, said Tomasz Smolarek, an investment manager at mTFI, during the recent CFA Summit, as quoted by "PB".
Chinese bypass sanctions using shell companies
Why is China able to produce processors smaller than those specified by US regulations? It's because Western companies themselves bypass the sanctions, and Chinese firms set up shell companies, explains "PB".
The AI accelerator produced by Huawei was built based on the Ascend 910B chip produced by Taiwan's TSMC. The Chinese government has collaborated with the Dutch ASML, which specializes in producing lithographic machines essential for the creation of advanced processors, the newspaper exemplifies.
