Chip companies victims of tech hegemony

As of last week, various entities from the members of the de facto chip club Washington is trying to set up to starve the Chinese mainland of advanced chips and the equipment to make them have expressed their unwillingness to limit their production and investment in China. It is only those on the island of Taiwan, under the coercion of the secessionist-minded Tsai Ing-wen authorities, that have not added their voices to the chorus.

The Republic of Korea government has urged the Joe Biden administration to review its “guardrail” rules regarding its chip subsidies, as it doesn’t think that the US government providing ROK chip companies, such as Samsung and SK Hynix, with subsidies to encourage them to invest in the United States should affect their decisions to expand production in the Chinese mainland.

And the Dutch government has also stressed the necessity for the Netherlands to take the initiative to continue to engage with such a major economy as China, which it says is a preferred economic and trade partner.

Also, the CEOs of Nvidia and Panasonic, two chip giants from the US and Japan respectively, have, on different occasions, both said that the Chinese mainland market is irreplaceable.

All these highlight the strong resistance to Washington’s attempts to re-shape the global industry and supply chains of the chip sector in the US’ favor. Although the Biden administration might lure the chip giants to expand production in the US through providing them market-law-distorting subsidies, it cannot offer a substitute to the Chinese mainland’s huge chip market if it forces them to withdraw from it as a condition for receiving the subsidies.

The US’ decoupling efforts in the chip industry will disturb the stability of related industries worldwide, including automobiles, information and electronics. During that process the companies from the US and its allies will bear the main brunt of Washington’s weaponization of technology and trade for its own geopolitical ends as it will push up the prices of relevant end products from the Chinese mainland.

After the Japanese government announced that it will implement China-targeted export control measures on semiconductor manufacturing equipment from July this year last week, the share price of a number of Japanese semiconductor-related companies, including Screen Semiconductor Solutions, Advantest and Disco, fell instantly.

That clearly shows the market’s view of the influences of the US’ tech offensive. The Chinese mainland accounted for about 30 percent of Japan’s chip and related equipment exports last year. It remains to be seen how the Japanese companies will fill the gap now that Tokyo is shutting their doors upon the Chinese mainland at the behest of the US.

And that question applies to all companies the US wants to use as pressure points to hobble China’s modernization.

Editorial, China Daily