Tensions are escalating in the global chip market

Written 14 Dec 2022 at 18:34Updated 14 Dec. 2022 at 20:05

Things continue to get tense in the semiconductor ecosystem. On Wednesday, it emerged that the US administration is preparing to place Chinese chip maker Yangtze Memory Technologies (YMTC) and 35 other Chinese companies on a blacklist that prevents them from buying certain US components, Bloomberg reports. According to the news agency, they must obtain a special license even for American components of low technological value.

October restrictions

On October 10, the US Department of Commerce had already announced two new regulations expanding its export control policy “to protect US national security and foreign policy interests”. Any company that wants to sell advanced chips in China must now apply for a prior license from the US government, with the aim of preventing China from sourcing advanced chips, developing and maintaining supercomputers or producing advanced semiconductors itself.

In November, the US Federal Communications Commission (FCC) also announced by decree the ban on telecommunications equipment and services provided by nearly half a dozen Chinese companies. And since Wednesday, Huawei and other Chinese 5G companies have been hit by a bill to limit their access to US banks.

Barrage

Control of advanced technology chips is already influencing the largest companies. They would thus affect the export capacity of Arm, a subsidiary of SoftBank and a major player in the design of sophisticated chips, the Chinese e-commerce giant Alibaba and other Chinese companies, according to the “Financial Times”. The British semiconductor group reportedly believes it has no chance of getting the green light for its Neoverse V chip designs due to their high performance.

These tensions are causing some industry leaders to publicly balk. Peter Wennink, CEO of ASML, the Dutch equipment manufacturer whose machinery is essential for chip manufacturing around the world, on Tuesday cast doubt on the relevance of US pressure on the Netherlands to limit the conditions for exporting its companies to China.

Dissatisfied companies

“Maybe they think we should sit at the table, but ASML has already made a lot of sacrifices,” he told German business newspaper “Handelsblatt”. Following US pressure, the Netherlands has already since 2019 sanctioned the export of sophisticated lithography machines – especially those called “extreme ultraviolet lithography” (EUV) – which has benefited equipment manufacturers across the Atlantic, who often have a larger share of their income than ASML (15%) with China, explained Peter Wennink. According to him, the existing restrictions even miss their target in military affairs because the technology for such applications is often ten to fifteen years old.

This anti-China crusade led by the Americans is in any case pushing the Europeans, as well as the Japanese and of course the Chinese themselves, to follow the example of the United States, which seeks to attract investment on its territory in order to be less dependent in the future on components produced on the other side of the world and from which they could be deprived.

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