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The US and China are about to be embroiled in a tech war.
Reports say that the US government has stopped giving licenses to American businesses that want to sell most goods to the Chinese tech company Huawei.
It comes as the Biden administration makes it harder and harder for the US to send technology to China. Therefore, instigating the possibility of a tech war.
Washington has said that Huawei threatens US security and works with the Chinese Communist Party.
Both the company and the government of China have said that the claims are false.
The first piece of news came from the Financial Times. It said that the US Commerce Department told some US companies that they could no longer sell US technology to Huawei.
The move comes as Washington moves toward a ban on selling any US technology to the Chinese telecom equipment giant, the paper said.
As political tensions between Washington and Beijing grew over Taiwan, where most of the world’s computer chips are made, the Biden Administration kept giving Huawei more rules to follow.
The US Under Secretary of Commerce for Industry and Security, Alan Estevez, said in October, “The threat environment is always changing.”
For a few years, the US has made it hard for Shenzhen-based Huawei to export high-speed fifth-generation (5G) telecom equipment and artificial intelligence technology.
When Donald Trump was president in 2019, the company was put on an “entity list.”
It means that US companies need permission from the government to export or transfer certain technologies, especially if they are worried that the Chinese military will use them.
But at that time, US companies like Intel and Qualcomm were permitted to give Huawei technology that had nothing to do with 5G.
The US is getting the best of China in the tech war
For more than a hundred years, the race for oil caused wars, strange alliances, and diplomatic disagreements.
Now, the world’s two biggest economies are in a tech war fighting over semiconductors, which are also a valuable resource. These chips run the things we do every day.
These tiny bits of silicon are the most important parts of a $500 billion industry that is expected to double by 2030. Whoever controls the supply chains, which are a complicated network of companies and countries that make the chips, will be an unbeatable superpower.
China wants this technology so that they can make chips. Because of this, the US, which gives Beijing a lot of technology, is cutting it off.
Chris Miller, the author of Chip Wars and an associate professor at Tufts University, says that it is clear that the two countries are in a race to get more weapons in the Asia-Pacific region.
For now, the US is winning the chip war with China, but the world economy is changing because of it.
Chip makers
Chips are the main drivers of the ongoing tech war.
Semiconductors are made through a complicated, specialized, and deeply connected process.
The chips in an iPhone are made in Taiwan, Japan, or South Korea, but they are designed in the United States. After that, the iPhone is put together in China. So India could play a bigger role in the industry if it kept investing more money.
Semiconductors were first made in the US, but East Asia became a manufacturing hub over time, mostly because of government subsidies and other incentives.
During the Cold War, this allowed Washington to build business relationships and strategic alliances in a region that was easy for Russia to control. With Beijing’s power in the Asia-Pacific region growing, it’s just as useful now.
The tech war is race to make many of the best and most efficient chips; the smaller they are, the better. The challenge is to see how many transistors, small electrical switches that can turn on or off a current, you can put on the smallest part of a silicon wafer.
Even the best people who make chips need help to get them. So around the middle of 2022, Samsung was the first company to start making a lot of three-nanometer chips. Later that same year, Taiwan Semiconductor Manufacturing Company (TSMC) joined the group. This company makes the most chips worldwide and is one of Apple’s biggest suppliers.
What a tiny place! Much smaller than the width of human hair, which is between 50 million and 100 million nanometers.
These smaller “leading edge” chips are more powerful and are used in more valuable devices like supercomputers, AI, and the internet of things.
Profits can also be made in the market for “lagging edge” chips, which power things like microwaves, washing machines, and refrigerators. But demand will likely go down in the future.
Right now, most of the world’s chips are made in Taiwan. The President of Taiwan calls this a “silicon shield” because it protects the self-governed island from China, which claims the land.
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Beijing has also made making chips a national priority and is putting a lot of money into supercomputers and AI. Mr. Miller says it is not a world leader, but it has been catching up quickly over the past ten years, especially in its ability to design chips.
It remains to be seen how long and to which extent the tech war would go.
