America, China’s 4 billion chip war with Biden scoring success

Last October was the starting gun for a brand new race between the US and China, and this summer marks a midway point. From the perspective of Harvard University technology policy researcher Kevin Klyman (Kevin Klyman), “the Biden administration has progressed fairly well in attracting foreign partners.”

Of course, he’s talking about semiconductor chips, the amazing tiny structures that power everything from computers to computers. computerized car and is becoming Like oil in the 21st century.

President Joe Biden on Oct. 7 launched a series of export controls aimed at restricting China’s purchases of highly advanced chips and the computers that contain them. Moreover, they are targeting not just cutting-edge chips, but the tools that can be used to make them, such as the state-of-the-art lithography machines at ASML in the Netherlands. This is a serious obstacle preventing China from developing its own state-of-the-art chip models. America’s Dutch and Japanese allies joined in, including amazing experts like Kleiman.

“The fact that the Netherlands and Japan have fully joined U.S. export controls is a phenomenal success beyond anyone’s wildest dreams,” Kleiman told wealth. “That’s not what outside analysts expected.”

Last August, Biden signed a new executive order banning U.S. investment in three key technology areas in China: semiconductors, quantum technology and artificial intelligence.this prohibitThe bill, which takes effect next year, is sure to hasten the rapid withdrawal of private equity and venture capital funds from the country. A few weeks later, Biden dispatched Commerce Secretary Gina Raimondo to Beijing. While it’s the latest in a series of visits aimed at unfreezing relations between the two superpowers, and Raimondo has taken pains to say the U.S. is not seeking an economic “decoupling” from the world’s second-largest economy, dialogue is not an option. Avoid turning into chips. Raimondo told reporters that Chinese Commerce Minister Wang Wentao and other officials had asked the United States to “reduce export controls on technology.” “Of course, I said no. We will not negotiate on national security issues.”

With China’s $18 trillion economy mired in severe indigestion and threatening to export deflation to Western economies that have been struggling with high inflation, Kleiman and other experts argue that the chip wars have cast long shadow. “The effects we’re seeing are not limited to advanced semiconductors,” Kleeman said. “We see its impact on China’s tech sector evident.”

Battle lines are drawn

The battle for semiconductor supremacy has been a hot topic throughout the 2020s, as supply chain disruptions caused by the pandemic underscored the importance of chips to every aspect of modern life. When chip production ground to a halt, every American looking to buy a car suddenly turned to the used car market, which soared to historic levels.

Chris Miller has written a definitive book on the subject with an aptly titled book. chip wars,winner Financial Timesbusiness book of the year 2022 and the most widely read book by Fortune 500 CEOs last summer.A professor of international history at Tufts University told us wealth The Biden administration has indeed achieved a coup, because Japan and the Netherlands are the two most important countries for machine tools for making chips, besides the United States and China.

Miller said it would be very difficult for China to circumvent those controls, so he generally believed that the White House’s actions should effectively challenge China’s goal of building its own cutting-edge chip industry.

Kleiman puts the scale of these operations rightly. He told reporters: “The United States has determined that semiconductors are crucial to China’s military modernization, so it has taken unprecedented measures to carry out a surgical strike on China’s semiconductor industry and do everything possible to destroy China’s semiconductor industry.” wealth.

What is the chip for?

Semiconductor chips are the lifeblood of nearly every modern technology, from microwaves to cars to fighter jets, so they’re big business, too. In 2022, the industry sales will hit a record high of 574 billion US dollars, According to the Semiconductor Industry Associationand income trends suggest they are moving away from computers to everything else.

But the United States is most worried about weapons chips that have not yet been invented. In justifying export controls, BIS noted that semiconductors are necessary to train AI systems that China can then use to abuse human rights, spy on people, and go to war with the U.S. (for reference, OpenAI’s ChatGPT accepted Train 10,000 Nvidia chips.)

Jeffrey Ding, a professor of political science at George Washington University, said artificial intelligence could be used to create autonomous weapons or to supplement military power with innovations not necessarily related to weapons. While there is a strong military rationale for the controls, for now, the effect is more basic: maintaining the United States’ position as the world’s largest economy, Ding said.

Ding likened AI to electricity, a broad-ranging technology that could change entire economies and the global balance of power.

“Historically, general-purpose technologies such as artificial intelligence or electricity have sparked waves of productivity growth, and a country can sustain a higher level of economic growth than another and become a leading economic power,” Ding said. We saw this in other industrial revolutions, such as the first industrial revolution and the rise of Great Britain, and the second industrial revolution and the rise of the United States.”

The United States has maintained its position in the electricity-based third industrial revolution and is now in what some are calling the artificial intelligence-powered fourth industrial revolution. and interconnectivity. Some experts hope that strategic export controls will suppress China’s chip and artificial intelligence industries before they take off, maintaining U.S. technological leadership in this era.

For now, China is unlikely to build its own version of the advanced machinery needed to produce cutting-edge chips, said Scott Young, an earth technology analyst at the Eurasia Group. He described ASML’s state-of-the-art lithography machines, which etch patterns onto tiny chips, as “so complex that it’s almost impossible to reverse engineer them,” adding that they may be the most advanced ever invented. advanced machines.

Limitations of control

While export controls work in the short term, in the long run, Yang sees it as “a situation of diminishing returns” and predicts that their effectiveness will decline as China finds ways to circumvent them.

Likewise, Ding said enforcement issues limited the overall impact of export controls. These include the smuggling of prohibited items through laxly regulated countries, or the sale of highly advanced chips masquerading as low-end chips, and the use of cloud computing by Chinese artificial intelligence labs to access advanced chip clusters located in other countries.

Instead of trying to limit access to foreign technology, Ding argues, the U.S. should consider funding domestic education as a policy tool.

“If we diverted all the time, all the political capital, all the space occupied by export control discussions to thinking about how to build infrastructure for national security, we could do more good for the national security interest. Foster a broad AI engineering talent,” he said.

Ding said accelerating the training of AI engineering students could be one of the most important policy levers in the US-China tech competition, similar to the role that educational institutions played in the last century when establishing new disciplines such as electrical or mechanical. project.

Export controls run counter to that policy, adds Harvard’s Kleiman, because they make foreign scientists feel less welcome in the U.S., creating a worse overall environment for developing talent. By forcing China to reduce its dependence on the United States, they encourage China to develop its own self-sustaining semiconductor ecosystem, essentially shifting the tech war from exports to education. While it’s still many years away, the lag may not be as large as the U.S. hopes, he said.

Echoing Ding’s call to focus on education in the tech wars, Kleiman said that producing breakthrough geniuses — Albert Einstein or Robert Oppenheimer — could “raise the capabilities of the U.S. tech system” ten times”.

“The rewards of education are almost endless,” Kleiman said. “The U.S. is already leading the way in AI scientists, but the growth rate isn’t as high as other countries, and the U.S. isn’t retaining scientists as much as it used to. So immigration reform plus education will be key.”

He added, “People are the secret sauce for this technology to work.”

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