China’s rapid advancements in semiconductor technology have posed significant challenges to the Biden administration’s efforts to maintain control over the future of computing. While the U.S. initially focused on denying China access to cutting-edge semiconductors, Beijing’s response has doubled down on developing its chip manufacturing and design capabilities.
Rising Chinese competence in cutting-edge chips
The U.S. export controls on advanced semiconductors aimed to restrict China’s access to cutting-edge chips.
China is displaying unexpected advancements in chip manufacturing and design.
Chinese tech giant Huawei recently released a phone featuring an advanced domestically produced processor.
While China’s 7-nanometer chips may not yet compete cost-effectively, they signal rapid progress.
China invests in indigenous supply chains and alternative routes to acquire restricted technology.
China’s Push in Legacy Chip Manufacturing
Legacy chips, produced using older technology, are crucial for various applications, including critical infrastructure and industrial equipment.
China’s focus on legacy chips gives it leverage over essential systems and the potential for espionage.
Chinese companies captured over 75% of the global market for legacy chips powering smart device connectivity.
China’s state-funded semiconductor manufacturer SMIC is ramping up legacy manufacturing with cost advantages.
China’s capacity expansion in semiconductor manufacturing threatens U.S. dominance.
Chinese Advancements in Chip Design
The U.S. traditionally excelled in chip design, but China is gaining a comparative advantage.
China’s status as the world’s largest consumer of semiconductor devices drives its design capabilities.
Lower labor costs and a growing talent pool are boosting China’s chip design efforts.
Chinese startups use cheap engineering talent and legacy chip manufacturing to compete with U.S. firms.
Huawei’s successful chip design in its August phone launch highlights China’s progress.
Tailored responses for different aspects of the semiconductor industry
A one-size-fits-all approach won’t work for addressing China’s semiconductor advancements.
Leading-edge chip manufacturing still requires a “small yard, high fence” strategy with continuous maintenance.
The U.S. should monitor China’s efforts in advanced chip manufacturing, including lithography methods.
Developing mechanisms to limit advanced chips’ use for dangerous AI applications can reduce demand for China’s production.
Diversifying supply chains with friendly countries like India and Mexico is essential for legacy chip manufacturing.
Scrutinizing foreign components for backdoors and evaluating critical dependencies on legacy chips are recommended.
In chip design, the U.S. government can invest in ambitious innovation, strengthen software and standards, and foster collaboration among American companies.
These tailored responses are necessary to outpace China’s semiconductor advancements and secure U.S. leadership.
China’s rapid progress in semiconductor technology challenges the U.S. strategy to control the future of computing. As China advances in both cutting-edge and legacy chip manufacturing and chip design, the United States must adopt tailored responses to maintain its competitive edge. By continuously monitoring and adapting its approach, the U.S. can mitigate China’s growing influence in the semiconductor industry and protect its economic and security interests.
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