China Defies US Sanctions with Computer Chip Breakthrough

 28.07.2022 Author: Brian Berletic

Column: Economics

Region: Eastern Asia

Country: China

The Western media lamented China’s most recent breakthrough in computer chip manufacturing, achieving standards in production that were thought impossible because of sanctions imposed by the United States specifically designed to stifle Chinese advances.

A report from early July by CNBC would discuss these sanctions. In their article, “US mulls fresh bid to restrict chipmaking tools for China’s SMIC,” CNBC would report:

The Biden administration is considering new targeted restrictions on shipments of chipmaking tools to China, seeking to hamstring advances by China’s largest chipmaker, SMIC, without slowing the flow of chips into the global economy, five people familiar with the matter told Reuters.

The Commerce Department, which oversees export policy, is actively discussing the possibility of banning exports of chipmaking tools to those Chinese factories that make advanced semiconductors at the 14 nanometer node and smaller, the people said, to stymie China’s efforts at making more state-of-the-art chips.

The very notion of one nation dictating to another what it can and cannot manufacturer and specifically to keep one nation subordinated to another as its “factory,”  helps illustrate the true nature of the United States’ “rules-based international order,” an order in which the US makes rules solely serving its interests and achieved at the expense of all other nations. Those who refuse to follow these rules become “adversaries” as China clearly has.

Despite these sanctions, China’s Semiconductor Manufacturing International Corporation (SMIC) has managed to surpass the 14nm mark and is in fact producing chips with nodes as small as 7nm.

Bloomberg in a more recent article, “China’s Top Chipmaker Achieves Breakthrough Despite US Curbs,” would admit:

Semiconductor Manufacturing International Corp. has likely advanced its production technology by two generations, defying US sanctions intended to halt the rise of China’s largest chipmaker.

The Shanghai-based manufacturer is shipping Bitcoin-mining semiconductors built using 7-nanometer technology, industry watchers TechInsights wrote in a blog post on Tuesday. That’s well ahead of SMIC’s established 14nm technology, a measure of fabrication complexity in which narrower transistor widths help produce faster and more efficient chips. Since late 2020, the US has barred the unlicensed sale to the Chinese firm of equipment that can be used to fabricate semiconductors of 10nm and beyond, infuriating Beijing.

The Bloomberg article notes that attempts to stifle China’s technological advances have been ongoing, spanning multiple US presidencies with US President Donald Trump having targeted SMIC during his administration, followed by additional sanctions imposed by the Biden administration.

America’s Inability to Compete, or Even Cheat

Clearly US sanctions have not had their desired impact, nor should they have been expected to. The notion that the United States can stifle Chinese technological advances by denying it equipment and components from beyond Chinese borders reflects the West’s thinking toward China that the nation and its people are inferior and are incapable of achieving significant advances without “stealing” intellectual property or using equipment made by the “much more advanced” West.

However this is clearly not true with several prominent Chinese companies, including Huawei and DJI, creating products with quality unrivaled worldwide.

Yet even amid this most recent advance in chip manufacturing, the Western media is attempting to suggest China made this achievement through “copying” the technology of others, namely Taiwan Semiconductor Manufacturing Company (TSMC). The fact that Taiwan is part of China appears to escape those across the Western media making this claim.

An article in tech media outlet Tom’s Hardware, “China’s SMIC Shipping 7nm Chips, Reportedly Copied TSMC’s Tech,” attempts to make the argument that SMIC copied TSMC’s technology. The article reports:

According to analyst firm TechInsights, Chinese foundry SMIC has been producing chips based on its 7nm process node for a Bitcoin Miner SoC, and they’ve been shipping since July of 2021 (h/t to SemiAnalysis). TechInsights has reverse-engineered the chip, saying the “initial images suggest it is a close copy of TSMC 7nm process technology,” a telling discovery after Taiwan-based TSMC has sued SMIC twice in the past for copying its tech. The discovery comes as China continues to build out its own homegrown semiconductor production, with the heavily-sanctioned SMIC leading the way. Meanwhile, the US government is on the cusp of approving large subsidies for US-based chipmakers.

Of course, lawsuits filed against China regarding “intellectual property” are often filed in the United States and used as part of a much wider effort to isolate and contain China’s economic and technological rise. This is done by using legal maneuvers and the outcomes of lawsuits to bar Chinese companies from first US markets, and through pressure from the US State Department, markets around the globe.

This method of attempting to contain China has emerged out of America’s inability to compete against China head-to-head. Even through increasingly desperate measures, it is clear the US is losing its advantage as an economic, industrial, and even technological leader.

China’s Technological Rise is Driven by Forces the US Cannot Contain

Tom’s Hardware in their recent article also notes that while the US continues attempting to stifle China’s chipmaking industry, it will only succeed in perhaps slowing it down, not stopping it. The article reports:

[China] has continued to plow money into developing its own chipmaking tools and software (EDA) ecosystem. As SMIC has proven, it can use less-sophisticated equipment to create advanced process nodes even if it is less profitable, and that opens the firm up to even more sales from chip designers. Whether or not those chips will come with export restrictions due to legal challenges remains to be seen, but China has its own burgeoning ecosystem of chip designers that could use their designs in-country, perhaps sidestepping the impact of punitive measures.

The article’s latter point about China’s “own burgeoning ecosystem of chip designers that could use their designs in-country” cannot be overstated. As Chinese President Xi Jinping has observed, “the Chinese economy is a sea, not a pond.”

Regardless of how successful US pressure may be in barring Chinese products from certain markets around the globe, Chinese industries will continue to advance even if simply serving Chinese domestic markets. The same could be said about other advanced industries including telecommunications and China’s growing aerospace industry – both of which are also targets by the US.

Driving China’s technological rise is the massive number of graduates produced across the fields of science, technology, engineering, and mathematics (STEM). China leads the world in this respect and far outpaces the United States or any other Western nation.

A 2017 Forbes article titled, “The Countries With The Most STEM Graduates [Infographic],” would note:

According to the World Economic Forum, STEM (science, technology, engineering and mathematics) has become a pretty big deal in China’s flourishing universities. In 2013, 40 percent of Chinese graduates finished a degree in STEM, over twice the share in American third level institutions.

STEM graduates have become a vital cog in the wheel of global prosperity and unsurprisingly, China is leading the way. The World Economic Forum reported that China had 4.7 million recent STEM graduates in 2016. India, another academic powerhouse, had 2.6 million new STEM graduates last year while the US had 568,000.

This is a trend that has only continued.

Georgetown University’s Center for Security and Emerging Technology in a more recent 2021 paper titled, “China is Fast Outpacing US STEM PhD Growth,” would claim:

Based on current enrollment patterns, we project that by 2025 Chinese universities will produce more than 77,000 STEM PhD graduates per year compared to approximately 40,000 in the United States. If international students are excluded from the US count, Chinese STEM PhD graduates would outnumber their US counterparts more than three-to-one.

Regarding the quality of Chinese higher education, the paper would note:

Our findings also suggest the quality of doctoral education in China has risen in recent years, and that much of China’s current PhD growth comes from high-quality universities.

The paper notes that this serves as a key indicator of a nation’s future competitiveness in STEM fields which includes high-tech industries like chipmaking.

The US labors under the flawed assumption that the only way China can advance its chipmaking capabilities is with machinery and components from Western corporations or through “theft” of intellectual property. This is an outlook rooted in generations of Western thinking that other nations and peoples beyond the West are inherently inferior.

It is clear that China has invested heavily in the most important resource of all, human resources. Together with the large amount of natural resources China has access to, it has everything it needs within its borders to continue advancing all of its high-tech industries including chip manufacturing, independently of the West.

The West, through its belligerent policies aimed at China are not only going to fail in stopping China’s rise as a technological superpower, they will have isolated themselves from the benefits other nations working with China will enjoy as China’s rise continues.

Above all, US policy towards China is driven by a desperate and entirely irrational desire to prevent China’s rise. China is a nation with over four times the population of the United States. It graduates millions more in essential fields including STEM disciplines driving national development, has access to plenty of natural resources, and has created a foundation of world-class infrastructure upon which to continue building up its society.

China’s rise as the largest, most powerful nation on earth is inevitable. The resources, energy, and time the United States is wasting in attempting to contain China’s rise and assert itself above all other nations could be used instead to find a constructive role to play among all other nations as a still powerful, influential nation with much to offer humanity, just not the most powerful or influential. The United States, like many empires before it in history, unfortunately, appears determined to squander this opportunity to peacefully transition to one powerful nation among many, and instead faces the prospects of holding neither primacy over the planet, nor significant prominence among the nations on it.

Brian Berletic is a Bangkok-based geopolitical researcher and writer, especially for the online magazine “New Eastern Outlook”.

 https://journal-neo.org/2022/07/28/china-defies-us-sanctions-with-computer-chip-breakthrough/