Bypassing barriers: China's semiconductor success defies U.S. sanctions
Despite American sanctions, the Chinese semiconductor industry is thriving. Market giants Huawei and SMIC have joined forces to produce, among other things, phone chips, meaning processors smaller than those restricted by the sanctions. They use shell companies set up by Chinese firms, reports "Puls Biznesu".
19 November 2024 09:53
For several years, US-China relations have been tense, and a key reason is the trade war surrounding semiconductor technology, commonly known as chips. Refrigerators, cars, smartphones, tablets, ballistic missiles, drones, artificial intelligence—these are just a few examples of their applications, notes "Puls Biznesu".
The newspaper also notes that in October 2022, the administration of President Joe Biden imposed sanctions on the Chinese semiconductor industry. This occurred a few weeks before ChatGPT was launched. The largest companies from the US, the Netherlands, and Japan were banned from exporting equipment necessary for producing high-end processors (smaller than 10 micrometres) essential for developing technologies such as artificial intelligence.
However, there's more to the story, as the US government is concerned about national security due to China's expansion in the semiconductor sector. Advanced processors are crucial for the development of weapon systems, exascale supercomputers (next-generation computers capable of performing 1 trillion calculations per second), as well as surveillance applications and weapons of mass destruction, highlights "Puls Biznesu".
Experts quoted by the newspaper suggest that on the surface, the sanctions are failing. The United States intended to limit China's production capabilities, yet the largest Chinese semiconductor producer, SMIC, is capable of mass-producing technology at 8 micrometres, and next year at 5 micrometres. Experts also note a revival of Huawei, which was the most "targeted" company during the first wave of sanctions imposed by the Donald Trump administration in 2018.
Huawei and SMIC have joined forces and started producing phone chips and AI accelerators (processors designed for fast artificial intelligence and machine learning applications). Additionally, China has begun producing exascale supercomputers, while the Americans aimed to block this, said Tomasz Smolarek, an investment manager at mTFI, during the CFA Summit, quoted by "PB".
Chinese bypass sanctions using shell companies
Why is China able to produce processors smaller than those stipulated by US regulations? Because Western companies themselves are bypassing the sanctions, and Chinese firms are setting up shell companies—explains "PB".
The AI accelerator produced by Huawei was built using the Ascend 910B chip produced by Taiwan's TSMC. The Chinese government has collaborated with the Dutch ASML, which specializes in the production of lithographic machines essential for advancing processor production, the newspaper exemplifies.
