Last month, US semiconductor stocks, including Nvidia and AMD, grabbed the headlines after announcing that the US government had imposed additional restrictions on their sale of some advanced chips to China. The stocks suffered a steep sell-off. It is but one of the latest measures — and most certainly not the last — in a widening US-Sino tech war. Indeed, the US intends to broaden current export curbs to include more chip-making tools produced by US companies such as Lam Research Corp. And companies that invest in advanced chip-making capacity in China will be barred from receiving government subsidies under the US CHIPS and Science Act.
Geopolitical tensions between the US and China have been simmering for some time, most notably during Donald Trump’s presidency, when he ordered the high-profile ban on Huawei Technologies. The two countries then engaged in an escalating tit-for-tat trade war. However, the US and China tech war has, quite assuredly, little to do with trade imbalances.
This is a war waged by the US to contain China’s rapid progress in next-generation IT and biotechnology, and particularly in artificial intelligence (AI) and bioengineering, high-performance computing as well as clean energy. Although the US continues to dominate in the high-tech space, China is catching up fast and, in some areas, may have even surpassed the former. For instance, it has the world’s most extensive 5G wireless network and rural broadband access, driving digital economy applications and smart industrial manufacturing. Huawei was a leading telecommunications player for next-generation networks and smartphones. E-commerce and digital payments are ubiquitous in the country, well before the pandemic drove adoption in the rest of the world.