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Why the US-China chip war is heating up

Assif Shameen
Assif Shameen9/18/2020 07:00 AM GMT+08  • 10 min read
Why the US-China chip war is heating up
With the US ban on China chip makers, the latter has its work cut out as it attempts to become a semiconductor superpower.
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This past week, a new space plane prototype flew on a test flight from Jiuquan Satellite Centre in the Gobi Desert, landing back on Earth on Sept 6. US satellites caught the landing and part of its journey. Beijing confirmed that a Long March 2F rocket had carried a “reusable experimental spacecraft” into orbit, describing the flight as an “important breakthrough”. The plane was modelled after US X-37B, an American space plane that has been operating for nearly a decade.

A space plane such as US X-37B uses a lot of sophisticated equipment powered by state-of-the-art semiconductors. While China presented the experimental plane as a huge breakthrough, the truth is that it remains dependent on foreign semiconductor equipment manufacturers such as Applied Materials Inc, Lam Research Corp, Japan’s Tokyo Electron and the Netherland’s ASML Holding as well as foundries or fabs run by Taiwan Semiconductor Manufacturing Co (TSMC) or South Korea’s Samsung Electronics Co, which make chips for design houses that do not have their own factories. Without access to chip designs, equipment or the foundries themselves, China will not have the chips that power sophisticated gear in space flights or, indeed, other military equipment or consumer electronics such as 5G smartphones.

Since early 2018, when President Donald Trump’s rhetoric sparked a trade war between the US and China, technology has been the main battlefield, and the epicentre of action has been semiconductors. As the trade and tech war have morphed into a Cold War between the two most powerful nations on earth, the US maintains a clear advantage over China because of its lead in semiconductors. Little wonder, then, that Washington is leaving no stone unturned to deny Beijing access to chip technology, equipment or facilities that might allow it close the gap.

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