“An Act of War”: Insight into America’s Silicon Blockade Against China

By exploiting the industry’s natural bottlenecks, the Biden administration wants to block China from the future of chip technology. The impact will go far beyond constraining China’s military advances, and will also threaten the country’s economic growth and scientific leadership. “We said there are important areas of technology where China shouldn’t move forward,” says Emily Kilcrease, a senior fellow at the Center for a New American Security and a former US trade representative. “And these happen to be the areas that will drive future economic growth and development.” Today, scientific advances are often made by running simulations and analyzing vast amounts of data, rather than trial-and-error experiments. Simulations are used to discover new life-saving drugs, model the future of climate change, and explore the behavior of colliding galaxies and the physics of hypersonic missiles and nuclear explosions.

“The man with the best supercomputer can do the best science,” Jack Dongarra, founding director of the Innovative Computing Laboratory at the University of Tennessee, told me. Dongarra runs a program called TOP500, which ranks the world’s fastest supercomputers every two years. As of June, China claims 134 spots compared to 150 for the US. But the picture is incomplete: Around 2020, China’s submissions plummeted in a way that suggested Dongarra was trying to avoid attracting unwanted attention. Rumors of new supercomputers circulate in scientific publications and research announcements, allowing observers to speculate about the real state of the competition — and the size of China’s presumed lead. “It’s striking because China didn’t have any computers on the list in 2001,” Dongarra says. “Now they’ve grown to the point of dominating it.”

But behind China’s strength lies a key weakness: almost all chips that power the country’s most advanced projects and institutions are intrinsically linked to US technology. “The entire industry can only function with US inputs,” says Miller. “In every facility that is remotely state-of-the-art, there is US tooling, US design software, and US intellectual property throughout the process.” Despite decades of efforts by the Chinese government and spending tens of billions of dollars on “indigenous innovation” the problem remains acute. In 2020, China’s domestic chip makers covered just 15.9 percent of the country’s total demand. In April, China spent more money on importing semiconductors than on oil.

America fully understood its power over the global semiconductor market in 2019, when the Trump administration added Huawei, a major Chinese telecoms maker, to the list of companies. Although the listing allegedly represented punishment for a criminal violation – Huawei had been caught selling sanctioned materials to Iran – the strategic advantages were immediately apparent. Without access to US semiconductors, software and other essential supplies, Huawei, the world’s largest maker of telecom equipment, struggled to survive. “The Huawei sanctions immediately lifted the curtain,” said Matt Sheehan, a fellow at the Carnegie Endowment for International Peace who studies China’s tech ecosystem. “Chinese tech giants use chips that are made in America or have deep American components.”

Export control law has long been seen as a dusty, mysterious ambush far removed from the actual exercise of American power. But after Huawei, the United States discovered that its dominance in the semiconductor supply chain was a rich source of untapped leverage. Three US-based companies dominate the market for chip design software, which lays out the billions of transistors that fit on a new chip. The market for advanced chip-making tools is similarly concentrated, with a handful of companies claiming effective monopolies over key machines or processes — and almost all of those companies are American or dependent on American components. At each step, the supply chain passes through the US, US treaty allies, or Taiwan, all of which operate in a US-dominated ecosystem. “We stumbled in,” says Sheehan. “We started using these weapons before we really knew it How to use them.”

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