The News: Execs from major U.S. manufacturers Intel, Qualcomm, and NVIDIA recently met with Secretary of State Antony Blinken to make a case for exporting advanced chips to China, despite hints that the Biden Administration seems keen to tighten restrictions. Read the full article from Reuters.
The U.S. Hints at Tighter Restrictions on China, but Not Without Pushback
Analyst Take: Back in October 2022 the Biden administration announced some major export restrictions on China. The restrictions took specific aim at limiting China’s ability to grow its AI technology due to fears that it would use those technologies for military purposes. It’s a valid concern for national security, for sure. But for U.S. semiconductor manufacturers, it feels like a major misstep. Limiting business with China means missing out on more than 1/3 of the global semiconductor demand. And tightening those restrictions even further means the U.S. semiconductor market will get an even smaller piece of the global pie.
The discussion is a complex one, to be sure. It gets even more complex when taking into consideration that other U.S. allies are making similar concessions to the U.S. demand to limit China’s access to AI technology. For instance, ASML Holding NV, a major provider of chip making equipment, is facing export controls from its home base the Netherlands forbidding the company from “maintaining, repairing, and providing spare parts” for specified equipment without the government’s approval. The United States is also expected to bar ASML from selling certain gear to certain Chinese plants without U.S. approval.
You might wonder: how can the U.S. ban ASML, a Dutch company, from selling technology to China? Because that’s how global politics works. Allies make concessions for one another to reach a shared goal. In this case, the goal is to prevent China from becoming a major military superpower. The problem, of course, is that political goals don’t always align with economic goals or technological reality. That’s where the current skirmish between the U.S. semiconductor industry and the U.S. government comes in.
So, right now, we have two camps setting up for a major sit-in:
- Those in favor of exporting chips to China: The semiconductor industry would argue that losing out on one of the largest markets in the world is bad for the entire country, not just their individual profit margins. They’d also argue that limiting chip production or export would cause a huge global downturn, limiting the advancement of technology and access to AI-specific chips around the world.
- Those against exporting to China: The United States—as well as some of its allies—would agree that making top technologies available to China, which is already one of the most powerful nations in the world, would put global stability at risk. If China were to grow its militarization of hacking abilities, the United States and other democratic nations would be ill-prepared to deal with the strength of the attack.
Honestly, both sides are valid. But to reach any meaningful outcome, we need to consider the technological realities noted above. And those are that technology is here, and growing, by the minute. U.S. manufacturers need to create the chips to fuel this technology, and these chips need to be made available to all nations to advance technology to its optimum capabilities. Technology isn’t political. It simply is. And while sweeping restrictions against China may look good on paper, the truth is that China will get the chips it needs from someone, regardless what the U.S. government decides. Why not focus on building clear guidelines on what China can create, rather than cutting off its access altogether?
Restrictions like the ones being floated to further tighten China’s access to chips capable of building AI make good soundbites on network news, but the truth is all of us need to work together to create the safe, responsible tech solutions we all want to deploy on our planet. Rather than cut China out of the discussion, let’s let them be part of the solution. Naïve? Maybe. But I’d rather live in a transparent tech eco-system than one where technology can grow—and devolve—in the shadows.
Other insights from The Futurum Group:
Talking Broadcom, VMWare, China, Microsoft, Activision, Adobe, Amazon, IBM & Google
GlobalFoundries and Lockheed Martin Put the National Security Into the US Chipset Supply Chain
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
