Chinese semiconductor sector thrives despite US 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 the sanctions allow. They use shell companies set up by Chinese firms, reports "Puls Biznesu".
19 November 2024 08:28
For several years, US-China relations have been tense, and one of the reasons is the trade war surrounding semiconductor technology, commonly known as chips. Refrigerators, cars, smartphones, tablets, ballistic missiles, drones, and artificial intelligence are just a few examples of their applications, notes "Puls Biznesu".
The newspaper also reminds us 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 100 nanometres) essential for developing technologies such as artificial intelligence.
But that's not all, 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 or weapons of mass destruction - highlights "Puls Biznesu".
Experts quoted by the newspaper say that at first glance, 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 76 nanometres, and next year at 51 nanometres. Experts also note that there has been a revival of Huawei, which was the most "harassed" company during the first wave of sanctions imposed by the Donald Trump administration in 2018.
Huawei and SMIC joined forces and started producing phone chips and AI accelerators (processors designed for fast artificial intelligence and machine learning applications). Additionally, China began producing exascale supercomputers, despite American efforts to block this - said recently during the CFA Summit Tomasz Smolarek, an investment manager at mTFI, quoted by "PB".
Chinese bypass sanctions using shell companies
Why can China produce processors smaller than those stipulated by US regulations? Western companies bypass the sanctions, and Chinese firms set up shell companies, explains "PB."
Huawei's AI accelerator was built using the Ascend 910B chip produced by Taiwan's TSMC. The Chinese government has collaborated with the Dutch ASML, specialising in the production of lithographic machines, which are essential for the production of advanced processors, the newspaper exemplifies.
