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  • Writer's pictureBy The Financial District

Biden Clips China's Boast Of Leading Tech Race

Despite the boast of China’s foreign ministry that Beijing is moving to develop high technology and beating other nations in the race to manufacture computer chips that are smaller and more powerful, US President Joe Biden cut Beijing down to size by banning the sale to China of computer chips used in artificial intelligence (AI), blockchain and military designs.

Photo Insert: The US has rightly determined that China is dozens of years behind it in developing microchips, graphics processing units, and AI.

Reporting for South China Morning Post (SCMP), Matt Haldane of SCMP’s technology desk said the signing of the Chips and Science Act into law perked up the US campaign to deny China access to chips that are less than 7 nanometers that are used in AI, and fabricators like Nvidia and ADSML of the Netherlands have been prohibited from selling to China since their chips are manufactured using US machines.

China is dependent on US fabricators and NVIDIA holds a virtual monopoly on designs. China could not purchase sensitive chips from ASML, a Dutch company, which makes advanced lithography equipment with licensed US patents.

China’s dependence on chips designed in Taiwan for a variety of products could be hit hard when the US tells Taiwan to stop shipping chips to China. China’s continued dependence on overseas technology has become more conspicuous in recent months.

The China Semiconductor Industry Association has complained of a “hostile” environment created by the US Chips and Science Act, which is meant to pump nearly $53 billion into the American semiconductor industry for more domestic production. Pouring salt on the wound is a provision that prohibits beneficiaries of the new law from building advanced factories in China for 10 years.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

The US has rightly determined that China is dozens of years behind it in developing microchips, graphics processing units, and AI. It has not developed a scientific cadre capable of beating the US, thus the fight over chips also has knock-on effects in other industries considered strategically important.

This was most recently seen with artificial intelligence (AI), which has come to heavily rely on advanced graphics processing units from Nvidia for machine learning. When the US barred Nvidia from selling its powerful A100 and H100 chips to China, the domestic AI industry reeled.

Market & economy: Market economist in suit and tie reading reports and analysing charts in the office located in the financial district.

As one industry insider pointed out, Nvidia chips are hard to replace when it comes to AI. In August, chip exports from China plummeted by nearly a quarter, the biggest monthly drop since records began in 1997.

As it is, Chinese tech products are deteriorating and the big boast of Xi Jinping that he can surpass the US in due time may just be a mirage, all because they never exercised independence and initiative in developing an advanced but homegrown chips industry.

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