Huawei’s chip triumph is proof that US tech war on China is sheer folly
- The fact US-made equipment is still widely available in China despite export controls will only further undermine American allies’ appetite for a coordinated tech war
- The greater the ambition for decoupling, the wider and deeper the tech restrictions must be – but few countries are interested in shutting out China
Yet the chip at the heart of Huawei’s Mate60 Pro – the Kirin 9000s – is not a technological revelation.
Mainland Chinese foundries like Semiconductor Manufacturing International Corporation (SMIC) have access to the same technologies that Taiwan Semiconductor Manufacturing Company (TSMC) used initially to make 7-nm chips. And evidence emerged last year that SMIC was already producing sub-14-nm chips for commercial use. Still, SMIC’s achievement is impressive and sheds light on the Chinese industry’s capacity to thrive despite US controls.
Analyses of the new Kirin chip suggests that SMIC has achieved yield rates from its most advanced fabrication process that allow chip production at a scale and cost that can cater for Huawei’s new lines of consumer devices and at the same time for the Chinese economy’s other needs.
That in turn has implications for the willingness of US allies to go along with Washington’s chip war against China.
There is already concern in Europe, Japan and South Korea that following the US lead will harm their companies in a marketplace where the competitors are largely from the US or allied advanced economies. Evidence that US-made equipment is still widely available in China despite Washington’s export controls is likely to undermine appetite for coordination among these countries, whose companies occupy critical roles in the chip supply chain.
The October 2022 controls remain an interim rule to be finalised, with the US government reportedly in renewed internal debate over how to proceed. At the heart of this challenge is the dual-use character of strategic technologies like semiconductors, and China’s global economic integration in ways beyond low-level processing trade.
From the start of the US-China technology wars, it seemed unlikely that such an entrenched Chinese presence in the web of interdependence could be excised by seeking to cut Chinese players off from selected technologies.
Such a “targeted” approach to China “de-risking” has had more doubt cast over it by the shadow of Huawei’s and SMIC’s achievement. Even within the relatively narrow scope of chip fabrication, only a few technologies are specific to the most advanced processes. Many more inputs are applicable to production at older generation processes that are not export controlled.
Supported by state largesse, China’s extensive ecosystem of hardware and software suppliers and vast talent pool will keep generating technical and commercial solutions, unless more drastic foreign measures are taken.
De-risking from China? That way lies economic disaster
But the direct costs from replicating industrial activity will stack with costs from a slowing global shift to green energy and the aggravated climate change effects that will result in – the costs that will be world-spanning but unevenly distributed.
The greater the ambition for decoupling and the curbing of Chinese technological progress, the wider and deeper the export controls and other restrictions must be. That implies an increase in both the US need for cooperation from allies and their reluctance to follow. And outside this circle of technologically advanced economies, few countries are interested in shutting China out.
Much more political water needs to flow before progress like that represented by Huawei’s new chip is put decisively out of Chinese reach.
John Z. Lee is director of the consultancy East-West Futures