The news continues to misrepresent export control regulations as some sort of ban. As I explained in my previous post, the restrictions are merely to secure mega profits for a select few licensed exporters while kicking out their competitors. In particular, preferentially giving license to American corporations at the expense of American allies.
The “loopholes” in the restrictions are also never explained. We’re just supposed to take it face value that “cHiNa iS BreAkInG tHe RuLeZ!!1”. From my reading of the US Dept of Commerce’s official Export Administration Regulations, the only “loophole” is that exporters can apply for a license and then they can export. The continuous portrayal of China as a bad faith trade partner is a propaganda tactic to cover up their own bad faith profit driven dealings—wanting to profit from trade with China while directing the American public’s anger at China for the hollowing out of the American chip industry.
The decline of imports is subtly portrayed as a win for the cover narrative that the sanctions are presumably to slow down or stop altogether China’s access to chips. In reality, this is probably due to China building up domestic chip manufacturing—I’ll credit the article for mentioning that revenue from domestic manufacturers rose 39% in the first half of 2023 compared to a year earlier. By presenting it this way, they confuse readers into thinking that this loss (the decline of exports to China) is actually a win.
It’s pretty funny how these people have no imagination whatsoever, all they know how to do is double down on shit that clearly isn’t working for them.
I enjoy clowning on capitalists as much as anyone but just like how capitalist wars aren’t about achieving military victories but rather securing business for the MIC corporations, the chip ban (which is not a ban at all according to the actual Export Administration Regulations) is about securing mega profits from trading with China for certain—American presumably— corporations at the expense of their competitors through preferential license issuances. Slowing down/stopping access to chips is merely a narrative crafted to portray China as a bad faith trade partner who’s always cheating or breaking the rules.
That’s likely the rationale behind the move, but the problem is that we already see US based companies starting to lose money because of it. This was a really good of the problems. Basically, chip development has very low margins and profitability relies entirely on selling large volumes. China used to be one of the biggest consumers for chips, and now US companies aren’t allowed to export newer chips there. So, their market has shrunk and now it’s not profitable for them to even bother developing new chips. What’s worse is that they’re now becoming worried that China will be flooding the world with older chips now that they’ve spun up their own foundries. Most of the chips being sold aren’t bleeding edge ones, but older variants that are still good enough for most applications.
US has also been struggling with trying to get domestic foundries going, and at the rate things are going I expect China will end up leapfrogging the US in terms of bleeding edge chip production as well within a couple of years.
The only play US really has here is to force their vassals to decouple from China entirely and then force them to buy chips and other tech from US. However, we’re already seeing anti-US sentiment growing in Europe, and pro US governments might end up getting kicked out of power in the near future.
Overall, I think this is a really poor strategy all around, and it’s not going to produce the results that US is hoping for. It’s the same level of delusion that resulted in the debacle in Ukraine.
Interesting ideas but it doesn’t take into account the extremelly expensive AI chips, and the new AI designed chips as well to a lesser extent I guess.
If they can make enough money with the AI chips, or if the government invests heavily, they could keep their position for longer, but if it doesn’t make them enough or if they just distribute this to the shareholders they could indeed face a lack of sales leading to falling income and possible crashes.
Truly specialized chips for AI have yet to be fully explored. And China will surely be one of the countries to invent them, with the sanctions in place meaning the government will have to prioritize designing new chips.
It looks like US hasn’t really been doing much of an investment into subsidizing domestic fabs
Meanwhile, China is already making domestic 7nm chips for AI https://www.digitimes.com/news/a20230717PD210/china-7nm-ai-chips.html
and has a huge domestic market https://asiatimes.com/2023/12/china-to-meet-ai-market-demand-with-local-chips/
My expectation is that China will rapidly catch up and will start outpacing western chip companies. It’s also worth noting that as western chip market slumps, China will be able to poach a lot of the people. This has already been happening with TSMC and Samsung researchers and engineers moving to China because they got really attractive job offers.
Those are some good points and I agree, but it’s important to note that the export rules doesn’t actually ban chip sales, it merely adds a requirement to get a license from the US Dept of Commerce (specifically the Bureau of Industry and Security). It would be expected that many companies American and not would start losing money since we would expect only the chosen few would be approved for the license. I think China was already planning to boost domestic chip production even before the “chip war” and the US is desperately trying to keep as much of the market for the “chosen ones” corporations before losing the market altogether.
That said, It’s kind of interesting to see just how incompetent and delusional US policymakers can be when they can’t achieve any of their stated objectives much less their ulterior objectives.
I definitely agree with your assessment of the logic behind this move.
There’s only so much you can do when you’re whole approach is ‘do as we say or else’ but the threats stop working.
Bro just one more sanction. Please their economy has almost collapsed, just one more sanction. Bro please just one more.