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When The Chips Are Down Will The US Continue To Rise?

By TD NewsDesk

TD NewsDesk

Updated on Wed, Jul 5, 2023

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The one race that will never lose speed is the technology race! #ThisRaceGoesOn

Quick-fire Question: what is a key element in modern technology?

Answer: Microchips!

Well, China is looking to tighten control over the export of two key materials used in the manufacturing of high-tech computer chips. The move will come into force in August and will restrict the export of gallium and germanium, for which exporters will need special licenses.

These rare metals are used in chipmaking, semiconductors, solar panels, radars, fiber-optic communication, night-vision goggles, space exploration satellites and military equipment.

As per China's Ministry of Commerce, the restrictions were made to "safeguard national security and interests."

Even the Netherlands and Japan are acting on similar lines, with Netherlands first restricting exports of semiconductor manufacturing equipment and then restricting its "most advanced" microchip technology exports. Japan too drew up plans to restrict computer-chip making exports.

Regarding the situation, Eurasia Group analysts wrote, “It is a shot across the bow intended to remind countries including the United States, Japan, and the Netherlands that China has retaliatory options and to thereby deter them from imposing further restrictions on Chinese access to high-end chips and tools.”
 
However, the good news is that the US is making major investments in the manufacturing, research and development of semiconductors.

This consists of a federal semiconductor incentive program, CHIPS for America Fund, which will include more than $50 billion in funds.

This is just a part of the CHIPS and Science Act (2002), which aims at enhancing the semiconductor industry and its competitiveness in the US, with emphasis on developing its innovation and providing better protection to US national security.

Another reason behind the initiative is to address the recent chip shortages and bring the manufacturing processes of semiconductors back to the US. Many US chipmakers, including Nvidia, have their finished goods inventory, components and supply capacity located in Asia, which can be affected by geopolitical tensions.

Furthermore, GlobalFoundries, which ranks among the top foundries worldwide, announced that it received $30 million in federal funding to further innovation and production of next-generation chips.

This does well against the concerns raised by Senator John Cornyn, who said in 2021 that “China is building 17 foundries as we are thinking about building one, or having one built in Arizona”.
 
Speaking on the initiative, Gina Raimondo, Secretary of Commerce, said, “After the pandemic exposed holes and bottlenecks in our semiconductor supply chains that sent shockwaves across our economy, the CHIPS and Science Act is a historic opportunity to ensure our microchip supply chain resilience ... Thanks to the Investing in America agenda, we’re already seeing billions in private sector investment bolster the semiconductor supply chain.

What do you make China’s move to restrict exports? Will this lead to less reliance on Chinese imports for semiconductors? Let us know in the comments below!

First published on Wed, Jul 5, 2023

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Tags:

Microchips High-tech computer chips Gallium Germanium exports China USA Netherlands Japan restrictions licenses Tech Race

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