The News
The US is preparing new rules to restrict other countries from exporting semiconductor chips to China, according to reports. These kinds of chips are crucial for advanced computing and artificial intelligence technology.
The restrictions could make exceptions, however, for shipments from some US allies, including Japan, the Netherlands, and South Korea, Reuters and Bloomberg reported. Shares in ASML, a Dutch firm that makes chip printing machines, surged on the reports.
The rules would be the latest in a series of blocks designed to stop Beijing from getting its hands on advanced semiconductor chips or the means to make them itself, as the US tries to maintain a technological edge over the country.
SIGNALS
US is trying to curb China without alienating allies
By exempting key chip manufacturers in allied countries from the new proposed restrictions, Washington is trying to balance a hard stance on China with not alienating allies who need China’s market, Reuters noted. Almost half of Dutch manufacturer ASML’s first-quarter revenue came from China, and the company — one of industry’s biggest players — has already felt the impact of other US restrictions on its balance sheet, The Register added. But with so many countries’ exports exempted from the rules, it’s unclear what effect they will actually have on China’s chip ambitions, if any.
Chinese telecom giant Huawei is enjoying a resurgence
A flash point in the US’ long-standing tech trade war with China is telecom giant Huawei. Washington blacklisted the company years ago, and has tried to cut off the company’s network of chipmakers. Huawei initially faltered, but support from Beijing kept it afloat and now it’s doubled its profit, made its own chips, and stepped up competition with Apple. Huawei’s resurgence is a cautionary sign for the US, The Wall Street Journal wrote: American restrictions are “inadvertently bolstering the company’s resilience, echoing the age-old adage that what doesn’t kill you makes you stronger,” one analyst said.
American protectionism is here to stay
Biden’s war on tech has helped to grind US-Chinese diplomacy to a halt, Politico wrote. That’s set to continue: Regardless of who wins in November, the next US government will likely pursue a protectionist and unilateral foreign policy, an Asian researcher argued in the South China Morning Post. Trump’s “America First” strategy, which includes a proposed 60% sanctions on Chinese goods, would entrench this stance, but Democrats have also shown they are prepared to put tariffs on Chinese goods to show political strength at home. “The next American president is likely to be haunted by turbulent domestic politics and a sceptical world,” while Biden may be remembered with “nostalgia,” the academic wrote.