Great results can be achieved with small forces,” Sun Tzu wrote in “The Art of War” some 2,500 years ago.
That quote is so old it’s now an adage. But it appears the U.S. isn’t content to wager that small actions can achieve the wide-ranging impacts necessary to gain an edge over China in the development of AI and machine learning technologies.
After implementing sweeping restrictions on the export of semiconductors to China last October, the U.S.’ recent deal with Japan and the Netherlands to restrict the export of vital semiconductor parts and chip-making technologies to China is throwing the $600 billion global semiconductor industry into turmoil.
The implications of these restrictions are broad, given that China accounts for approximately 80% of the world’s electronics production and is a large consumer of semiconductors. To make things even more complicated, nearly every major chipmaker has Chinese customers.
But Washington doesn’t seem to be concerned with the worries of global chipmakers or near-term supply chain volatility. It’s looking far to the future: It wants to choke out China’s ability to develop and access AI technology while diversifying its sources of the increasingly important semiconductor.
The United States’ aggressive moves are about “AI dominance, which underpins what many call the fifth industrial revolution, and ultimately, about global economic leadership in the next few decades,” according to Josep Bori, research director at GlobalData.
And the recent deal with Japan and the Netherlands, which includes “preventing legacy deep ultraviolet (DUV) machine exports and outright advanced AI chips,” targets China’s semiconductor business and its ability to develop its AI technology well beyond just hardware, Bori said.
You can’t make pancakes without a pan
You see, while China makes a ton of different semiconductors, it doesn’t have some of the advanced equipment that’s needed to make the fastest processors, chips and memory storage devices.
Manufacturers in the country import a lot of the chips and equipment from companies across the world, including Taiwan’s TSMC; the U.S.’ Intel, Nvidia, and AMD; South Korea’s SK Hynix and Samsung; the Netherlands’ ASML Holdings; and Japan’s Nikon and Tokyo Electron.
This, to an extent, means that Chinese manufacturers like Semiconductor Manufacturing International Corporation (SMIC) rely heavily on the global semiconductor industry for the machines to make high-end chips.
According to Bori, a number of the high-end logic and memory chips are made using extreme ultraviolet (EUV) and deep ultraviolet (DUV) lithography machines.
“Initially, the [U.S.’ export] bans to China only affected EUV machines, used for the most advanced process nodes, such as 3 nm, 5 nm, and 7 nm,” Bori said.
This played into the U.S.’ strategy to slow Chinese companies’ advances in AI, machine learning and other cutting-edge tech. Basically, the smaller the distance between each transistor, the faster and more power-efficient a chip becomes. The smallest process nodes, such as 3 nm, 5 nm and 7 nm, are used to develop artificial intelligence systems, smartphones, cloud data centers and self-driving cars and are used in military applications.
But the January agreement targets older DUV machines that could let Chinese manufacturers make 14 nm chips, as well as 18 nm DRAM chips and NAND flash chips with more than 128 layers, Bori added. DUV machines let you make chips at the 14 nanometer, 28 nanometer and larger process nodes; such chips are commonly used in automobiles, industrial equipment and home appliances.
How are global chipmakers preparing for the US-China chip war? by Kate Park originally published on TechCrunch
