The U.S. is set to impose new rules limiting exports of chipmaking equipment to China. To learn more, TaiwanPlus spoke with David Nicholson at market research firm the Futurum Group.
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00:00The United States looks set to implement further restrictions on exports of chip-making equipment
00:05to China. The move would follow previous measures to limit China's access to key technologies via
00:11companies both inside and outside the U.S. Chris Goring explains the growing trade tit-for-tat
00:17between China and the U.S. The U.S. has been restricting the export of key chip technologies
00:23to China for the last two years, placing penalties on companies that sell to China.
00:28This applies not only to the chips themselves, but also to the essential tools needed to make
00:34chips, such as lithography systems, which only a few companies in the world produce.
00:39The first set of major U.S. restrictions began in October 2022, with a second round coming the
00:45following year. Last May, American companies Intel and Qualcomm were barred from selling
00:51chips to China's Huawei. China has responded to these moves by restricting export of key
00:56raw minerals needed for electronics manufacturing, including gallium, germanium, and eventually
01:01graphite. That all leads to these most recently reported rules, the official text of which has
01:06not yet been released. To learn more about the new U.S. rules,
01:11Chris also spoke with David Nicholson from the market research firm Futurum Group. He began by
01:17asking him how the U.S. can enforce penalties on companies outside its own borders.
01:23What if it's a company outside of the borders of the United States that's using a bunch of
01:29American technology to build a final product that they're arguing is, well, it's a Dutch product.
01:37It's like, wait a minute, but you used American hardware and software and advanced technology to
01:42build it. Yeah, but we built it in the Netherlands. OK, well, we still don't think you should be
01:48allowed to sell that to our adversaries. You are subject to the same export controls that you would
01:54be if you were an American company directly trying to sell that technology. Initial reporting seems
01:59to indicate that companies in Japan, South Korea, and the Netherlands might not be included. These
02:06are some of the most important countries in the chipmaking supply chain. Why would they be left
02:10out? It's not necessarily an exclusion or an exemption per se. It's just acknowledgment that
02:18companies within these countries are already essentially in compliance when it comes to the
02:24new, more rigorous rules. So I want to believe that's the answer. It's all on the up and up,
02:31and it isn't some sort of other backroom political favoritism that's going on.
02:37But I believe that that's the case. Malaysia, Israel, Singapore and even Taiwan are expected
02:43to be affected by this. Does the U.S. run the risk of harming its relations with these countries?
02:49It's a bit of a walking the balance beam for the U.S. because you're balancing commercial
02:56interests of your allies and your domestic companies, while at the same time there's this
03:01looming global security question. I can tell you personally, as an American, it sort of makes me
03:09cringe when I hear about my government regulating free trade and the idea that a company in Taiwan
03:16is going to have a rough time because, you know, wait a minute, shouldn't Taiwan get to decide what
03:22it sells to China? Okay, bottom line here, are these rules going to have their intended effect
03:27on China? Yeah, I think that it's undeniable that it creates friction in the system for China.
03:37It slows their ability to get from where they are now to where they want to be. Will it prevent them
03:45from ultimately dominating AI globally, whatever that means? Who knows? You know,
03:52the U.S. assertion is it's all about security. China will tell you, hey, you know what,
03:56you're just really messing with the global economy, you're hurting your partners,
04:00and we're going to get there eventually with you or without you.