Chips and Biden’s Obsession with China

One of U.S. President Joe Biden’s obsessions since inauguration — like that of his predecessor, Donald Trump — has been the attempt to obstruct the dizzying economic, political and social development of the People’s Republic of China.

During a speech given in the White House on Oct. 28 supporting a multibillion dollar spending bill that was previously approved by Congress, the president affirmed that it “put us on a path not only to compete, but to win the economic competition for the 21st century against China and every other major country in the world.”

The production of microchips is included in this confrontation. Washington relies on a few advantages it has over Beijing: The globe’s main production plants are in the United States or in allied countries, such as South Korea, Japan and Taiwan, the latter being the world’s primary manufacturer.

The cutting-edge chips, which are sent to all the large advanced technology companies, are concentrated mainly in two brands: TSMC in Taiwan and Samsung in South Korea. Next are Qualcomm and Intel from the U.S. It is estimated that about 80% of chips are produced in Taipei and Seoul.

The U.S. is granting million dollar loans so that its companies are able to expand the ability to increase production. For example, Intel has invested $20 billion to open two microprocessor factories in Arizona.

In this declared commercial-financial war, Biden’s administration recently prohibited Intel from initiating the production of microchips in a factory in the Chinese city of Chengdu to deal with the shortage. The company explained to U.S. authorities that increasing silicone wafer production in the U.S. by the end of 2022 is a key component in the manufacturing of semiconductor devices — like integrated circuits — and in starting their production in the Asian country.

The spokesperson for the Ministry of Foreign Affairs of the People’s Republic of China, Zhao Lijian, denounced Washington’s refusal of Intel’s plan as another example of imposed commercial barriers that undermine the rules of international business.

Lijian added, “Economic globalization is an objective reality and historical trend. The U.S. has repeatedly overstretched the concept of national security and abused state power to politicize and weaponize science, technology and economic and trade issues based on ideology.”

All this is happening against a backdrop of universally increased concern about the shortage of chips used in a variety of ways, such as computers, cell phones, cars, high-tech teams, aviation and astronautics. Many companies have suffered the lack of microprocessors and chips since the decline of the pandemic and the increase in demands.

Also, millions of ultramodern and expensive chips are required for the implementation, proliferation and maintenance of 5G network databases.

For most countries, it is impossible to build and operate a factory for these sophisticated components because it demands enormous startup capital.

The factories must rely on highly qualified, highly salaried personnel who are also scarce in many countries. As if this weren’t enough, the facilities require maintenance and extreme cleanliness — a single dust particle could cost millions. The constant updating of these microchips is essential to remaining competitive in the market, as products could become almost obsolete given the slightest delay.

Web Russia Today cited Intel, for example, which lost its industry leadership some years ago when Asian rivals started to produce chips with 5-nanometer transistors — 20,000 times smaller than the thickness of a sheet of paper.

In its open hostility toward Beijing, the United States also sanctioned the companies Huawei and SMIC to prevent their access to technologies for microchip development; thus, they forced the Asian giant to become more self-sufficient in other fields.

But in this clash of titans for technological supremacy, Beijing holds a powerful card: It owns between 85% and 95% of production and the supply of the rare earth elements, while Washington depends on 80% of these supplies coming from China. Rare earth elements are also produced — although in minor quantities — in India, Russia, the U.S., Burundi, Malawi, Canada and Australia. An interruption in supplies would have serious negative effects on the North American economy.

The rare earth elements consist of a group that consists of 17 metals and minerals: cerium, lanthanum, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, scandium and yttrium.

If the Asian giant cuts its shipments, then the U.S. would suffer huge technological and military delays; according to experts, it would take about three years to find new suppliers. Faced with this reality, the White House will be left with no other option but to call for a careful weighing of the issue.