Hopefully the Petitions of US Semiconductor Companies Can Wake Up Washington

As rumors that the Biden administration will expand restrictions on chip exports to China continue to swell, opposition against the noise is also growing within the U.S., with American semiconductor companies launching a rarely seen petition movement. On July 17, the chief executive officers of U.S. chip companies such as Intel, Qualcomm and Nvidia met with senior officials, including Secretary of State Antony Blinken, Secretary of Commerce Gina Raimondo, Director of the National Economic Council Lael Brainard and National Security Advisor Jake Sullivan, to clearly express their opposition to the U.S. government’s tightening of export restrictions on chips and semiconductor manufacturing equipment to China. On the same day, the American Semiconductor Industry Association also issued a statement warning that restrictions on chip sales to China may backfire on the U.S. itself.

Since October of last year, when the U.S. government launched what The New York Times called “an act of war” by beginning a chip blockade against China, U.S. semiconductor companies have continually expressed their opposition in various ways. Not only has the U.S. government failed to take their concerns seriously, but it also has continued to escalate the blockade. It is widely rumored that new restrictions will be introduced at the earliest by the end of this month, an upgrade on the export restrictions introduced in October last year. This news has caused dissatisfaction and worry to erupt among American semiconductor companies, with the group using their last window of opportunity to urge the Biden administration not to take this step and to stop enacting more restrictions on chip exports to China. There is little confidence, however, as to whether the White House will listen to their concerns and adopt their changes.

The collective action of those in the U.S. industry was not a coincidence but a sign that the so-called “chip war” has reached a new phase. It is obvious that completely opposing attitudes have emerged between U.S. industry and Washington on the issue of export controls with China. But only one side is right, and it is obvious who is right and who is wrong. The irony and absurdity of the situation is that, other than the excuse of “national security,” the U.S. government claims it launched the chip blockade against China to protect the interests of the domestic semiconductor industry. But whether it has truly protected this sector or harmed it is up to those most affected by the policy to say. Now they have given a definite answer, and they say it hurts.

China has long expected such a result and has repeatedly tried to warn the U.S. China is the largest semiconductor market in the world. Sales of American chip companies in China cannot be replaced by administrative orders from Washington or some subsidies. Crazy restrictions on exports to China will cause difficulties for the development of China’s related industries, but at the same time, it will also destroy sources of income for American semiconductor companies, which will only be a detriment to themselves.

As this looks to be a war with no winners, there is also huge conflict over the topic within the Biden administration. It is said that the faction represented by Secretary of the Treasury Janet Yellen hopes to narrow the scope of the attack as much as possible. Yellen herself has repeatedly stated that the relevant restrictions will be “targeted action” and “would not be broad controls that would affect U.S. investment broadly in China.”

The U.S. Semiconductor Industry Association made clear in its statement that the potential additional restrictions are “overly broad, ambiguous, and at times unilateral” and could weaken the competitiveness of the U.S. semiconductor industry, disrupting supply chains, causing significant market uncertainty and prompting continued escalatory retaliation by China. The China Semiconductor Industry Association also issued a statement on July 19, expressing its attitude toward maintaining the globalization of the semiconductor industry in cooperation with all industry colleagues in countries and regions all over the world. This resonance between the Chinese and American semiconductor industries proves that the industries of the two countries have formed a real system of mutual benefit with win-win results, and that it is not at all the zero-sum competitive relationship that Washington has described.

In the past, there was a popular theory in the U.S. called the “fortress state.” It describes a country in which all decisions were made from the perspective of war and so-called “national security” with market principles and rules and the private sphere all pushed aside. Today’s America looks increasingly like living in this “national security fortress.” This petition movement reflects how the differences and contradictions between the economic interests of the business world and the political thinking of the national strategic elite have already come to the point of direct conflict.

Finally, to emphasize once again, the U.S.’ extreme suppression of China may create some troubles and difficulties that will harm the interests of both parties, but it will never weigh down China, nor will it hinder China’s development and technological progress. In the end, the price the U.S. will have to pay for this will be extremely high. U.S. chip companies have already seen this clearly, and hopefully this “petition” will wake some people up in Washington.