US-China 'Chip War': No Winner!

The move comes amid ongoing disputes between the two countries over chip manufacturing technology for critical information infrastructure sectors such as telecommunications, transportation, and finance. Observers say the move deepens the dispute between the two tech and security giants, signaling a zero-sum war where both sides will suffer losses.

Hard blow

In an unsurprising move, the Cybersecurity Administration of China (CAC) recently announced that the US chipmaker Micron had failed a cybersecurity assessment, which effectively banned operators of China’s critical infrastructure from purchasing its products. Specifically, the Chinese regulator stressed that the assessment showed that Micron’s products posed a relatively serious risk of causing cybersecurity problems.security riskChina's critical information infrastructure supply chain and national security. However, the agency did not elaborate on the potential risks and which specific Micron products would be affected by the ban.

The US-China chip war is escalating. Photo: AsiaTimes

Micron is one of the largest U.S. chipmakers, with more than 10% of its revenue coming from mainland China. Shares of Micron Technology (MU) fell about 3% on Monday following China's announcement. Meanwhile, Asian rivals posted new gains. Chinese chipmaker Ingenic Semiconductor rose 2.8%, while Shenzhen Techwinsemi Technology gained 6.3%. In Seoul, SK Hynix, one of the world's largest chipmakers, rose 0.9%. The Chinese regulator's decision comes nearly two months after it began a cybersecurity review of Micron's products, a move that was in retaliation for sanctions imposed by Washington and its allies on China's chip sector.

While Micron has expressed its willingness to discuss with Beijing, a spokesperson for the US Department of Commerce has firmly stated that Washington firmly opposes such unfounded restrictions. “This action, along with other recent attacks on US companies, is inconsistent with Beijing’s claims of open markets and commitment to a transparent legal framework,” the US State Department said in a statement. The US State Department also expressed serious concerns about the ban, saying the US would work with its allies to address the issue.

Micron is the latest victim in the US-China tech war. Photo: AP

Who is worse off?

The US warning is not just a threat. Just one day before Beijing's ban, leaders of the G7 countries at the Summit in Hiroshima (Japan) harshly criticized Beijing on human rights issues, "non-market" economic policies, Beijing's military activities in the East China Sea as well as the South China Sea... In a landmark joint statement, the G7 group, although emphasizing the need to cooperate with the world's second largest economy, still needs to focus on countering Beijing's "malicious" or "coercive" actions.

Previously, the US hadban on installing TikTok appon government equipment and imposed restrictions on the export of certain advanced computer chips to China. Looking back since October 2022, the Washington administration has imposed a series of export controls on US chip components and equipment to China in an effort to block China's access to technology critical for military purposes. More recently, in March, two US allies, Japan and the Netherlands, also announced restrictions on the export of chip manufacturing technology abroad to countries including China.

It is understood that chips are now the strategic focus of Beijing in its efforts to become a technological superpower. China is pouring $220 billion into accelerating the development of its chip industry, gradually reducing the need for foreign technology and moving towards self-sufficiency. China currently has its own chip manufacturers, but these units mainly supply low- to mid-range processors used in home appliances and electric vehicles. One reality that Beijing is forced to admit is that it still depends on advanced chip technology from the US and its allies. Therefore, the new ban will be a factor that slows down the modernization of China's chip industry.

Workers work on a semiconductor chip production line at Jiangsu Azure Corp in Huai'an, Jiangsu province, China. Photo: China Daily/Reuters

On the other hand, American companies will also suffer significant losses when they lose the grip of a major market like China. Therefore, economic experts are warning US lawmakers to carefully consider imposing additional trade restrictions on China. More broadly, the escalating “chip war” is posing a serious risk of disruption to the global production chain of many other important products such as computers or cars. The risk of politicizing technology will also not be excluded in international cooperation on clean energy or pharmaceuticals - urgent issues of the world today. In this scenario, perhaps both sides will be losers!