The devolving US-China relationship represents the scariest dilemma facing the world since World War II, made all the worse by a horrible war in Ukraine as Russia seeks offensive arms and more support from China and other nations.
US-China is not only a concern for stern diplomats in western countries, but also Congress and the White House who are obsessed over inflation, unemployment, the debt ceiling and more. A hearing by a bipartisan US House panel on competition with China on Feb. 28 brought the enormity of the problem into somewhat better focus as the chair described an “existential struggle over what life will look like in the 21st century.” His words had taken on greater impact after the US on Feb. 4 shot down a suspected spy balloon that had been flying over North America.
More to the point: US-China affairs are also central to the tech sector and chipmakers. Such companies are occupied with balancing their budgets with layoffs or dividend reductions in the short term, but they still need a view 10 years down the road with R&D investments and strategic directions that often have involved China or partnerships with companies based in China that may directly or less directly be aligned with the Chinese Communist Party.
Most executives at US-based chipmakers have remained silent, at least in public, about Biden administration sanctions on companies selling chips and equipment into China but are going along for many reasons. For one, they support the passage of the US CHIPS Act and want to benefit from a piece of $52 billion in grants and loans that have now officially come on the block.
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A few in the chip industry, usually leaders from Canada and Asian countries, have openly expressed concerns that a degrading US-China trade relationship will hurt innovation in coming years. More immediately, they worry access to PhD graduates from China and elsewhere in Asia could be further hurt by US immigration rules. The predominance of high-end node producers like TSMC in Taiwan, an island almost constantly under peril from Chinese invasion, shows the need for the US and Europe to develop their own advanced node capabilities (3nm and smaller) and novel chip architectures and put far less reliance on Taiwan. It is a process that will take years, however.
What has been unfolding in the US since the Trump administration cracked down on Huawei (which continues under the Biden administration) shows how complex the issue can be. The US concerns that Huawei gear could be used by CCP to steal data on US companies and eventually US defense operations was attacked by Huawei as unfair and untrue, well before Biden assumed office. Huawei suffered for some time but gives the outward impression of doing well in the rest of the world where it can still sell networking gear, telling Fierce Wireless at MWC 2023 recently it has 741 customers globally for networking in addition to various innovations. Huawei also makes smartphones and displayed them separately at MWC.
A long history of US neglect and confusion over China
What has been developing between the US and China over trade and human rights has been developing—festering, really—for decades since China became communist in 1949 and, then, since China became a member of the World Trade Organization in 2001. While the US spy apparatus and diplomatic corps have followed China all this time, often in concert with close allies, there does seem to have been a complete disconnect with how the US government—including presidents and executive agencies and Congress—relays this information to the US taxpayers. Without going into a long digression on how the federal government has failed to tell its public what issues matter and what it has done in foreign affairs, it is almost as if the US uber brain trust has seen the American contest with China as a single US-style football game where China fakes it is rushing on a short play in a close game but really intends to throw a bomb (pun intended) to a receiver on the goal line.
What might be better analogy is that China is not really playing just one football game against the US, but has several games going at once, maybe actually hundreds of games and games in a variety of different sports, that the US does not even realize it is playing or has fielded players to play. The US and other western powers do not seem to have a handle on how fast and massive China’s economic and technological build up and spy ability has increased since WTO more than two decades ago. (Take China’s work in quantum or satellites, for example, or at least what the US admits it knows of such technology.)
The chip industry and its trade groups bear some responsibility for this disconnect as well. The Semiconductor Industry Association and Global Semiconductor Alliance, among others, have done an admirable job of telling the public how important chips are to the US economy and to global stability in recent years with the CHIPS Act in the US and similar actions elsewhere, but the entire industry just seems too scared to budge, much at all, on how it feels about trade with China. This might be the only safe approach for an industry worried with its bottom line, but it cannot help the public understand what is at stake or what matters in the big picture.
The media deserves condemnation as well, partly because editors cannot afford to assign reporters to cover boring chip trade statistics and lawsuits over patent rights allegedly stolen by companies backed by the Chinese government while a hulking balloon from China looms and glides seemingly blissfully over corn farms in Missouri. One potential benefit from the balloon episode is how suddenly even grazing cows will have paid attention to China. Ironically, a Chinese balloon flying over US farmlands and suspected of spying might wake up the public more than a nervous chip industry ever could.
Is the chip industry unified or just confused?
Clearly, the big chipmakers all have DC-based lobby organizations and they are staffed with people who really do follow China trade and probably speak Mandarin as well. They often work for their individual companies, however, and maybe don’t fully realize how the US-China relationship goes well beyond whether company A sells more MOSFETs or vRANs or FPGAs or SoCs or holds more patents than companies B, C and D. Maybe the US concerns with China really are existential, but do average Americans even have a glimmering of what that concern means? A well-written statement of concern by a GOP US congressman is not going to cut it, nor are similar concerns raised by Democrats.
This issue is so sensitive that fear about speaking up could be holding companies back. Or maybe companies really don’t know what they want with China for fear of being accused that all they really ever wanted was low-cost chip production and assembly labor at big facilities in Asia. It’s clear companies want US government handouts with the CHIPS Act, but beyond that mechanism, companies must think the public and the media are too simple-minded to understand how complex the matters of foreign relations can be. Is the chip industry hiding or just failing to be honest with itself? Is its vision so obtuse that its vision defies description other than during a healthy quarterly earnings call? Something, humbly speaking, needs to change.
Matt Hamblen is editor of Fierce Electronics.