[Epoch Times, February 26, 2022](Epoch Times reporter Zhang Ting comprehensive report) Russia launched a war on Ukraine from sea, land and air on Thursday (February 24), triggering comprehensive sanctions by European and American countries. The CCP announced on the same day that Sino-Russian trade was normal, raising concerns that the CCP helped Russia evade sanctions. But experts say there are some types of chips that Russia needs that China cannot make anyway.
The U.S. imposed export restrictions to Russia as part of a package of response measures after Russia launched its invasion of Ukraine on Thursday. The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced Thursday that it will limit Russia’s access to technology and other products.Russia will lose access to products such as semiconductors, computers, telecommunications, information security equipment, lasers and sensors. That would force companies that use U.S. equipment to manufacture these products overseas to obtain prior U.S. permission to supply products to Russia.
The U.S. Commerce Department said the controls were primarily aimed at Russia’s defense, aerospace and maritime sectors. The United States is taking this action in partnership with the European Union, Japan, Australia, the United Kingdom, Canada and New Zealand.
In addition to the Commerce Department’s export restrictions on high-tech products, the United States, Britain and the European Union have announced other sanctions against Russia aimed at isolating Moscow from the global economy.
Beijing has never criticized Putin’s incursions, and China’s foreign ministry said on Thursday that trade with Russia would remain “normal” while it approved the import of wheat from Russia. In response, the White House responded that Sino-Russian trade was not enough to offset the impact of U.S. and European sanctions on Moscow.
White House spokeswoman Jen Psaki said China and Russia’s share of the global economy is far lower than that of the G7, which includes the United States and Germany. This means that Sino-Russian trade cannot make up for the impact of sanctions imposed by the United States and Europe.
China cannot supply high-end chips to Russia
Reuters pointed out in an article on February 25 that Russia cannot fully seek help from Beijing in terms of chip supply.
The report quoted a Chinese chip consultant as saying that Russia’s own chip industry is a failure and depends on global semiconductor supplies.
The United States imposed sanctions on Chinese telecom giant Huawei in 2019, cutting off most of the company’s overseas chip supplies and effectively preventing it from building its own chip supply. The U.S. extended sanctions in 2020 to China’s largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC), further hampering China’s plans for tech hegemony.
According to the Semiconductor Industry Association, China’s share of global chip exports remains negligible — its fabless chip makers (meaning only circuit design for hardware chips, which are then handed over to foundries to manufacture, and companies responsible for sales) account for about 16% of the global market share. It also limits the extent to which Beijing can help Russia, which has been severely sanctioned, Reuters said.
“China alone cannot meet all of Russia’s critical military needs,” said a senior U.S. government official.
The official also said that China does not have the most advanced semiconductor production technology. “As a result, both Russia and China are dependent on other suppliers, and of course on American technology, to meet their needs.”
According to the United Nations Comtrade, China exported about $10 billion worth of electronics to Russia in 2020, accounting for about 20 percent of its total exports, with smartphone shipments accounting for a large portion of that.
Doug Fuller, who studies China’s technology policy at City University of Hong Kong, said that while a complete Western cut off Russia’s chip imports from other countries could increase Chinese chip exports, “some of the chips that Russia needs China is not going to do anyway. cannot be manufactured”.
The CCP does not have access to advanced equipment and high-end technology, making it difficult to produce high-end chips
High-end chips are used in a wide variety of cutting-edge products, from advanced smartphones and 5G cellular devices to computers for artificial intelligence.
Over the past decade, China, the world‘s largest importer of chips, has invested heavily in semiconductor projects as part of its “Made in China 2025” plan. The 2025 plan calls for a 70% self-sufficiency rate for core components of key technologies by mid-decade.
But Chinese manufacturers such as SMIC cannot produce high-end chips due to U.S. technology export restrictions. Reuters said that so far, China has produced mainly low-end chips.
The Semiconductor Industry Association said in a 2021 report that China is “significantly behind” in tools, materials and production technology.
Washington and Europe, citing security concerns, are preventing Chinese chipmakers from gaining access to the most advanced tools and preventing them from competing with global leaders in precision and efficiency.
Without these advanced tools, China would fall further behind, Peter Hanbury, who focuses on the chip industry at Bain & Company, told The Associated Press.
The Wall Street Journal reported in a July 2021 report that the CCP had difficulty obtaining advanced chip machines. China wants to supply domestic chipmakers with $150 million worth of machinery, allowing smartphone giant Huawei and other Chinese tech companies to reduce their reliance on foreign suppliers, the report said. But Dutch lithography machine maker ASML Holding did not provide even a single machine because it did not obtain a license from the Dutch government.
In January, Peter Wennink, chief executive of ASML, said the company still had not obtained a license to ship any of its state-of-the-art lithography machines, which are necessary to make advanced computer chips, to China. .
Huari said that analysts believe that without ASML’s most advanced machines, Chinese chipmakers will not be able to make leading chips until domestic tools catch up. It is estimated that it will take at least ten years for the CCP to reach the technical level of ASML.
The U.S. government has asked the Dutch government to limit sales out of national security concerns, according to U.S. officials. The United States has the right to do so, because ASML’s machines also use American technology.
Although the CCP has invested heavily in recent years to try to achieve China’s chip autonomy. But Reuters said in a June 2021 Biden administration review of U.S. supply chain vulnerabilities, the Chinese government is providing $100 billion in subsidies to its chip industry, including the development of 60 new factories. However, some of those payouts have resulted in huge losses, with a string of bankruptcies, loan defaults and abandoned projects.
Responsible editor: Lin Yan#