The war over semiconductor chips between the US and China is heating up

POLICY

China has suffered another blow in its ongoing trade war with the U.S., with Bloomberg reporting today that Japan and the Netherlands have both agreed not to export much-needed chipmaking technology to China.

Earlier this year, the U.S. introduced new rules which would make it near impossible for companies to sell China key chips and components for supercomputers. The aim, reportedly a matter of national security to prevent China from making state-of-the-art weaponry, is to cripple China’s advanced tech industry. The rules make it hard for foreign companies to deliver products to China if those companies rely on American-made tools.

In order to make high-end chips, China needs extreme ultraviolet lithography or EUV photolithography machines, which ASML Holding in the Netherlands has previously supplied. China has also relied on Tokyo Electron, which has supplied equipment to China that can fabricate integrated circuits. In short, this may kneecap China since, without these technologies, it may only be able to make chips with transistor sizes of 14 nanometers. That won’t be good enough since advanced chips today — three generations in front — are usually three-nanometer, with two-nanometer on the way, possibly in 2025.

Since the new rules were introduced, which also brought U.S. citizens back home from China if they worked in related industries, China has complained that the U.S. is not playing fair. Today, the country’s Ministry of Commerce said it had filed a complaint against the U.S. with the World Trade Organization. China says the U.S.’s new rules have nothing to do with national security and are a matter of trade protectionism.

“China takes legal actions within the WTO framework as a necessary way to address our concerns and to defend our legitimate interests,” said China’s commerce ministry in a statement. Since the rules were introduced, China has also warned that the U.S. will upset global industrial supply chains. The country says the U.S. is violating international trade rules and laws, which it claims at the end of the day will be detrimental to global peace.

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