The Game of Chips?

As tensions escalate, the US has taken steps to stop chipmakers in the country from selling their semiconductor products to China. In order to ensure that obtaining the raw material used to produce the chips is hard, the government has made a few updates to the rules. Also, there is a tab on forty other countries so that the same raw material is not supplied to China indirectly either. The main motive behind such a ban by the US is to prevent China from gaining any further military strength.

The rules for regulating the exports do not apply to regular chips but only to those capable of pulling powerful AI stunts. Going forward, the companies engaged in the export of such chips must get special permission for sales to other countries. Further, the government requires that the chip companies disclose if their chips are close to the established threshold. The decision to export the same or not shall be decided on a case-by-case basis ensuring that national security is not threatened.

The latest advancements in the chip export ban have worsened the tension between the two countries. China has criticized the move and has asked the United States to stop the unnecessary weaponization of the technology industry. The stocks of the major chip developers in the US, like Nvidia and Intel, have plummeted.

In the short run, this ban by the US might put China behind if China does not develop its technology in this field. While China is dependent on imports of advanced chips, this move may not be sufficient in derailing its technological progress. However, this action might end up hurting various American companies that rely on the Chinese market, and no level of support from the government for semiconductor industry may be able to fill the gap.

Since technology is a driving factor of development and convenience, it can also have serious military repercussions. No nation can underestimate protecting its interest, as it is the foremost responsibility. However, the ongoing technological advancements are constantly blurring the line between commercial and military utility.

At the international level, the observers see the ban as an interplay of economic, geopolitical and technological factors. The US is trying to protect its national security interest, and China is accusing it of destabilizing the world economy. The long-term impacts remain uncertain for both countries, being majorly dependent upon China’s ability to overcome this hindrance.  However, a transparent and well-developed control process might help mitigate the risks. In the meantime, this might prove to be beneficial for other Asian countries as the West will be looking for new markets and suppliers. Southeast Asia might be considered a more appealing option compared to major chip-producing nations like South Korea and Taiwan, given the region’s perceived neutrality amid the continuing trade tensions between the U.S. and China.