Circuits of War: on Biden’s technological offensive against China

This article by Italian social theorist Marco d’Eramo, which originally appeared in Sidecar (a blog published by New Left Review), provides a detailed and insightful analysis of the “chip war” being waged by the US as part of its broader New Cold War on China. D’Eramo explains the profound importance of the semiconductor industry to the overall trajectory of modern technology, and describes the extent to which semiconductor supply chains are today dominated by the US. While China uses more than 70 percent of the world’s semiconductor products, it only produces 15 percent – and these are not of the latest generation of chip design.

The Biden administration has announced wide-ranging and unprecedented restrictions on the export of semiconductors, with a view to protecting its dominance of the industry at all costs. D’Eramo quotes Martin Wolf in the Financial Times saying that the chip war launched by the Biden administration is “far more threatening to Beijing than anything Donald Trump did. The aim is clearly to slow China’s economic development. That is an act of economic warfare… It will have huge geopolitical consequences.”

The author however observes that Biden’s chip war will not be plain sailing, as it relies on the cooperation both of major US technology companies – which earn handsome profits from exporting to China – but also the US’s allies abroad, including for example Germany, which “has grounded its economic – and therefore political – fortunes in its relationship with China, its principal commercial partner (with $264 billion worth of annual trade).” In this context, Chancellor Scholz’s recent trip to Beijing “seems like a major act of insubordination.”

Another factor, not directly addressed by the article, is the record of Chinese socialism in overcoming this sort of difficulty. For example, very few would have thought that China could develop its own nuclear deterrent, carrying out its first successful test of an atomic bomb in 1964, at a time when it was still a poor and backward country, blockaded by the US and without the support of the Soviet Union, with which it was engaged in a bitter ideological dispute. Even with the seemingly unbreachable gap between the US and China in terms of semiconductor technology, the likely effect of these new US restrictions will be to accelerate China’s own research and investment in the sector. A decade ago, China wasn’t the global leader in renewable energy technology; today it is. We shouldn’t be surprised if China is able to catch up with the US in the coming years.

A world war was declared on 7 October. No news station reported on it, even though we will all have to suffer its effects. That day, the Biden administration launched a technological offensive against China, placing stringent limits and extensive controls on the export not only of integrated circuits, but also their designs, the machines used to ‘write’ them on silicon and the tools these machines produce. Henceforth, if a Chinese factory requires any of these components to produce goods – like Apple’s mobile phones, or GM’s cars – other firms must request a special licence to export them.

Why has the US implemented these sanctions? And why are they so severe? Because, as Chris Miller writes in his recent book Chip War: The Fight for the World’s Most Critical Technology (2022), ‘the semiconductor industry produces more transistors every day than there are cells in the human body’. Integrated circuits (‘chips’) are part of every product we consume – that is to say, everything China makes – from cars to phones, washing machines, toasters, televisions and microwaves. That’s why China uses more than 70% of the world’s semiconductor products, although contrary to common perception it only produces 15%. In fact, this latter figure is misleading, as China doesn’t produce any of the latest chips, those used in artificial intelligence or advanced weapons systems.

Continue reading Circuits of War: on Biden’s technological offensive against China

Why Biden is unleashing a full scale chip war against China

The following article, by Marc Vandepitte and Jan Jonckheere, was originally published in Dutch on De Wereld Morgen. It explains the crucial significance of semiconductor chips to advances in modern technology, and goes on to describe the “chip war” currently being waged by the US government against China. The authors note that this is not the first time the US has attempted to suppress another country’s technological development, but they express significant doubt about the chances of success in this case. “In the past, the US has often succeeded in bringing countries to order and keeping them in line. However, whether it will succeed with China is highly questionable.”

Keith Lamb’s article Blocking China’s semiconductor industry is an attempt to impede the construction of socialism provides useful supplementary reading.

Recently, the US has identified China as its main enemy and is trying to thwart its economic and technological rise. Chips play a key role in this as they are the backbone of economic and military performance in the digital age. Whether the U.S. will succeed in its endeavour is highly questionable.

The key to the future

Technology is the key to the future. It is the basis for military might on the one hand, and economic productivity and a competitive position in the world market on the other.

Until recently, the US had an unassailable, dominant position on both fronts. The White House wants to maintain that hegemony at all costs, but the rise of China threatens to put an end to that.

According to US Presidential Security Adviser Sullivan, “we are facing a competitor that is determined to overtake US technological leadership and willing to devote nearly limitless resources to that goal”.

That is why the US has identified the People’s Republic of China as its main enemy and is trying to thwart the economic and technological ascent of this Asian giant.

Chip War

Semiconductors and chips[1] are particularly targeted. This makes sense, because in the future geopolitical supremacy may increasingly depend on computer chips. Chips are integrated circuits that are pretty much the nervous system of electronic devices.

Until last century, military strength was based on firearms, warships, fighter jets or (nuclear) missiles. In the digital age, chips are the backbone of economic as well as military performance.

According to James Mulvenon, an expert on Chinese cybersecurity, “the Pentagon has decided that semiconductors is the hill that they are willing to die on. The sector of semiconductors is the last industry in which the US is leading, and it is the one on which everything else is built”.

In early October 2022, the White House put its money where its mouth is. The Biden administration introduced sweeping export controls that will severely hamper Chinese companies’ attempts to obtain or manufacture advanced computer chips.

Under Trump, US companies were no longer allowed to sell chips to Huawei. Biden has now extended those trade restrictions to more than 40 Chinese companies, including several chip makers. The new measure effectively prohibits any US or non-US company from supplying those Chinese companies with hardware or software whose supply chain includes US technology.

The export restrictions not only target military applications but seek to block the development of China’s technological power by all means available. The strategy is to cut China off from the rest of the world in chip supply chains in order to deny it the opportunity to indigenise its semiconductor industry.

Paul Triolo, China and technology expert describes the new measure as a “major watershed” in US-China relations. “The US has essentially declared war on China’s ability to advance the country’s use of high-performance computing for economic and security gains.”

Conversely, the US is doing all it can to further increase its technological lead. For example, the White House’s National Science and Technology Council has just published a 47-page ‘National Strategy for Advanced Manufacturing’ that includes 11 strategic goals to increase US competitiveness in chips.

Geopolitics aside, the chip industry is also big business. The market capitalization of the largest listed chip firms now exceeds $4,000 billion. China spends more on computer chip imports than on oil.

Quest for allies

Although Biden claims to be eager to work with allies, this chip war is only initiated by the US. Experts admit that if other countries continue to supply China, the restrictions will have little effect. The only consequence then is that US chip companies will miss out on the large Chinese market.

In the past, the US already pressured other countries and regions to stop supplying high-tech products to China. In the case of chips, this mainly involves South Korea, Japan, the Netherlands and the de facto autonomous Chinese province of Taiwan. With the new measure, foreign companies working with US technology are now supposed to act following US restrictions. They must seek US permission on a case-by-case basis.

Of course, foreign countries are not eager to comply with that, because China is a very important if not the most important customer. Samsung, for example, is the world’s largest builder of memory chips. Partly as a result of the new measure, this South Korean company expects 32 percent less revenue. It remains to be seen whether and to what extent these countries will seek and find possible loopholes.

Washington especially wants to bring Taiwan along in its isolation strategy. Taiwan accounts for 92 percent of the world’s high-value chips. For China, imports from Taiwan are economically and technologically vital

It is in the context of this chip war that the provocative visit by Pelosi and other US politicians to the separatist leadership of Taiwan must be viewed. Mid-September, the US Senate approved a bill providing $6.5 billion in direct military aid to the island. Washington is putting pressure on China on several fronts.

Chances of success?

Chips are the main engine of electronics. China itself manufactures about 12 percent of global production. That is by no means enough for its own use. Only one-sixth of what it needs in chips is produced domestically. Moreover, for the time being, it is still unable to produce the most advanced chips.

In other words, in terms of chips, the country is highly dependent on imports. Annually they account for about $400 billion. If that supply were compromised, it would not only mean a very large economic loss, but it would also seriously undermine technological progress. In this sense, chips are considered the Achilles heel of Chinese industry.

To overcome that dependency and catch up with the technological backlog, China is investing more than any other country in this strategic industry. The country has already made serious progress in a number of areas. For example, it has successfully produced a 7 nanometre chip.[2] This puts it only one or two ‘generations’ behind industry leaders in Taiwan and South Korea.  

But with these breakthroughs, it will remain dependent on imports of parts from other countries for the time being.[3] It doesn’t have to stay that way. Analysys Mason, a leading consulting firm, says in a recent report that China could be self-sufficient in chips within three to four years.

In any case, the US restrictive strategy will motivate the Chinese government to allocate even more resources and make breakthroughs. Asia Times gives the example of the 2015 blocking of the supply of Intel’s high-end Xeon Phi processors to Chinese supercomputer makers. A year later, Chinese researchers developed those processors themselves.

In the past, the US has often succeeded in bringing countries to order and keeping them in line. However, whether it will succeed with China is highly questionable. By the end of this decade, we will know whether the US attempt to wreck China’s chip industry has succeeded or failed.

Notes:

[1] Semiconductors are electronic components based on semiconductor material. A diode and a transistor are examples of semiconductors. In a sense you can think of semiconductors as the building blocks of chips. Chips are integrated circuits, small in size. They are part of a computer or other electronic devices. In the mainstream media, there is usually no distinction between semiconductors and chips.

[2] The company in question, SMCI, is reportedly now working on even more advanced 5 nanometer chips.

[3] For example, China cannot make advanced semiconductor devices without EUV lithography equipment from ASML (Netherlands) and electronic design automation (EDA) tools from Synopsis and Cadence (US) or Siemens (Germany).

US media hide military threats against China

This insightful article by Sara Flounders, originally published in Workers World, exposes the incredible hypocrisy shown by the ‘free’ media – giving non-stop coverage to China’s allegedly aggressive response to Nancy Pelosi’s Taiwan visit whilst studiously ignoring the RIMPAC maneuvers being carried out at the same time by the US naval command.

Sara notes that the US maintains a constant military presence in the region, and connects this back to the imperialist domination of China, starting with the First Opium War nearly 200 years ago. Just as the Opium Wars were fought to impose British imperial hegemony, so is the current escalation in the Pacific region being carried out in order to impose US imperial hegemony. The difference being that, following the establishment of the People’s Republic of China in 1949, the CPC-led government has been able to “rebuild a strong, united China which is increasingly able to defend its coastal waters and resist US imperialist demands.”

The author points out that the US is conducting a “desperate imperialist strategy to reverse its declining global position”, and is wreaking havoc in the process. Progressive and pro-peace forces worldwide must join hands against this menace.

Consider what is being said, as well as what is totally omitted, in the U.S. coverage of China’s naval action around Taiwan.  

The U.S. naval command RIMPAC (Rim of the Pacific Amphibious Assault Training) was carrying out maneuvers involving 170 aircraft, 38 ships, four submarines, and 25,000 military personnel from all the G7 imperialist countries. Some 19 other Asia Pacific countries were pulled in for symbolic participation. RIMPAC is the world’s largest international maritime exercise.

This aggressive maritime action took place from June 29 to Aug. 4. In other words, it was going on as Speaker of the House Nancy Pelosi was visiting Taiwan.

The shaping of information is all pervasive. Whether it is FOX News, CNN, AP, the New York Times or the Washington Post, the multibillion-dollar media are part of and totally intertwined with U.S. military industries. They collaborate in hiding U.S. war plans and provocations. 

The role of the corporate media in totally distorting the news on China must be challenged.

Continue reading US media hide military threats against China

China: COVID, computer chips, airliners, and US imperialism

This interesting article by Chris Fry, writing in Fighting Words, analyzes the escalating tech war initiated by the Trump administration and being carried forward under Biden. Desperate to slow down China’s economic and technological rise, the US is spreading all manner of lies in order to impose sanctions on China.

In dealing with China, the primary goal of each successive administration is to successfully maintain U.S. hegemony, to assert the power of the U.S. ruling class to profit from exploiting Chinese workers as well as the rest of the global working class and oppressed nations without restrictions.

These sanctions will inevitably fail to prevent China’s development, but in the meantime are already impacting the livelihood of the working class in the West. As Mao Zedong famously remarked in 1957: “‘Lifting a rock only to drop it on one’s own feet’ is a Chinese folk saying to describe the behavior of certain fools. The reactionaries in all countries are fools of this kind.”

The leadership of the People’s Republic of China (PRC) likes to describe its social and economic structure as “Socialism with Chinese characteristics.” But we can describe the U.S. system, driven by its insatiable greed for profits and global hegemony, as “Imperialism with imperialist characteristics”.

A July 5th Bloomberg article revealed that the Biden administration is pressuring the Netherlands to force Dutch companies to stop selling computer chip manufacturing equipment to China:

The US is pushing the Netherlands to ban ASML Holding NV from selling to China mainstream technology essential in making a large chunk of the world’s chips, expanding its campaign to curb the country’s rise, according to people familiar with the matter.

A computer chip ploy for a vast subsidy for Big Tech

Since the 1970s, U.S. Big Business has closed thousands of plants and factories across the country, while finance capital has invested trillions in overseas facilities to exploit low wage workers. Currently, the predominant manufacturer of the leading edge 5nm computer chip is the Taiwan based TSMC Corporation in Taiwan.

Senator Sanders stated in a July 14th  editorial for the Guardian describing a current piece of chip-industry pushed legislation for $52 billion in subsidies to build a TSMC chip facility in the U.S.:

Let’s review some recent history. Over the last 20 years, the microchip industry has shut down more than 780 manufacturing plants in the United States and eliminated 150,000 American jobs while moving most of its production overseas – after receiving over $9.5bn in government subsidies and loans.

In other words, in order to make more profits, these companies took government money and used it to ship good-paying jobs abroad. Now, as a reward for that bad behavior, these same companies are in line to receive a giant taxpayer handout to undo the damage that they did.

Continue reading China: COVID, computer chips, airliners, and US imperialism

Pelosi’s one-night stand in Taipei accomplished her goals

In this short article, originally published on his Edu/Pol Newsletter, veteran US progressive activist Mike Klonsky draws a connection between Pelosi’s Taiwan visit and the shady dealings of her venture capitalist husband, currently under investigation for an insider trading scandal involving semiconductors made on the island.

If Nancy Pelosi’s aim was to destabilize the region and pull the rug out from under Biden’s upcoming meeting with Xi, her stopover in Taiwan was a resounding success. Her visit to Taiwan could also have a large impact on the semiconductor business, which has a heavy presence in China and Taiwan.

China now says it is canceling or suspending all dialogue with the U.S. on issues from climate change to military relations and anti-drug efforts in retaliation.

AP reports this morning

China is canceling all communication between its area commanders and defense department, along with talks on military maritime safety. Cooperation on returning illegal immigrants, criminal investigations, transnational crime, illegal drugs, and climate change will also be suspended.

China also announced unspecified sanctions on Pelosi and her venture-capitalist husband, Paul, who is currently under investigation for an insider-trading scandal involving semiconductors, made in Taiwan.

Can’t say they weren’t warned.

Early in July, it was disclosed that Paul Pelosi had exercised call options for as much as $5 million worth of Nvidia stock ahead of deliberations in Congress about a bill that would boost the U.S. semiconductor industry.

It wasn’t the first time Paul Pelosi had invested in a semiconductor company as momentum built behind congressional funding for the industry, which produces computer chips needed for a broad range of technology.

On her brief stopover in Taipei, Pelosi met with Mark Liu, Chairman of Taiwan Semiconductor, a company with a market capitalization of more than $430 billion. The recently passed CHIPS Act provides funding to the semiconductor sector and encourages the building of foundries in the U.S., something that was likely discussed between Pelosi and Liu.

Pelosi, who has said the CHIPS Act could create an opportunity for U.S. cooperation with Taiwan, recently came under scrutiny for her husband exercising call options of NVIDIA Corp. The Pelosis eventually sold their shares in NVIDIA.

Taiwan Semiconductor is building a $12-billion plant in Arizona.

Get it?

In July, Pelosi claimed that her husband has “absolutely not” made any stock trades based on information from her.

Paul Pelosi was also busted recently for causing a crash while driving his Porsche while drunk.

DSA open letter opposing the US Innovation and Competition Act (USICA)

We are pleased to reproduce and invite support for this Open Letter to US Congressional Representatives, initiated by the International Committee, and its Asia & Oceania and Anti-War Subcommittees of the Democratic Socialists of America (DSA), expressing opposition to the US Innovation and Competition Act (USICA), which they describe as a move “to counter China as part of a New Cold War fuelled by US imperialist interests, which further destabilizes geopolitical relations and jeopardizes efforts toward greater global cooperation on issues affecting everyone worldwide.” The statement decries further militarisation of the Pacific region along with the increased anti-Asian racism and violence in the US and declares:

We believe that US industrial policy should not be built upon imperialist ambitions that serve only to drag the world into a new Cold War. We believe that working people in the US and elsewhere deserve policies that invest in public works programs, climate resilience, infrastructure, healthcare, and more.

The undersigned chapters and members of the Democratic Socialists of America and other allied organizations and individuals strongly condemn Congress’s use of industrial policy and other elements of the proposed US Innovation and Competition Act (USICA) to counter China as part of a new Cold War fueled by US imperialist interests, which further destabilizes geopolitical relations and jeopardizes efforts toward greater global cooperation on issues affecting everyone worldwide.

We call on members of Congress to oppose this aggressive escalation and push back on the narratives that have fueled rising anti-Chinese sentiment in the US, marked by increased anti-Asian racism and violence. We oppose the USICA and other legislation that calls for increased military budgets, further militarization of the Indo-Pacific region, and fosters anti-Chinese propaganda efforts, all based on nothing more than perceived threats to US geopolitical interests. Elected members of the US Congress have the duty to prioritize the needs and concerns of their working class constituents instead of those of arms manufacturers and defense contractors who have fueled decades of endless war at the expense of genuine global cooperation and common prosperity for working class people everywhere.

We believe that US industrial policy should not be built upon imperialist ambitions that serve only to drag the world into a new Cold War. We believe that working people in the US and elsewhere deserve policies that invest in public works programs, climate resilience, infrastructure, healthcare, and more. The US Innovation and Competition Act is not created for those purposes, instead it is overwhelmingly focused on preserving US global hegemony by fabricating narratives aimed at painting China as a threat and riling up global conflict in an effort to undermine an increasingly multipolar world. If enacted, the bill would ramp up interference in the sovereignty of nations throughout the world, establish an anti-Chinese federal bureaucracy, intensify the militarization of US global policies, and continue the legacy of US industrial policy being weaponized against socialist movements globally. This legislation will promote confrontation and conflict with China, escalate the potential for military conflict between nuclear powers, and hinder global cooperation needed to address critical issues like climate change.

For these reasons, we strongly condemn the USICA and urge members of Congress to oppose the bill and call for an end to US policies that threaten hundreds of millions of people in the Indo-Pacific region and could spiral into worldwide conflict.

Keith Lamb: Blocking China’s semiconductor industry is an attempt to impede the construction of socialism

We republish below an important piece of analysis by Keith Lamb, originally published in CGTN on 23 November 2021, seeking to understand the US’s motivations in imposing restrictions on China’s semiconductor industry. The author concludes that semiconductor technology is crucial for China’s goal of building a modern socialist country by 2049, and that the US and its allies are determined to impede – or ideally prevent – any further economic breakthroughs for socialist China.

Since 2015, the U.S. has introduced technological restrictions preventing China from both competing openly in consumer markets and acquiring technology. Restrictions have focused on the semiconductor industry and correlated sectors. For example, the Chinese chipmaker Semiconductor Manufacturing International (SMIC) was blacklisted in December 2020, and, just before this, U.S. and non-U.S. chipmakers who use U.S. semiconductor technology, were forced to comply with U.S. sanctions meaning they could no longer take orders from companies like Huawei.

The U.S. has justified its actions by citing China’s civil-military integration where semiconductors can be used in advanced weaponry. However, even if true, considering the U.S. military and the microchip industry grew in tandem, this crossover wouldn’t be extraordinary. At any rate, it isn’t China’s military that surrounds the U.S., and nor does China seek to confront the U.S. which sits securely protected by two oceans and two compliant neighbors.

Continue reading Keith Lamb: Blocking China’s semiconductor industry is an attempt to impede the construction of socialism

Justin Yifu Lin: China must lead the new industrial revolution

Justin Yifu Lin is one of China’s most distinguished economists and a former Chief Economist and Senior Vice President at the World Bank.  We are very pleased to republish here from Asia Times his important article on the Fourth Industrial Revolution. Lin points out that new industries will predominate in China by the time of the People’s Republic’s centenary in 2049. He notes how historically the United States has taken measures to prevent any rising power from being able to challenge its hegemony. China therefore needs to break through the US blockade and to do so it must lead the new industrial revolution. China not only has the material conditions to do this, he argues, but also a number of comparative advantages over the US. 


As a national mandate, the 19th National People’s Congress of the Communist Party of China (CPC) in 2017 announced its “Two Centennial Goals”: the first is to complete building a moderately prosperous society in an all-round way in China, which is to be achieved at the 100th anniversary of the CPC in 2021, and the second is to build the People’s Republic of China into a modern socialist power by 2049, the  100th anniversary of its founding.

There are a number of characteristics of a modern country. One is that China’s GDP per capita should reach at least half of that of the United States, the other most powerful country. 

Continue reading Justin Yifu Lin: China must lead the new industrial revolution