Semiconductors: summit meeting between Joe Biden and Xi Jinping

Will the semiconductor war between the United States and China come to an end? This is one of the challenges of the meeting between Joe Biden and Xi Jinping, this Monday, November 14 in Bali, on the sidelines of the G20 summit. This meeting of the two heads of state aims to iron out many disagreements, relating in particular to the status of Taiwan and technological rivalry, the current sticking point of which focuses on electronic components.

The United States produces 12% of the electronic chips on a world market which should weigh 1000 billion dollars by 2030. To boost national production of semiconductors, a 52 billion dollar plan was adopted this summer by the US Congress.

For its part, China launched its Made in China 2025 plan in 2015, the objective of which is to produce 70% of the country’s annual needs in electronic components, compared to 15% currently. The Asian nation is therefore multiplying colossal investments. Thus, no less than 28 projects for new semiconductor factories were put into orbit in 2021 for an amount of 26 billion dollars. Beijing also has a joker, and not the least: rare earths, a group of metals with exceptional properties used for the manufacture of high-tech products. However, China represents more than 60% of world production. Ten years ago, this share even reached 97%!

Tone up

Since 2018 and Donald Trump’s crusade against Huawei, tensions have continued to grow between Washington and Beijing. Technologically, this rivalry has hardened further after the Biden administration’s decision to severely restrict China’s access to its electronic components. To do this, the US Department of Commerce has implemented new restrictions to prevent Chinese companies from obtaining the most advanced chips, in the name of national security. From now on, any export is conditional on obtaining a license from Washington, with presumption of refusal for those concerning the Middle Kingdom.

In this climate of lukewarm war, Chinese giants like Huawei will therefore have to develop their own electronic chips, which will take longer without US technologies. In accordance with the Newtonian principle of action/reaction, Xi Jinping reaffirmed his policy of total technological autonomy on the occasion of the 20th Congress of the Chinese Communist Party. The Chinese government has made the development of advanced computer chips for all possible uses, both artificial intelligence and hypersonic missiles, a priority for the coming years.

The West worries about a loss of supremacy

This posture of Beijing does not please Western countries, like the United Kingdom which has issued a warning. Jeremy Fleming, director of the Government Communications Headquarters (GCHQ), notably considered that the Chinese leaders see “opportunities to control the Chinese people rather than looking for ways to support and unleash the potential of their citizens [et qu’ils perçoivent] nations as potential adversaries or potential client states, to threaten, corrupt or coerce.”

The head of this British intelligence agency also assures that the Chinese state “learn the lessons” of the war in Ukraine and that a centralized digital currency could “allowing China to partially escape the type of international sanctions currently applied to the Putin regime in Russia”. A protection strategy (paid article) that Beijing is already working to put in place. As a reminder, tensions around Taiwan, a strategic island off mainland China, have never been so high.