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America's War on Chinese Chips

What economic war looks like.

The Economist has a smart piece on America's efforts to blunt China's semiconductor industry. The whole article is worth reading, but the lead provides good context.

The ultimate effect of all this will be to set back China’s chip industry. International Business Strategies, a consultancy, had previously estimated that Chinese firms would be making more than half of the chips their country needed by 2030. After the American sanctions came into effect, it lowered that forecast to 33%.

This is just what America’s policymakers want. The latest sanctions are different from past measures against China, Russia and, during the cold war, the Soviet Union. They seek to deny China access not just to advanced weapons or narrowly defined technologies, but to undermine whole industries. In a speech in September Jake Sullivan, America’s national security adviser, explained that the government wanted to hobble China’s capabilities in “foundational technologies” such as artificial intelligence, biotech and clean energy, to allow America to maintain as much of an edge as possible in these areas. Some call this plan the “Sullivan doctrine”.

If strictly measured by integrated circuit production, Sullivan's doctrine seems to be working. Imports have halved since 2020.