IC is also called silicon chip. The US has put sanctions to prevent China from having the capability to design and manufacture leading-edge chips. In fact, the US citizens and green card holders too are prohibited from taking employment in the Chinese companies in tech area. The sanctions also apply to US companies and their firms, as they are dependent on US technology, say firms such as TSMC from Taiwan or Samsung from S. Korea.
China wanted to leapfrog but the sanctions are a deterrent. China expected a lead time to develop its own capabilities. It is not short of investment in research to keep pace with others.
Currently TSMC is the leader in cutting edge chips and 3nm processes. Samsung and Intel too are building their own capacities. All the three firms are now working on 2nm processes.
China’s biggest firm SMIC is still in the 7nm process. Chip fabrication in China is of a much older generation.
The US-trained Chinese manpower working in Chinese companies will now have to choose between China and the US. China’s current capability is based on copying the Western designs and technologies. China too is focusing on research in its academic institutes, but still lags behind the US and Europe.
They can catch up, but the sanctions are the impediments, and will take a longer time to catch up.
Europe, Australia, Japan and Korea back the US.
India has lagged behind. India has taken initiative by Vedanta-Foxconn project to enter into low-end chips — of 28 nm. India should move up the value chain. However, this calls for active private players participation.
In the 1970s and 1980s, nuclear technology gave the countries a competitive advantage. These days semiconductor related items which also power weapons of mass destruction provide the competitive advantage.
The US sanctions are for trading of logic (processor), DRAM or dynamic random access memory and NAND or not and or memory chips. China will thus be left behind in innovations in 5G, AI and defence.
The semiconductor industry, to begin with, was funded by the US department of Defence.
There is a growing chips market in China, say 30-40 per cent chips made in the world travel to China. The Chinese demand for chips is 25 per cent of the global demand which equals the US demand. Chips in the short run will become expensive. At the same time, there are opportunities for other players from Vietnam, Malaysia, Indonesia and India.
The US leads semiconductor research. It is home to the IP revenue and patents. Big research labs are in the US with a few interspersed in Japan, Europe and S.Korea.