Why are the US and China fighting over chips? | Business

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The United States has moved to block China's access to the most advanced semiconductors and the equipment and talent needed to make them in recent months, citing national security. | News24_Business

China has dismissed those concerns, accusing the United States of"technological terrorism" and unfairly hindering its economic growth. It has sought to counter the US containment measures.Microchips are the lifeblood of the modern global economy: the tiny slices of silicon are found in all types of electronics -- from LED lightbulbs and washing machines to cars and smartphones.

Washington imposed a series of export controls last year, saying they were meant to prevent"sensitive technologies with military applications" from being acquired by China's armed forces and its intelligence and security services.A deep dive into the big business story of the week, as well as expert analysis of markets and trends.

The Netherlands, a NATO member, and Japan -- a US treaty ally -- did not name China, but their restrictions infuriated Beijing. Some Chinese companies that were suddenly left unable to guarantee access to chips saw lucrative foreign contracts evaporate, forcing them to slash jobs and freeze expansion plans.

A recent semi-official survey of Chinese chip companies estimated a need for 800,000 foreign workers by 2024, a gap Washington made harder to plug by restricting"US persons" from working in China's semiconductor industry.Beijing has reacted with anger and defiance, vowing to accelerate its efforts to become self-reliant on semiconductors.

"Money is not the problem," said Qi Wang, co-founder of Hong Kong-based MegaTrust Investment, pointing instead at waste, fraud and talent shortages.

 

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